As filed with the Securities and Exchange Commission on September 11, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
☒
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number:
BURFORD CAPITAL LIMITED
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
Guernsey
(Jurisdiction of incorporation or organization)
Regency Court, Glategny Esplanade, St. Peter Port GY1 1WW, Guernsey
(Address of principal executive offices)
Mark N. Klein
Telephone: 212-235-6820
350 Madison Avenue, New York, NY 10017
Copies to:
Andrew J. Pitts
Telephone: 212-474-1000
Cravath, Swaine & Moore LLP
825 Eighth Avenue, New York, NY 10019
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Ordinary shares, no par value
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BUR (reserved)
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New York Stock Exchange (proposed)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d) OF THE ACT: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or ordinary shares as of the close of the period covered by the annual report. N/A.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Emerging growth company ☒
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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☐
TABLE OF CONTENTS
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ii
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iii
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iv
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PART I
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1
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1
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1
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23
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35
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35
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78
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88
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90
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90
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91
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109
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112
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PART II
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113
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113
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113
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113
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113
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113
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113
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113
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113
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113
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113
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113
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PART III
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114
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114
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114
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115
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DEFINITIONS
In this registration statement, unless otherwise indicated or the context requires otherwise:
•
“BAIF” refers to the Burford Alternative Income Fund, a private fund focused on post-settlement legal finance matters.
•
“BCH(UK)L” refers to Burford Capital Holdings (UK) Limited, our wholly owned indirect subsidiary that, among other things, holds the license to operate Burford Law.
•
“BCIM” refers to Burford Capital Investment Management LLC, our indirect wholly owned subsidiary, that serves as the investment advisor of all of our managed funds and is registered under the Investment Advisers Act of 1940, as amended.
•
“BCIM Strategic Value Master Fund LP” or “Strategic Value Fund” refer to a limited partnership and limited liability company for which BCIM serves as the investment advisor and which invests in certain complex strategies assets. Investors in the Strategic Value Fund include third-party LPs as well as our balance sheet. Our investment in the Strategic Value Fund currently comprises our capital provision-indirect assets.
•
“Board” refers to the Board of Directors of Burford Capital Limited.
•
“BOF” refers to the Burford Opportunity Fund, a private fund focused on pre-settlement legal finance matters.
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“BOF-C” refers to the Burford private fund through which the SWF invests in pre-settlement legal finance matters under our SWF arrangement or to the SWF arrangement itself, as applicable.
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“Burford”, the “Company”, “we”, “our”, “us” or similar terms when used in a historical context refer to Burford Capital Limited, or any one or more of its subsidiaries or their predecessors, or to such entities collectively, except that when such terms are used in this registration statement in reference to the ordinary shares, they refer specifically to Burford Capital Limited.
•
“Burford-only”, “Burford standalone”, “Burford-only balance sheet” or similar terms refers to assets, liabilities and activities that pertain only to Burford itself, excluding any third-party interests and the portions of jointly owned entities owned by others.
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“Burford Capital Finance LLC” refers to our wholly owned indirect subsidiary and the issuer of our U.S. dollar bonds, which are guaranteed by us as well as a number of our subsidiaries.
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“Burford Capital LLC” refers to our wholly-owned indirect subsidiary and primary operating company in the U.S.
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“Burford Capital PLC” refers to our wholly-owned indirect subsidiary and the issuer of our pound sterling bonds, which are guaranteed by us as well as a number of our subsidiaries.
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“Burford Capital (UK) Limited” refers to our wholly-owned indirect subsidiary and our primary operating company in the UK.
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“Burford Law” refers to our internal law firm that operates under the trade name Burford Law.
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“claimant” refers to any party in a matter to whom we provide financing. Most of our legal finance business involves providing financing to the party that is advancing a claim, such as the plaintiff, claimant or counterclaimant in a matter. However, we also provide financing to defendants, respondents and other parties from time to time.
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“Consolidated” refers to assets, liabilities and activities that include those third-party interests, partially owned subsidiaries and special-purpose vehicles that we are required to consolidate under IFRS accounting. This presentation conforms to the presentation of Burford on a consolidated basis in our financials. The major entities consolidated into Burford include the Strategic Value Fund, BOF-C and several entities in which Burford holds investments where there is also a third-party partner in or owner of those entities. Note that in our financial statements, our consolidated presentation is referred to as Group.
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“Exchange Act” refers to the U.S. Securities and Exchange Act of 1934, as amended.
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“Group” refers to Burford Capital Limited and its consolidated subsidiaries.
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“Group-wide” refers to Burford and its managed funds taken together, including those portions of the funds owned by third parties and including funds that are not consolidated into Burford’s consolidated financials. In addition to the consolidated funds, Group-wide includes the Partners Funds, BOF and BAIF and its predecessor.
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“litigation” is used broadly to refer to any kind of formal dispute resolution process, including court proceedings, arbitration, mediation and other specialty processes such as proceedings before the U.S. Patent and Trademark Office or the International Trade Commission.
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“Partners Funds” refers to BCIM Partners I, II and III LP, three limited partnerships for which BCIM serves as the investment advisor and which invest in legal finance assets. All three funds are no longer making new investments. BOF is the successor fund in this strategy to the Partners Funds.
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“SEC” refers to the U.S. Securities and Exchange Commission.
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“Securities Act” refers to the U.S. Securities Act of 1933, as amended.
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“SWF” refers to the sovereign wealth fund that is the single investor in BOF-C. The SWF is one of the 25 largest sovereign wealth funds in the world, according to the Sovereign Wealth Fund Institute, as most recently published prior to the date of this registration statement.
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Currency amounts in this registration statement are in U.S. dollars unless otherwise indicated.
BASIS OF PRESENTATION OF FINANCIAL INFORMATION
We report under International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS”).
IFRS requires us to present financials that consolidate some of the limited partner interests in funds we manage as well as assets held by our balance sheet where we have a partner or minority investor. See Note 23 to our consolidated financial statements included elsewhere in this registration statement. As described above, we refer to this presentation as “Consolidated” or “IFRS”. We endeavor to provide clarity on Burford as a stand-alone business by furnishing information on a non-IFRS basis that eliminates the effect of this consolidation. As described above, we refer to this presentation as “Burford-only”, “Burford standalone” and “Burford-only balance sheet” as the context requires. We also strive to provide clarity on the business of Burford and its managed funds as a whole by furnishing information on a non-IFRS basis that reflects the contribution of both our consolidated and unconsolidated funds. As described above, we refer to this presentation as “Group-wide”. See “Item 5 — D. Trend Information — Non-IFRS Supplemental Financial Measures” for important information about non-IFRS financial measures, including a reconciliation of these non-IFRS items to our financial statements prepared in accordance with IFRS.
Our financial statements are presented in U.S. dollars.
FORWARD-LOOKING STATEMENTS
In addition to statements of historical fact, this registration statement contains “forward-looking statements”. The disclosure and analysis set forth in this registration statement includes assumptions, expectations, projections, intentions and beliefs about future events in a number of places, particularly in relation to our operations, cash flows, financial position, plans, strategies, business prospects, changes and trends in our business and the markets in which we operate. These statements are intended as “forward-looking statements”. In some cases, predictive, future-tense or forward-looking words such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “forecast”, “guidance”, “intend”, “may”, “plan”, “potential”, “predict”, “projected”, “should” or “will” or the negative of such terms or other comparable terminology are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. In addition, we and our representatives may from time to time make other oral or written statements which are forward-looking statements, including in our periodic reports that we file with the SEC, other information sent to our security holders, and other written materials. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to
events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and are based on numerous assumptions and that our actual results of operations, including our financial condition and liquidity and the development of the industry in which we operate, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this registration statement. In addition, even if our results of operations, including our financial condition and liquidity and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this registration statement, those results or developments may not be indicative of results or developments in subsequent periods.
Factors that might cause future results to differ include, but are not limited to, the following:
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adverse litigation outcomes and timing of resolution of litigation matters;
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valuation uncertainty in respect of the fair value of our capital provision assets;
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our ability to identify and select suitable legal finance assets and enter into contracts with new and existing clients;
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changes and uncertainty in law and regulations that could affect our industry, including those relating to legal privilege and attorney work product;
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improper use or disclosure of confidential and legally privileged information under our control due to cybersecurity breaches, unauthorized use or theft;
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inadequacies in our due diligence process or unforeseen developments;
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credit risk and concentration risk relating to our legal finance assets;
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competitive factors and demand for our services and capital;
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negative publicity or public perception of the legal finance industry or us;
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current and future economic, political and market forces, including uncertainty surrounding the effects of COVID-19;
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potential liability from future litigation;
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our ability to retain key employees;
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the sufficiency of our cash and cash equivalents and our ability to raise capital to meet our liquidity needs; and
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other factors discussed in “Item 3. Key Information — D. Risk Factors” of this registration statement.
Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements contained in this registration statement, whether as a result of new information, future events, a change in our views or expectations or otherwise. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.
PRESENTATION OF INDUSTRY AND MARKET DATA
In this registration statement, we rely on and refer to information regarding our business and the markets in which we operate and compete. Certain economic and industry data, market data and market forecasts set forth in this registration statement were extracted from market research, governmental and other publicly available information, independent industry publications and reports prepared by industry consultants. These external sources include publicly available information about the legal finance market as well as certain private third-party reports.
Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information
is not guaranteed. While we believe that these industry publications, surveys and forecasts are reliable, we have not independently verified them and cannot guarantee their accuracy or completeness.
Certain information in this registration statement, including, without limitation, statements regarding the industry in which we operate, our position in the industry and our market share relative to our competitors, are based on our internal estimates and analyses and based in part on third-party sources.
We cannot assure you that our estimates or any of the assumptions underlying our estimates are accurate or correctly reflect our position in the industry. None of our internal surveys or information has been verified by any independent sources. All of the information set forth in this registration statement relating to the operations, financial results or market share of our competitors has been obtained from publicly available information or independent research. We have not independently verified this information and cannot guarantee its accuracy.
Certain market share information and other statements presented herein regarding our position relative to our competitors are not based on published statistical data or information obtained from independent third parties, but reflects our best estimates. We have based these estimates upon internal surveys, information published by our competitors and information obtained from our clients, trade and business organizations and associations and other contacts in our industry.
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A.
Directors and Senior Management
For the names, business addresses and functions of our directors and senior management, see “Item 6.A. Directors and Senior Management”.
B.
Advisers
Not applicable.
C.
Auditors
Ernst & Young LLP audited our consolidated statements of financial position as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, changes in equity, and cash flows for the years ended December 31, 2019, 2018 and 2017 and the related notes. The address of Ernst & Young LLP is 25 Churchill Place, Canary Wharf, London E14 5EY, United Kingdom. Ernst & Young LLP is registered with the Public Company Accounting Oversight Board.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.
KEY INFORMATION
A.
Selected Financial Data
The following tables present selected consolidated financial data of the Company as of December 31, 2019, December 31, 2018 and January 1, 2018, and for each of the years in the three-year period ended December 31, 2019. The tables should be read together with “Item 5. Operating and Financial Review and Prospects”. The selected consolidated financial data of the Company is a summary of and is derived from our audited consolidated financial statements and notes thereto, which have been prepared in accordance with IFRS. Our audited consolidated statements of comprehensive income and changes in equity for the years ended December 31, 2019, 2018 and 2017 and the consolidated statement of financial position as of December 31, 2019, December 31, 2018 and January 1, 2018, together with the notes thereto, are included in “Item 18. Financial Statements” and should be read in their entirety.
Consolidated Statement of Comprehensive Income Data
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For the year ended December 31,
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(in U.S. dollar thousands except per share data)
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2019
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2018
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2017
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(audited)
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Capital provision income
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351,828
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404,230
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315,280
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Asset management income
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15,160
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11,691
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14,458
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Insurance income
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3,545
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10,406
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7,613
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Services income
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2,133
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1,650
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1,837
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Cash management income and bank interest
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6,703
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1,801
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2,650
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Foreign exchange gains/(losses)
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1,992
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(1,453)
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1,639
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Third-party share of gains relating to interests in consolidated entities
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(15,318)
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(3,348)
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(863)
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Total income
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366,043
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424,977
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342,614
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Operating expenses
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(91,402)
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(71,831)
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(57,479)
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Amortization of intangible assets
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(9,495)
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(9,494)
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(11,703)
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For the year ended December 31,
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(in U.S. dollar thousands except per share data)
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2019
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2018
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2017
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(audited)
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Operating profit
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265,146
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343,652
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273,432
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Finance costs
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(39,622)
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(38,538)
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(24,251)
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Profit for the year before taxation
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225,524
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305,114
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249,181
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Taxation (expense)/credit
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(13,417)
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12,463
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123
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Profit for the year after taxation
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212,107
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317,577
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249,304
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(Cents)
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Basic profit per ordinary share
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97.0
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150.7
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119.7
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Diluted profit per ordinary share
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96.6
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150.3
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119.6
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Dividends declared per ordinary share
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4.17
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12.5
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11.0
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Consolidated Statement of Financial Position Data
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As of
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(in U.S. dollar thousands)
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December 31,
2019
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December 31,
2018
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January 1,
2018
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(audited)
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Total assets
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2,651,984
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2,318,982
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1,499,353
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Total liabilities
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1,118,992
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955,828
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700,789
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Total net assets
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1,532,992
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1,363,154
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798,564
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Equity
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Share capital
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609,954
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609,954
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364,749
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Reserves attributable to owners
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923,038
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753,200
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433,815
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Total shareholders’ equity
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1,532,992
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1,363,154
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798,564
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Other Financial and Operating Measures
This registration statement also presents certain unaudited alternative performance measures (“APMs”), which are not presented in accordance with IFRS or any other internationally accepted accounting principles, including concluded assets, deployed cost, commitments, internal rate of return (“IRR”), return on invested capital (“ROIC”), weighted average life (“WAL”) and assets under management (“AUM”).
The presentation of APMs is for informational purposes only and does not purport to present what our actual results of operations and financial condition would have been, nor does it project our results of operations for any future period or our financial condition at any future date. The presentation of APMs set out in this registration statement is based on available information and certain assumptions and estimates that we believe are reasonable. Our APMs measure certain performance of our assets to the end of the period and include concluded and partially concluded portfolios (as described below).
We have defined each of these APMs as follows:
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Concluded assets means legal finance assets where there is no longer any litigation risk remaining. We use the term to encompass: (i) entirely concluded legal finance assets where we have received all proceeds to which we are entitled (net of any entirely concluded losses); (ii) the portion of legal finance assets where we have received some proceeds (for example, from a settlement with one party in a multi-party case), but where the case is continuing with the possibility of receiving additional proceeds; and (iii) legal finance assets where the underlying litigation has been resolved and there is a promise to pay proceeds in the future (for example, in a settlement that is to be paid over time) and there is no longer any litigation risk involved in the asset.
In most instances, concluded assets both conclude and we receive all cash proceeds associated with the asset in the same period. Sometimes, non-cash assets are received or cash will be paid over time. In those instances, a balance sheet due from settlement of capital provision assets is recorded, in which event we estimate the future date we expect to receive cash for purposes of calculating returns such as IRR and WAL. When proceeds are ultimately received, we adjust our presentation of returns to reflect actual proceeds and timing.
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Deployed cost means the amount of funding we have provided for an asset as of the applicable point in time.
For purposes of calculating returns, we must also consider how to allocate the deployed costs associated with an asset in the event of a partial conclusion. Our approach to cost allocation depends on the type of asset:
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When single case assets have partial resolutions along the way without the entire case being resolved, most commonly because one defendant settles and the remaining defendants continue to litigate, we report the partial resolution when agreed as a partial realization and we allocate a portion of the deployed cost to the partial resolution depending on the significance of the settling defendant to the overall claim.
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In portfolio assets when a case (or part of a case) resolves or generates cash, we report the partial resolution when agreed as a partial realization and we allocate a portion of the deployed cost to the resolution. That allocation depends on the structure of the individual portfolio arrangement and the significance of the resolution to the overall portfolio but it is in essence a method that mimics the way an investor would allocate cost basis across a portfolio of security purchases.
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Commitment means the amount of financing we agree to provide for a legal asset. Commitments can be definitive (requiring us to provide funding on a schedule or, more often, when certain expenses are incurred) or discretionary (only requiring us to provide funding after reviewing and approving a future matter). Unless otherwise indicated, commitments include deployed cost and undrawn commitments.
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IRR is a discount rate that makes the net present value of a series of cash flows equal to zero and is expressed as a percentage figure. We compute IRR on concluded (including partially concluded) legal finance assets by treating that entire portfolio (or, when noted, a subset thereof) as one undifferentiated pool of capital and measuring inflows and outflows from that pool, allocating investment cost appropriately. IRRs do not include unrealized gains.
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ROIC means the absolute amount of realizations from a concluded asset divided by the amount of expenditure incurred in funding that asset, expressed as a percentage figure. ROIC is a measure of our ability to generate absolute returns on our assets. Some industry participants express returns on a multiple of invested capital (“MOIC”) instead of an ROIC basis. MOICs include the return of capital and thus are 1x higher than ROICs. In other words, a 70% ROIC is the same as 1.70x MOIC.
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WAL means the average length of time until we receive a cash realization from that asset, weighted by the amount of that realization. WAL is, simply, how long our asset will be outstanding on average. In calculating a portfolio WAL, we compute a weighted average of the individual asset WALs.
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AUM means the fair value of the capital invested in funds and individual capital vehicles plus the capital that we are entitled to call from investors in those funds and vehicles pursuant to the terms of their capital commitments to those funds and vehicles (consistent with the SEC’s definition of AUM). Our AUM will fluctuate as we raise new funds and other investment vehicles, and as existing funds and vehicles mature and no longer represent sources of callable capital in the future; there is no direct translation from AUM to asset management income.
These financial measures are presented as (i) we use them to monitor our financial results and (ii) we believe they are useful to investors, securities analysts and other interested parties. The APMs, as defined by us, may not be comparable to similarly titled measures as presented by other companies due to differences in the way our APMs are calculated. Even though the APMs are used to assess our financial position and financial results, and these types of measures are commonly used by investors, they have important
limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our consolidated financial position or results of operations.
Consistent with how management assesses Burford’s business, we also present certain of these APMs on a (1) Consolidated basis, (2) Burford-only, Burford standalone and Burford-only balance sheet basis and (3) Group-wide basis. Information presented on a Burford-only, Burford standalone, Burford-only balance sheet and Group-wide basis is non-IFRS information. See “Item 5. Trend Information — Non-IFRS Supplemental Financial Measures” for important information about non-IFRS financial measures, including a reconciliation of these non-IFRS items to our financial statements prepared in accordance with IFRS.
B.
Capitalization and Indebtedness
Our authorized share capital is unlimited. As of June 30, 2020, we had 219,049,877 ordinary shares issued and outstanding. See “Item 10. Additional Information — A. Share Capital” for additional information on our ordinary shares. As of June 30, 2020, our total indebtedness was $631.4 million, which consists of our four series of debt securities. See “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Financial Instruments” for additional information on our debt securities.
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
D.
Risk Factors
This registration statement contains “forward-looking” statements that may be based on assumptions and estimates that are subject to further risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the risks described below and elsewhere in this registration statement. For further information, see “Forward-Looking Statements”.
Risks Related to Our Business and Industry
Litigation outcomes are risky and difficult to predict and a loss in a litigation matter may result in the total loss of our capital associated with that matter.
It is difficult to predict the outcome of litigation, particularly complex commercial litigation of the type in which we specialize. We typically advance capital to our counterparties on a non-recourse basis, and are therefore entirely dependent on a positive, cash-generative outcome in the underlying litigation matter in order to recover our principal and earn a return. If our counterparty is unsuccessful in the underlying litigation matter, if the damages awarded in favor of our counterparty are less than we expect or if it is not possible to successfully enforce a favorable judgment, we could suffer a variety of adverse consequences, including the total loss of our deployed capital and, in some jurisdictions, liability for the adverse costs of the successful party to the litigation. In addition, to the extent we have provided insurance coverage in respect of adverse cost risk in the matter, a loss resulting from an adverse outcome would be compounded with additional adverse cost loss. Unfavorable outcomes in litigation matters we have financed could, individually or in the aggregate, have a material adverse effect on our business, results of operations or financial condition.
Our revenue, earnings and cash flows can vary materially between periods as both the timing of resolution and the outcome of litigation matters are difficult to predict.
Our revenue, earnings and cash flows can vary materially from period to period due to the nature of our business, including the fact that litigation matters often take many years to resolve and the processes involved are subject to change and uncertainty. We are unable to control the progress and resolution of most of our assets because their timing depends upon parties working through the legal systems in various jurisdictions and therefore the timelines for our receipt of any potential return on our assets and the related cash inflow can be long and are difficult to predict. Events or conditions that have not been anticipated may occur and may have a significant effect on the outcome or process of a litigation matter, which may reduce the actual rate of return on an asset. Moreover, the substantive or procedural law relevant to the litigation matters brought by our counterparties may change after we have committed capital. The time, complexity and expense involved in collecting returns on our assets, including the enforcement of judgments and the release of funds held in escrow pending the resolution of a litigation matter, also affect our cash flows. All of these factors contribute to potentially significant volatility in our financial performance and the trading price of our ordinary shares. In addition, we cannot assure you that we will generate cash flows from the returns on our assets in an amount sufficient to enable us to meet all of our obligations or to fund our working capital, asset and other business needs.
Under applicable IFRS accounting standards, we are required to report our capital provision assets at fair value, which can result in volatility in our reported results and a mismatch between operating profit and cash flows and increases in the fair value of such assets may never be realized.
Our capital provision assets are classified as financial instruments in accordance with IAS 32 (Financial Instruments — classification) and accounted for at fair value through the income statement in accordance with IFRS 9 (Financial Instruments). See “Item 5. Operating and Financial Review and Prospects — D. Trend Information — Fair Value Data” and Note 2 (Basis of preparation and principal accounting policies) and Note 6 (Capital provision assets) to our audited financial statements included elsewhere in this registration statement.
Due to the illiquid nature of our capital provision assets, there is inherent valuation uncertainty in the assessment of fair value. Our valuation methodologies involve subjective assessments and require us to make
significant and complex judgments about legal matters that are inherently difficult to predict. We review the fair value of each capital provision asset semi-annually.
There is a risk that we will make erroneous judgments in our assessment of fair value which could lead to valuations of capital provision assets differing significantly from their ultimate outcomes. This could materially misstate the value of the capital provision assets in our consolidated statements of financial position and relevant fair value movements recognized in our consolidated statements of comprehensive income.
As further described under “Item 5. Operating and Financial Review and Prospects — D. Trend Information — Fair Value Data”, certain of our individual assets represent a significant portion of the fair value of our capital provision assets. We have one set of exposures on YPF-related assets that, by virtue of fair value adjustments to our carrying value of those assets, account for 42% of our capital provision assets as of December 31, 2019. The carrying value of Burford’s YPF-related assets on its balance sheet (both Petersen and Eton Park combined) was $773 million as of December 31, 2019 including $734 million of unrealized gain, and in 2019, the capital provision income from the YPF-related assets was $188 million, consisting of realized gains relative to cost of $98 million, previous unrealized gains transferred to realized gains of $(78) million and fair value adjustment in the period of $168 million. Since the beginning of 2015, YPF-related assets accounted for $878 million in fair value adjustment, less $144 million in previous unrealized gains transferred to realizations, resulting in $734 million in fair value movement net of transfers.
The application of fair value accounting likely will continue to result in volatility in our reported results and a mismatch between operating profit and cash flows and increases in the fair value of such assets may never be realized. In addition, any errors in valuation could have a material adverse effect on our business, financial condition and operating results.
Our past performance may not be indicative of our future results.
Our past returns should not be considered indicative of our future results. Our past returns have benefited from funding opportunities and general market conditions that may not continue or reoccur and there can be no assurance that we or our funds will be able to avail ourselves of comparable opportunities and conditions. As the market in which we operate matures, we are subject to increased competition for talent and financing opportunities and potentially new regulation. There can be no assurance that any of the current or future single matters or matters contained in our portfolios will eventually be successful. Failure to achieve results consistent with our historical performance could have a material adverse effect on our business, results of operations or financial condition.
Our success depends on our ability to identify and select suitable legal finance assets to fund, and our failure to do so could have a material adverse effect on our ability to achieve our investment objectives.
Our success depends on our ability to source and select legal finance assets that will be successful and will pay returns, which in turn is dependent upon the conclusion, management and realization of suitable funding opportunities. Our Commitments Committee is primarily responsible for identifying and selecting opportunities for us to fund. There is no guarantee that we will be successful in sourcing suitable matters in a timely manner or at all, or in sourcing a sufficient number of suitable legal assets to finance that meet our diversification, underwriting and other requirements. Our ability to select such commitments is dependent on the availability of desirable funding opportunities, which is subject to market conditions, client demand, pricing, competition and other factors outside of our control, including changes in regulations in different jurisdictions and limitations on our ability to adequately investigate the merits of the case or parties involved, among others. A failure by us to identify and select successful legal finance assets to fund could have a material adverse effect on our business, results of operation or financial condition and our ability to achieve our investment objectives.
The failure of the statistical models and decision science tools we use to predict the return on our legal finance assets could have a material adverse effect on our business, results of operations or financial condition.
We use internally developed models and other decision science tools in our operations, including to assist in evaluating the expected return of potential legal finance assets. At the time we enter into a contract to
finance a legal asset, however, we are likely to have imperfect information about the litigation matter in question and the likely future outcome. In addition, our historical information about cases or portfolios of cases may not be indicative of the characteristics of subsequent cases or portfolios of cases within the same industry or with comparable other characteristics, and our internal databases and external statistical data may not be as extensive as needed for comprehensive decision science. If the statistical models and decision science tools we use fail to accurately evaluate and predict returns, there could be a material adverse effect on our business, results of operations or financial condition.
The laws relating to legal privilege and attorney work product are complex and continue to evolve and any adverse court rulings, changes in law or other developments could impair our ability to conduct effective due diligence on potential legal finance assets.
To make informed financing decisions we often need access to information beyond that which is publicly available about a litigation matter, and we regularly seek and obtain protected and confidential information known as “attorney work product” in the United States or which is subject to various legal privileges in other jurisdictions. That sensitive information can lose its protection and become accessible to a litigation opponent if it is used publicly (a concept called “waiver”), which could have significant adverse consequences for the litigant. The laws relating to legal privilege and attorney work product are complex and continue to evolve and we could be adversely affected by court rulings, changes in law or other developments. If a court in a particular jurisdiction were to find that disclosure to litigation funders effected a waiver of applicable legal privileges, our access to such information could become constrained in that jurisdiction. Any significant limitations on our ability to access such information could adversely affect our ability to conduct due diligence and make informed financing decisions with respect to certain legal finance assets.
Our business and operations could suffer if we are not able to prevent improper use or disclosure of, or access to, confidential and legally privileged information under our control due to cybersecurity breaches, unauthorized use or theft.
As described above, we obtain protected and confidential information (including attorney work product) as part of our analysis of potential legal finance assets. We also obtain this type of information as part of our ongoing asset monitoring. When we receive this information, we are under a strict obligation to protect it. Among other things, this obligation requires us to tightly restrict access to the information itself.
As described under “— Cybersecurity risks could result in the loss of data, interruptions in our business, damage to our reputation, and subject us to regulatory actions, increased costs and financial losses, each of which could have a material adverse effect on our business and results of operations”, attempts to gain unauthorized access to our information technology systems have become increasingly sophisticated over time and our efforts to detect and investigate all security incidents and to prevent their recurrence may be unsuccessful. In addition to the risk of a breach of confidentiality as a result of a cyber incident, confidential information could be compromised in other ways. Although we have implemented controls to protect the confidentiality of such information, there can be no assurance that such controls will be effective. If our employees, third-party service providers or counterparties engage in misconduct or fail to follow appropriate security measures, the improper release or use of confidential information could result.
The unauthorized use or disclosure of, or access to, our intellectual property or litigation or business strategy or those of our clients due to a cybersecurity breach, unauthorized use or theft could harm our competitive position, reduce the value of our capital provision assets and have a negative impact on our reputation or otherwise adversely affect our business. In addition, if the courts were to find that we have improperly used or disclosed protected and confidential information, there could be significant adverse consequences for the litigant and we could be subject to complaints or lawsuits for damages or regulatory action as a result.
The due diligence process that we undertake in connection with funding legal finance assets may not reveal all facts that may be relevant in connection with such funding.
Before offering to fund legal finance assets on specified economic and other terms, we conduct due diligence based on the facts and circumstances applicable to the matter that may be the subject of such
funding. As part of our due diligence, we may be required to evaluate important and complex business, financial, tax, accounting, technological, environmental, social, governance, ethical, political, legal and regulatory issues. When conducting due diligence and making an assessment regarding funding a legal finance asset, we rely on the information available to us, including information provided by the parties involved in the case we intend to finance. We have no control over the accuracy or sufficiency of information received from such third parties and, in some cases, we have limited experience or no prior dealings with such third parties and are unable to assess their integrity.
The due diligence investigation that we carry out with respect to any funding opportunity may not reveal or highlight all relevant facts (including, without limitation, bribery, fraud or other illegal activities) or risks that would be helpful in evaluating such opportunity. Particularly where we fund a case that is at an early stage, such as before the conclusion of the fact discovery stage in a U.S. litigation, we may have limited ability to ascertain the facts that may have a material impact on the outcome of the litigation. In addition, although we regularly perform factual and legal research beyond what is provided to us by our prospective counterparties, we may underestimate the importance of a legal or factual risk of funding an asset that ends up being conclusive. There are also material factors that contribute to the outcome of funding a legal finance asset that are impossible to research or predict at the outset, such as a judge’s or jury’s positive or negative disposition towards a particular party, witness or lawyer.
Further, we may not identify or foresee future developments that could have a material adverse effect on our return on a legal finance asset, such as the credit risk from our counterparty or from a defendant in a case. For example, we may not uncover the risk associated with poor management of general finances or the litigation itself by a counterparty or defendant, any insolvency risk or potential key-person risk from a counterparty or defendant, or a misalignment of economic incentives between us and a counterparty because of the economics of our funding and developments in the litigation. In addition, financial fraud or other deceptive practices, or failures by personnel at our counterparties to comply with anti-bribery, trade sanctions or other legal and regulatory requirements, could cause significant legal, reputational and business harm to us.
Poor returns on our legal finance assets due to failures in our due diligence process or unforeseen developments could adversely affect our reputation and could materially and adversely affect our business, financial condition and results of operations.
Investors will not have an opportunity to independently evaluate our legal finance assets.
We generally do not disclose details of our existing or prospective legal finance assets (including their valuations for accounting purposes) on an individual basis because of confidentiality, attorney work product and other restrictions. As a result, investors will not have an opportunity to evaluate our legal finance assets and will be dependent upon our judgment and ability in selecting, managing and valuing our assets.
We are subject to credit risk relating to our various legal finance assets which could adversely affect our business.
Prior to the conclusion of a litigation matter, we are subject to the risk that a claimant who is our counterparty, a defendant against whom our counterparty is making a claim, a law firm or another relevant party will encounter financial difficulties or become insolvent, which could delay or prevent the litigation matter from being resolved and may adversely affect our ability to earn a return on the relevant legal finance asset. On becoming contractually entitled to proceeds after the conclusion of a litigation matter, depending on the structure of the particular legal finance asset, we could be a creditor of, or otherwise subject to credit risk from, a claimant, a defendant, a law firm or other relevant parties. Moreover, we may be indirectly subject to credit risk to the extent a defendant does not pay a claimant immediately, notwithstanding successful adjudication of a claim in the claimant’s favor. If the defendant is unable or unwilling to pay or perform or if any of the parties challenges the judgment or award, we may encounter difficulties in recovery. In addition to the credit risk associated with individual parties to a litigation matter, losses as a result of the credit exposures inherent in our business may adversely affect our cash flows, financial condition and results of operations.
Our portfolio may be concentrated in cases likely to have correlated results and we have a number of assets involving a single law firm.
Our capital provision-direct portfolio includes certain related exposures where we have financed multiple different counterparties in relation to the same or very similar claims, such that outcomes on these related exposures are likely to be correlated. We estimate that the deployed cost of the assets underlying our largest such correlated exposure represented approximately 11% of the Burford-only balance sheet’s total deployed cost of capital provision-direct assets as of December 31, 2019. An adverse litigation outcome in respect of any of these individual claims may result in, or increase the likelihood of, losses in the other related claims.
We have a number of assets involving a single law firm. As of December 31, 2019, our aggregate legal finance assets involving a single law firm (one of the 50 largest law firms in the United States based on revenue according to The American Lawyer) represented approximately 13% of our Group-wide commitments (14% Burford-only balance sheet) and provided approximately 7% of our consolidated total income in 2019 (7% Burford-only total income). These assets include both (i) financing arrangements between us and the law firm and (ii) direct financing arrangements with counterparties who elect to hire the law firm. Accordingly, although our direct financial exposure to the law firm is limited to matters in which it is our counterparty, if such firm were to encounter financial difficulties, dissolve or suffer a substantial loss of personnel, there could be a material adverse effect on our business, results of operation and financial condition.
Our exposure to correlated cases or counterparty concentration could result in increased volatility and could materially and adversely affect our business, financial condition and results of operations.
The lack of liquidity of our legal finance assets may adversely affect our business.
Our legal finance assets typically require significant advances of funds with no guarantee of return or repayment. It may be difficult or impossible to find willing buyers for these assets at prices we believe are representative of their underlying value or at all. Volatility in markets generally also could negatively impact the liquidity of our assets. Illiquid assets typically experience greater price volatility as a ready market does not exist and therefore they can be more difficult to value. In addition, the prices prospective buyers are willing to pay for illiquid assets may be more subjective than more liquid assets. The illiquidity of legal finance assets also is exacerbated by the fact that third parties may be limited in their ability to value these assets because they cannot perform full legal due diligence on a case due to the limitations imposed by applicable legal privileges and protections. The illiquidity of our assets may make it difficult for us to sell such assets if the need or desire arises. If we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our assets. As a result, our ability to change the makeup of our portfolio of assets in response to changes in economic and other conditions may be relatively limited, which could adversely affect our business, financial condition and results of operations.
We have commitments that are in excess of funds raised.
We typically have commitments to fund legal finance assets that exceed our total funds available. As of December 31, 2019, our unfunded legal finance commitments for the Burford-only balance sheet amounted to $829 million, $289 million or 35% of which are definitive commitments that we are contractually obliged to fund. We seek to manage our available capital and our capital provision asset portfolio to minimize the risk of a mismatch between the timing of when our commitments will be drawn and available cash, and many of our capital provision agreements set forth timetables for drawings or structure drawings with reference to case events, which provide us with some control over the timing and amounts of capital we provide in respect of our commitments. However, as we do not control the timing of developments with respect to the matters that we fund, it is possible that such a mismatch will occur, in which case we would need either to raise additional capital (which could include the potential sale of an interest in one or more of our existing legal finance assets) or to decline to meet a commitment. There can be no assurance that we will be able to raise capital on reasonable terms or at all, and our inability to do so could cause damage to our business and the potential loss of business and financial relationships. A failure by us to fund our definitive commitments may result in adverse consequences to our business such as a loss of entitlement to any
returns with respect to such commitments, a loss of capital we have invested or a claim by a counterparty for damages. Some of our funds also have commitments in excess of funds available and, accordingly, have some of the foregoing risks.
We face substantial competition for opportunities to finance legal assets, which could delay deployment of our capital, reduce returns and result in losses.
Competition for attractive opportunities to finance legal assets may affect our ability to finance on terms which we consider attractive. We compete to acquire legal finance assets with a wide variety of other entities. Our competitors may have access to greater financial resources, technical capabilities or better relationships than we do, may have businesses that are smaller and more flexible than ours, or may develop or market alternative financial arrangements that are more effective or less susceptible to challenge than ours. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to consider a wider variety of legal assets to finance, establish more relationships and offer better pricing and more flexible structuring than we are able to do. We may also face competition from smaller industry participants or law firms using alternative financing models on a smaller scale as well as market entrants that have a regional, industry or specific claims-based approach. Such entities may offer more competitive terms or more tailored approaches to specific industries or claims. We may lose funding opportunities if we do not match our competitors’ pricing, terms and structure. If we are forced to match our competitors’ pricing, terms and structure to deploy our capital, we may not be able to achieve acceptable returns on our legal finance assets or may bear substantial risk of capital loss.
If the lawyers we rely on to litigate claims and defenses do not exercise due skill and care, or the interests of their clients do not align with ours, there may be a material adverse effect on the value of our legal finance assets.
We are particularly reliant on lawyers to litigate claims and defenses with due skill and care. If they are unable or unwilling to do this for any reason, it is likely to have a material adverse effect on the value of our legal finance assets. While we will typically evaluate the lawyers involved in any legal finance asset we acquire, we do not select such lawyers, we may have limited experience or no prior dealings with such lawyers and there is no guarantee that the outcome of a case will be in line with our or the lawyers’ assessment of the case or that such lawyers will perform with the expected skill and care. As a matter of legal ethics in most jurisdictions, we are also unable to prevent our counterparties from discharging the lawyers who were originally in place in a case and replacing them with lawyers who may be less capable.
In addition, lawyers owe a duty to their clients as well as an overriding duty to the courts. We generally do not own or control a claim which we have financed, and as a result we will not be the client of the law firm representing the claimant in a case that is the subject of our commitment or financing. Accordingly, that law firm may be required to act in accordance with its client’s instructions and interests rather than our own. If the interests of the claimants in the cases we have financed are not aligned with ours, the actions of the lawyers representing such claimants could have a material adverse effect on the value of our legal finance assets, and therefore our business, financial condition and results of operation.
If the commitments we make on behalf of our funds perform poorly, we may not earn asset management performance fees, and our ability to raise capital for future funds may be materially and adversely affected.
Our income from our asset management business is derived from fees earned for our management of our funds and performance fees or carried interest with respect to those funds. If the commitments we make on behalf of our funds perform poorly, we may not earn performance fees. Further, if a fund does not achieve certain investment returns over its life and carried interest that was previously distributed to us exceeds the amounts to which we are ultimately entitled, we may be required to repay that amount under a “clawback” obligation. Moreover, to the extent we have invested balance sheet capital in our funds, we could experience losses on our investments of our own principal as a result of poor performance by our funds or individual assets.
In addition, poor performance by our funds could make it more difficult for us to raise capital for new funds in the future. Investors and potential investors in our funds continually assess our funds’ performance,
and our ability to raise capital for future funds will depend on our funds’ continued satisfactory performance. Poor performance may deter future investments in our funds or result in investors demanding lower fees which would adversely affect our asset management fees.
A significant portion of our fund assets under management are attributable to a fund with a single investor.
As of December 31, 2019, BOF-C, a fund with a single investor, the SWF, represented approximately 23% of our fund assets under management. While the SWF is contractually obliged to fund its commitments to BOF-C, if it fails to do so we will no longer have access to this capital and our cash flows from the fund will decline. In addition, if the SWF elects not to commit capital to future funds after BOF-C’s expiry, our asset management business may be adversely affected.
We face competition for investments in our asset management business and may not be successful in raising funds in the future.
The asset management business is highly competitive, and if investors determine that our product offerings are not attractive, we may have difficulty raising additional funds in the future. In order to attract capital, we may be required to structure funds on terms that are less favorable to us or otherwise different from the terms that we have been able to obtain in the past. For example, prospective investors in future funds may require that we allocate larger portions of our commitments in legal finance assets to such funds than under our current internal allocation policy, which would reduce the percentage of our direct investment in, and potential return from, future legal finance assets. These risks could occur for reasons beyond our control, including general economic or market conditions, regulatory changes or increased competition. Our inability to grow our asset management business could result in a decrease in AUM, asset management fees or performance fees, in which case our business, financial condition or results of operations may be adversely affected. Because we rely on the capital available in our funds to acquire legal finance assets, our inability to maintain or increase this source of capital could reduce our overall ability to grow our business.
Our asset management business is highly regulated, and changes in regulation or regulatory violations could adversely affect our business.
Our asset management business is highly regulated and the applicable regulations are subject to change. Compliance with these regulations requires a significant investment of management and financial resources and any liability imposed on us for violations of existing or future regulations could adversely affect our asset management business. The SEC regulates our investment management activities and is empowered to conduct investigations and administrative proceedings that can potentially result in fines, suspensions of personnel, changes in policies, procedures or disclosure or other sanctions, including censure, the issuance of cease-and-desist orders, the suspension or expulsion of an investment advisor from registration or memberships or the commencement of a civil or criminal lawsuit against us or our personnel. Any SEC actions or initiatives against us could have an adverse effect on our financial results. Even if an investigation or proceeding does not result in a sanction or the sanction imposed against us or our personnel were small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation.
The laws, regulations and rules relating to legal finance are evolving and may be uncertain, which may have negative consequences for the value or enforcement of our contractual agreements with our counterparties, for our ability to do business in certain jurisdictions or for our cost of doing business.
Law and professional regulation in the area of acquiring or otherwise taking a financial position or a commercial interest with respect to legal claims and defenses is evolving and can be complex and uncertain in the United States and elsewhere. Our legal finance assets could be open to challenge or subsequently reduced in value or extinguished as a result of these regulations. In various jurisdictions there are prohibitions or restrictions in connection with funding claims (known in many common law jurisdictions as maintenance, and a form of maintenance, called champerty) or the assignment of, or other economic participation in, legal claims. For example, in New York, Judiciary Law § 489 prohibits the assignment of a legal claim in certain circumstances, and certain other jurisdictions have similar laws. In New York, the relevant case law currently provides that the contracts underlying our legal finance assets are valid. However, such case law may be
overruled or the statutory and other laws in New York or other jurisdictions could be amended to include additional prohibitions or restrictions, which may adversely affect our business. The ability to participate financially in a lawyer’s fees is also limited in certain jurisdictions (including by ethical rules prohibiting a lawyer from sharing fees with non-lawyers). Such prohibitions and restrictions are governed by the laws, rules and regulations of each relevant jurisdiction and vary in degrees of strength and enforcement in different state, federal or non-U.S. jurisdictions. This is a complex issue that involves both substantive law and choice of law principles. However, in many jurisdictions, the relevant issues may not have been considered by the courts nor addressed by statute and thus obtaining legal advice or clarity is difficult. If we, our counterparties or the lawyers handling the underlying matters were to be found to have violated the relevant prohibitions or restrictions in connection with certain matters, there could be a materially adverse effect on the value of the affected legal finance assets, our ability to enforce the relevant contractual agreements with our counterparties and the amounts we would be able to recover with respect to such matters, or our costs for such matters.
In addition, politicians, advocacy groups and media reports have, in the past, advocated action to restrict litigation financing. Various jurisdictions have enacted or are considering enacting laws or regulations requiring the disclosure of litigation funding or other non-prohibitory regulation. Such laws or regulations or other future laws or regulations may deter parties from engaging us, result in a reduction in the overall number of potential legal finance assets or adversely affect the value of legal finance assets already in existence in such jurisdictions.
The laws, rules, regulations and supervisory guidance and policies applicable to our business activities are subject to regular modification and change, including by institutions such as U.S. state and federal legislatures, bar associations, courts and other U.S. and non-U.S. legislative, regulatory, judicial or advisory bodies. For example, the “Litigation Funding Transparency Act of 2019”, which was introduced in the current session of Congress, S.471, would require litigants to “produce for inspection and copying” any legal funding agreements creating contingent rights to payment in class actions and multidistrict litigations. That bill, like its nearly identical predecessors introduced in previous sessions, has not progressed beyond the Senate Judiciary Committee. The Safe to Work Act, which was also introduced in the current session of Congress, S.4317, would require the court in coronavirus-related class actions or multidistrict litigations where counsel have obtained legal finance to direct notice to potential class members, including “a description of the financing arrangement”, although the impact of any such requirement on our business is currently unclear. From time to time, similar legislation is introduced in state legislatures in the United States. For example, a bill is pending in the Ohio Senate, S.B. 322, which would require a claimant to file his or her litigation funding agreement with the court and provide it to the opposing party upon service of his or her complaint. The bill was referred to the Senate Judiciary Committee and no further action has been taken to date. Changes to laws, regulations or regulatory policies, including changes in interpretation or implementation of laws, regulations or policies, could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, delay new funding arrangements, limit the quantity and size of our financing arrangements, limit the types of services we may offer or our funding opportunities, decrease returns on our legal finance or other assets, and allow certain clients to void our contracts with them.
Negative publicity or public perception of the legal finance industry or us could adversely affect our reputation, business and results of operations.
Negative publicity about the legal finance industry in general or us specifically, even if inaccurate, could adversely affect our reputation and the confidence in our business model. For example, there is regular negative political and media activity in the United States with respect to the U.S. consumer litigation finance industry. Although Burford does not participate in that industry, negative publicity about that industry could adversely affect the public perception of the commercial litigation finance industry or lead to overly broad regulation of litigation finance in general.
Failure to protect our reputation and brand in the face of negative publicity and ethical, legal or moral challenges could lead to a loss of trust and confidence. There are various factors that may cause litigants, law firms and other actual and potential customers to be more reluctant to pursue external financing, such as publication in the online, print and broadcast media of stories about us or the litigation finance industry, about real or perceived abusive practices or about regulatory investigations or enforcement actions. Online
articles, blogs and tweets may lead to the increasingly rapid dissemination of a story and increase our exposure to negative publicity. Adverse public perception of the legal finance industry or us may increase media scrutiny of our business and could make it more likely that we receive negative attention if our employees engage in unlawful or questionable behavior, if we engage in internal disputes or disputes with former employees or if any of our counterparties is subject to negative publicity. Negative publicity relating to legal or regulatory violations by any of the third parties we engage, or negative publicity relating to the kind of matters we pursue, could also result in reputational damage to us.
Negative publicity could jeopardize our relationships with existing counterparties or our ability to establish new relationships or diminish our attractiveness as counterparties generally. Any of the foregoing could impact our ability to fund commitments, pursue our legal rights or collect amounts due to us, and may materially and adversely affect our business, results of operations or financial condition.
There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with IFRS. Any changes in these estimates, judgments or assumptions, including any changes as a result of changes in accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects.
The preparation of financial statements in accordance with IFRS requires management and the Board to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. Estimates, judgments and assumptions are inherently subject to change in the future, and any such changes, including any changes as a result of changes in accounting principles and guidance, or their interpretation, could result in corresponding changes to the amounts of assets and liabilities, income and expenses.
We are subject to the risk of being deemed an investment company.
If the Company were deemed an “investment company” under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business. An entity will generally be deemed to be an “investment company” for purposes of the Investment Company Act if: (a) it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (frequently referred to as an “orthodox” investment company) or (b) absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (frequently referred to as an “inadvertent” investment company). Excluded from the term “investment securities”, among other things, are U.S. federal government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.
The Company is and holds itself out as a leading global finance firm focused on law, with businesses that include litigation finance and risk management, investment management, asset recovery and a wide range of legal finance and advisory activities. We believe that, even if the Company’s legal finance assets were to be determined to constitute investment securities for purposes of the Investment Company Act, it should be exempt from registration as an investment company under Section 3(c)(5) of the Investment Company Act. Section 3(c)(5) of the Investment Company Act excludes from the definition of investment company “[a]ny person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses: (A) [p]urchasing or otherwise acquiring notes, drafts, acceptances, open accounts receivable, and other obligations representing part or all of the sales price of merchandise, insurance, and services or (B) making loans to manufacturers, wholesalers, and retailers of, and to prospective purchasers of, specified merchandise, insurance, and services”. The Company and its subsidiaries that conduct its core litigation finance business are not in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and are primarily engaged in the business of litigation finance by way of financing and acquiring notes evidencing financing, for purposes of the Investment Company Act, to parties engaged in litigation or arbitration and their law
firms. The purpose of such financing is to provide the counterparties with the capital necessary to finance the costs associated with litigation.
The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend to conduct our operations so that the Company will not be deemed an investment company under the Investment Company Act, which will require us to conduct our business in a manner that does not subject us to the registration and other requirements of the Investment Company Act. If the Company is deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on our capital structure, ability to transact business with affiliates and ability to compensate key employees, could make it impractical for us to continue our business as currently conducted, impair the agreements and arrangements between and among us and our customers and materially adversely affect our business, financial condition and results of operations.
Legal, political and economic uncertainty surrounding the effects of COVID-19 could adversely impact our business, financial condition and results of operations.
The COVID-19 pandemic has adversely affected the global economy, disrupted global supply chains and created significant volatility in the financial markets. While many courts and arbitral tribunals remain in operation and continue to render decisions, some cases have experienced and will continue to experience delay and disruption. We expect that our cash proceeds from litigation resolutions will be lower in the near term as the courts work through these issues. We also expect to make lower levels of new commitments to new cases in the near term as lawyers’ work has been disrupted and some counterparties are focused on other issues.
In addition, in a period of constrained liquidity, defendants may be less willing to settle litigation matters, extending duration and therefore restricting our ability to recycle capital. There is also an increased risk that defendants may encounter financial difficulties or become insolvent, which could impact the timing and quantum of litigation recoveries. To the extent that defendants in our matters do become insolvent, the impact of a defendant’s insolvency on pending litigation is very difficult to predict and is not only case specific but dependent on the insolvency process in the jurisdiction in issue. Our expected recoveries may be delayed and could be reduced during the restructuring or liquidation process.
The counterparties to whom we provide capital may also encounter financial difficulties or become insolvent in a period of constrained liquidity. We typically provide capital to our counterparties on a non-recourse basis and only receive a return upon the conclusion of a successful claim. If our counterparties encounter financial difficulties or become insolvent before the final resolution of their claims and are otherwise unable or unwilling to continue with their claims, we may decide to advance additional funds to them on terms that are less favorable to us. If we decide not to advance additional funds to such counterparties, it is possible that they will not be able to pursue their claims and we may therefore not earn any returns from such counterparties.
In addition, market conditions may restrict access to capital for us. While we expect to generate organic cash each year for reinvestment, we also rely on the availability of external capital — both corporate debt and fund capital — to maximize our growth prospects. If we do not have access to external capital, our growth could be curtailed, especially if defendants settle at a slower pace than in the past. While it is not possible to ascertain the precise impact COVID-19 may have on us from an economic, financial or regulatory perspective, any of the above factors, individually or in the aggregate, could have material adverse consequences on our business, financial condition and results of operations.
Litigation and legal proceedings against us could adversely impact our business and financial condition.
We are regularly subject to litigation and arbitration incidental to our business, including tactical litigation against us in the context of an ongoing funded matter. The types of claims made against us in lawsuits include claims for compensatory damages, punitive and consequential damages or injunctive relief. When we fund cases against sovereigns, there is the further risk of retaliatory criminal investigation or prosecution.
In the past, purported securities class action litigation has been instituted against companies following periods of volatility in the overall market and in the price of a company’s securities. We have previously been the subject of one purported class action litigation of this nature. Although that litigation was withdrawn, listing our ordinary shares on a U.S. stock exchange means that we may be more likely to be subject to similar litigation in the future, which, even if not successful, may divert our management’s attention and cause us to incur significant expenses in defending these lawsuits. Any insurance or indemnification rights that we may have may be insufficient or unavailable to protect us against such losses.
Any of these developments could materially adversely affect our business and financial condition.
Our success depends substantially on the continued retention of certain key personnel and our ability to hire and retain qualified personnel in the future to support our growth and execute our business strategies.
Our performance is, to a large extent, dependent upon the judgment and ability of our management, including, in particular, our co-founders, Chief Executive Officer Christopher Bogart and Chief Investment Officer Jonathan Molot. We also depend on other key personnel, including the members of our Commitments Committee and Management Committee. Our success will therefore depend largely upon the ability of certain members of our management and other key personnel and our ability to retain them and to compensate them appropriately, especially in light of the high levels of remuneration available from the major law firms from which they have typically come and the potential pressures on such remuneration levels from the public markets. The death, incapacity or loss of the service of any of our management or other key personnel could have a material adverse impact on our business. In addition, our performance may be limited by our ability to employ and retain sufficient skilled personnel. Such a failure to retain or recruit suitable replacements for significant numbers of skilled personnel could damage our business.
The failure of our third-party service providers to fulfill their obligations, or misconduct by our third-party providers, may have a material adverse effect on our business.
We depend on third-party service providers for fund administration and to provide a variety of corporate services to manage our multi-jurisdictional structure. There can be no assurance that our internal controls and procedures will be effective in monitoring and managing such third-party service providers. The failure of our third party-service providers to fulfill their obligations to us, or misconduct by our third-party providers, could disrupt our operations and lead to reputational harm, which may have a material adverse effect on our business.
Our operations are dependent on the proper functioning of information technology systems.
We rely on our information technology (“IT”) systems to conduct our business, including case management and documentation, as well as producing financial and management reports on a timely basis and maintaining accurate records. Our processes and systems may not operate as expected, may not fulfil their intended purpose or may be damaged or interrupted by increases in usage, human error, unauthorized access, natural hazards or disasters or similarly disruptive events. Any failure of the IT systems or third-party infrastructure on which we rely could lead to costs and disruptions that could adversely affect our reputation, business, results of operations, financial condition and prospects.
Computer and data-processing systems are susceptible to malfunctions and interruptions (including those due to equipment damage, power outages, computer viruses and a range of other hardware, software and network problems). A significant malfunction or interruption of one or more of our computer or data-processing systems could adversely affect our ability to keep our operations running efficiently and affect service availability. In addition, it is possible that a malfunction of our data system security measures could enable unauthorized persons to access sensitive data, including information relating to our intellectual property or litigation or business strategy or those of our clients. Any such malfunction or disruptions could cause economic losses. A failure of our IT systems could also cause damage to our reputation which could harm our business. Any of these developments, alone or in combination, could have a material adverse effect on our business, financial condition and results of operations.
Cybersecurity risks could result in the loss of data, interruptions in our business, damage to our reputation, and subject us to regulatory actions, increased costs and financial losses, each of which could have a material adverse effect on our business and results of operations.
Our systems may fail to operate properly or become disabled as a result of tampering or a breach of our network security systems or otherwise. In addition, our systems face ongoing cybersecurity threats and attacks. Attacks on our systems could involve, and in some instances have in the past involved, attempts intended to obtain unauthorized access to our proprietary information, destroy data or disable, degrade or sabotage our systems, or divert or otherwise steal funds, including through the introduction of computer viruses, “phishing” attempts and other forms of social engineering. Cyberattacks and other security threats could originate from a wide variety of external sources, including cyber criminals, nation state hackers, hacktivists and other outside parties. Cyberattacks and other security threats could also originate from the malicious or accidental acts of insiders, such as employees. There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because we hold a significant amount of confidential and sensitive information about our legal finance assets. As a result, we may face a heightened risk of a security breach or disruption with respect to this information. There can be no assurance that measures we take to ensure the integrity of our systems will provide protection, especially because cyberattack techniques used change frequently or are not recognized until successful. If our systems are compromised, do not operate properly or are disabled, or we fail to provide the appropriate regulatory or other notifications in a timely manner, we could suffer financial loss, a disruption of our businesses, liability to our investment funds and fund investors, regulatory intervention or reputational damage. Furthermore, if we fail to comply with the relevant laws and regulations, it could result in regulatory investigations and penalties, which could lead to negative publicity and reputational harm and may cause our fund investors and counterparties to lose confidence in the effectiveness of our security measures.
Our international operations subject us to increased risks.
We operate internationally and, accordingly, our business is subject to risks resulting from differing legal and regulatory requirements, political, social and economic conditions and unforeseeable developments in a variety of jurisdictions. Our non-U.S. operations are subject to the following risks, among others:
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political instability;
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international hostilities, military actions, terrorist or cyber-terrorist activities, climate change, natural disasters, pandemics (including the current COVID-19 pandemic) and infrastructure disruptions;
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differing economic cycles and adverse economic conditions;
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unexpected changes in regulatory and tax environments and government interference in the economy;
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changes to economic sanctions laws and regulations;
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foreign exchange controls and restrictions on repatriation of funds;
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fluctuations in currency exchange rates;
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inability to collect payments or seek recourse under or comply with ambiguous or vague commercial or other laws;
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difficulties in attracting and retaining qualified management and employees; and
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difficulties in penetrating new markets due to entrenched competitors or lack of local acceptance of our services.
Our overall success as a global business depends, in part, on our ability to anticipate and effectively manage these risks, and there can be no assurance that we will be able to do so without incurring unexpected costs. If we are not able to manage the risks related to our non-U.S. operations, our business, financial condition and results of operations may be materially adversely affected.
We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to meet our obligations under our indebtedness, which may not be successful.
We have significant indebtedness. Our ability to make principal or interest payments when due on our indebtedness and to fund our ongoing operations will depend on our future performance and our ability to
generate cash, which is subject to general economic, financial, competitive, legislative, legal, regulatory and other factors, many of which are beyond our control. In addition, our cash flows, to a large extent, depend on the outcome of litigation matters in respect of which we have made a capital commitment. Such outcomes are inherently uncertain and it is difficult to accurately forecast our cash flows for any future period. In addition, the trust deeds governing our debt obligations contain various covenants, including the requirement to maintain a certain leverage ratio. If we are unable to comply with these covenants, payment on our debt obligations may become due early. If we do not have sufficient cash at the required time, we may have difficulty meeting our payment obligations under our existing debt.
At the maturity of the obligations under the existing notes and any other debt which we incur, if we do not have sufficient cash flows from operations and other capital resources to pay our debt obligations, or to fund our other liquidity needs, or we are otherwise restricted from doing so due to corporate, tax or contractual limitations, we may be required to refinance our indebtedness. If we are unable to refinance all or a portion of our indebtedness or obtain such refinancing on terms acceptable to us, we may be forced to reduce or delay our business obligations, activities or capital expenditures, sell assets, raise additional debt or equity financing in amounts that could be substantial, or restructure or refinance all or a portion of our debt, on or before maturity. We cannot guarantee that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all, or that those actions would secure sufficient funds to meet our obligations under our indebtedness.
We may face exposure to foreign currency exchange rate fluctuations and may hold unhedged securities positions.
Three of our four series of outstanding notes are denominated in pounds sterling and some of our legal finance contracts and intercompany loans are denominated in local currencies. Fluctuations in the value of the U.S. dollar and foreign currencies, particularly pounds sterling, may affect our results of operations when translated into U.S. dollars. We do not currently engage in any currency-hedging activities to seek to limit the risk of exchange rate fluctuations. However, in the future, we may use derivative instruments, such as foreign currency forward and option contracts, to seek to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges.
In addition, from time to time, we may take substantial positions in the securities of companies that are subject to a corporate or regulatory event or to litigation. While we may seek to hedge these positions, appropriate hedging may not be available at a cost we consider reasonable or at all. If the value of the underlying securities were to decline, we would experience losses, which may have a materially adverse effect on our business and results of operations.
The tax treatment of our financing agreements is subject to significant uncertainty.
We structure our financings on a case-by-case basis in consultation with our professional advisers and seek to comply with applicable law. However, there is limited authority and significant uncertainty regarding the tax treatment of litigation finance, or the structures through which we provide our financing, in the applicable jurisdictions in which they are made. Accordingly, there can be no guarantee that an applicable taxing authority will accept our position on the tax treatment of a financing, or the structures we employ. If an applicable taxing authority were to successfully maintain a different position, the value of our assets could be adversely affected, we could be subject to additional tax liability or both. In addition, tax laws and regulations are under constant development and often subject to change as a result of government policy. Changes in applicable tax laws could adversely affect the taxation of our assets or us.
Risks Related to Our Ordinary Shares
No prior public market exists for the ordinary shares in the United States and one may not develop in the United States; assuming a public market develops in the United States, our ordinary shares will be traded on more than one market and this may result in price variations.
Currently, there is no public market for our ordinary shares in the United States. An active and liquid public trading market may not develop or be sustained after the listing of our ordinary shares in the United
States. Illiquid or inactive trading markets generally result in higher price volatility and lower efficiency in the execution of sale and purchase orders. We cannot predict the prices at which our ordinary shares will trade.
Our ordinary shares have traded on AIM since 2009, and are being listed on the NYSE. Trading in our ordinary shares on these markets will take place in different currencies (U.S. dollars on the NYSE and pounds sterling on AIM), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and the United Kingdom). The trading prices and liquidity of our ordinary shares on these two markets may differ due to these and other factors, including different custody and settlement arrangements that may affect cross-market trading. Any decrease in the price of our ordinary shares on AIM could cause a decrease in the trading price of our ordinary shares on the NYSE. Investors could seek to sell or buy our ordinary shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in the trading price of our ordinary shares.
The trading price of our ordinary shares may fluctuate significantly.
The market price of our ordinary shares has been highly volatile. During the period from January 1, 2019 to June 15, 2020, the closing price of our ordinary shares on the London Stock Exchange’s AIM (“AIM”) has ranged from a high of £18.32 on March 13, 2019 (approximately $24.23) per ordinary share to a low of £2.81 on March 18, 2020 (approximately $3.31) per ordinary share. The market price of our ordinary shares could continue to be volatile as a result of the risks described in this section, and others beyond our control, including:
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regulatory actions or changes in laws with respect to legal finance or practices commonly used in the legal finance industry;
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actual or anticipated fluctuations in our financial condition and operating results;
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actual or anticipated changes in our growth rate relative to our competitors;
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increased competition;
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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
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failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;
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issuance of research reports by securities analysts or other members of the financial community;
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fluctuations in the valuation of companies perceived by investors to be comparable to us;
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additions or departures of key management;
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sales or issuances of our ordinary shares by us, our insiders or our other shareholders; and
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general economic and market conditions.
These and other market and industry factors may cause the market price and demand for our ordinary shares to fluctuate substantially, regardless of our actual operating performance.
If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary, the price of our ordinary shares could decline.
The trading market for our ordinary shares likely will be affected by the research and reports that equity research analysts publish about us and our business, over which we have no control. For example, in August 2019, we were the subject of a short attack or bear raid based on a negative report making what we believe to be baseless allegations about our corporate governance and accounting policies, and our share price fell significantly and has continued to be volatile. The price of our ordinary shares could decline if one or more equity analysts issues unfavorable commentary or ceases publishing reports about us.
We cannot assure you that we will pay dividends or distributions.
Our Board declared and we paid an interim cash dividend of 4.17 cents per share in December 2019. Given the economic uncertainties surrounding the COVID-19 pandemic, our Board did not propose payment of a final dividend for 2019. We cannot assure you that we will declare dividends or distributions in the future. The declaration and payment of dividends and distributions, if any, will always be subject to the discretion of our Board and the requirements of Guernsey law (including, without limitation, satisfaction of a statutory solvency test). The timing and amount of any dividends or distributions declared will depend on, among other things, our cash flows from operations and available liquidity, our earnings and financial condition and any applicable contractual restrictions.
In addition, Burford Capital Limited is a holding company with no material assets other than the ownership of its subsidiaries and no independent means of generating revenues. Accordingly, our ability to pay dividends will be subject to the ability of our subsidiaries to transfer funds to us.
Future sales or the issuances of our securities may cause the market price of our ordinary shares to decline.
The market price of our ordinary shares could decline as a result of issuances of securities (including our ordinary shares) by us or sales by our existing shareholders of ordinary shares in the market, or the perception that these issuances or sales could occur. Sales of ordinary shares by shareholders may make it more difficult for us to sell equity securities at a time and price that we deem appropriate. As of June 30, 2020, there were a total of 2,263,581 ordinary shares issued under our long-term incentive plan. In addition, as of June 30, 2020, 19,286,693 ordinary shares remain available for future grant under our long-term incentive plan through 2030. Sales or issuances of substantial numbers of ordinary shares, or the perception that such sales or issuances could occur, may adversely affect the market price of our ordinary shares.
We are an “emerging growth company” which may make our ordinary shares less attractive to investors.
We are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act as discussed below and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden-parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. Because of the exemptions from various reporting requirements provided to us as an “emerging growth company”, we may be less attractive to investors if they believe that our financial accounting is not as transparent as that of other companies. That may result in a decrease in the price of our ordinary shares and it may be difficult for us to raise additional capital. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations that are applicable to U.S. domestic issuers, including:
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the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and current reports on Form 8-K;
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the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;
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the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
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the Regulation FD rules governing the selective disclosure of material nonpublic information.
We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a semi-annual basis. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you will not receive the same information that would be made available to you if we were a U.S. domestic issuer.
We will lose foreign private issuer status if a majority of our common shares are held in the United States. Losing foreign private issuer status in the future would require us to comply with the reporting regime that applies to U.S. domestic companies. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer will be significantly greater than the costs incurred as an SEC foreign private issuer. Among other consequences, we would be required to prepare historical financial statements in accordance with U.S. generally accepted accounting policies rather than IFRS. If we are not a foreign private issuer, we would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are generally more detailed and extensive than the forms available to a foreign private issuer. In addition, we would lose the ability to rely upon exemptions from corporate governance requirements that are available to foreign private issuers.
As a foreign private issuer whose shares will be listed on the NYSE, we intend to follow certain home country corporate governance practices instead of certain NYSE requirements.
We are incorporated under the laws of Guernsey and our corporate affairs, including with respect to corporate governance, are principally governed by the Companies (Guernsey) Law, 2008. We are a “foreign private issuer” under the securities laws of the United States and the rules of the New York Stock Exchange (“NYSE”). Under the NYSE rules, a “foreign private issuer” is subject to less stringent corporate governance requirements. Subject to certain exceptions, the rules of the NYSE permit a “foreign private issuer” to follow its home country practice in lieu of the listing requirements of the NYSE, including (i) the requirement of an annual performance evaluation of the compensation committee, (ii) the requirement to adopt and disclose corporate governance guidelines and (iii) the requirement to have an internal audit function.
Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements for domestic issuers.
If we are unable to satisfy the requirements of Sarbanes-Oxley, or our internal control over financial reporting are not effective, the reliability of our financial statements may be impacted.
As a Guernsey-incorporated company traded on AIM, a market operated by the London Stock Exchange, Burford has, since its inception in 2009, produced annual financial statements that have been audited pursuant to International Standards on Auditing (“ISA”) and applying IFRS. As long as Burford remains a foreign private issuer for U.S. securities law purposes, Burford will continue to report under IFRS unless it seeks AIM’s approval to begin reporting under U.S. generally accepted accounting policies. As a U.S. registrant, Burford is now also subject to an audit in accordance with the Public Company Accounting Oversight Board (the “PCAOB”) standards, which impose a different control regime than that of ISA. Moreover, in connection with our proposed listing on the NYSE, we will become subject to the requirements of the Sarbanes-Oxley Act (“Sarbanes-Oxley”). The SEC rules implementing Section 404 of Sarbanes-Oxley require a company subject to the reporting requirements of the Exchange Act to complete a comprehensive evaluation of its internal control over financial reporting. To comply with this statute, we will be required to assess, document and test our internal control procedures and our management will be required to assess and issue a report concerning our internal controls over financial reporting. Under the JOBS Act, emerging growth companies (“EGCs”) are exempt from certain reporting requirements, including the independent auditor attestation requirements of Section 404(b) of Sarbanes-Oxley. Under this exemption, our independent auditor will not be required to attest to and report on management’s assessment of our internal controls over financial reporting during a transition period that will end after five years or at such earlier time as we cease to be an EGC. However, in our second annual report filing after successfully completing our registration (which we anticipate to be the annual report for the year ending December 31,
2021), we will be required to report on the effectiveness of our internal controls over financial reporting. We will need to prepare for compliance with Section 404 of Sarbanes-Oxley by assessing, documenting and testing our system of internal controls to provide the basis for our report.
Under the PCAOB auditing standards applicable to us as an Exchange Act reporting company, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. During the course of our testing, our management may identify material weaknesses or significant deficiencies, which may not be remedied in a timely manner to meet the deadline imposed by Sarbanes-Oxley. Investor confidence in our financial reporting may weaken as a result, and the market price of our securities may suffer.
In preparation for filing this registration statement with the SEC, we and our independent registered public accounting firm undertook procedures to assess our internal control over financial reporting in accordance with the PCAOB auditing standards applicable to SEC registrants. In the course of those procedures, we and our accounting firm identified two areas related to (i) the lack of information technology general controls around user access and change management for information systems that are relevant to the preparation of financial statements and (ii) the inadequate segregation of duties in our internal control environment that represent material weaknesses under the PCAOB standards. As described above, pursuant to Section 404 of Sarbanes-Oxley, we will need to assess and report on the effectiveness of our internal control over financial reporting in connection with our second annual report filing after completing our registration (which we anticipate to be the annual report for the year ending December 31, 2021). Accordingly, we will need to remediate these control items prior to that date in order to determine that our internal control over financial reporting is effective for purposes of Section 404 of Sarbanes-Oxley. Although, as described under See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Internal Control Over Financial Reporting”, these items did not impact our historical financial statements and we have begun efforts to remediate them, our failure to remediate them by the time we need to be compliant with Section 404 of Sarbanes-Oxley could have an adverse impact on us.
We will incur significantly increased costs and be required to devote substantial management time as a result of operating as a public company in the U.S.
As a public company in the U.S., we will incur significant legal, accounting and other expenses that we do not incur as a public company in the United Kingdom. For example, we will be subject to the reporting requirements of the Exchange Act, and will be required to comply with the applicable requirements of Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time consuming and costly. In addition, we expect that management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of Sarbanes-Oxley. We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company in the U.S. or the timing of such costs.
If we are classified as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes, that classification could result in adverse U.S. federal income tax consequences to U.S. investors.
As described further below under “Item 10. Additional Information — E. Tax Considerations — Material U.S. Federal Income Tax Considerations — Passive Foreign Investment Company”, if we are treated as a PFIC in any year during which a U.S. Holder holds our ordinary shares, such U.S. Holder could be subject to significant adverse U.S. federal income tax consequences as a result of the ownership and disposition of our ordinary shares.
Risks Related to Our Incorporation in Guernsey
Your rights and protections as our shareholder will be governed by Guernsey law, which may differ in certain material respects from the rights and protections of shareholders of U.S. corporations.
Our corporate affairs are governed principally by our memorandum of incorporation and articles of incorporation and by the Companies (Guernsey) Law, 2008 (the “Companies Law”). The Companies Law differs in certain material respects from laws applicable to companies incorporated in the U.S. See “Item 10. Additional Information — B. Memorandum and Articles of Incorporation — Differences Between Rights of Our Shareholders and Rights of Shareholders of Delaware Corporations”.
The Royal Court of Guernsey may require a party to litigation to reimburse the prevailing party for its costs associated with the litigation. Our articles of incorporation entitle us to require shareholders to provide security against any such costs awarded to us by the Royal Court.
The Royal Court of Guernsey may require a party to litigation to reimburse the prevailing party for its costs associated with the litigation. Accordingly, if a shareholder were to bring an action against Burford in the Royal Court of Guernsey and Burford prevails in the litigation, the Royal Court of Guernsey may order the shareholder to reimburse Burford for its fees, costs and expenses incurred in connection with the defense of such action.
Article 40 of our articles of incorporation provides that Burford is entitled to security for costs in connection with any proceedings brought against it by a shareholder (which may include proceedings in jurisdictions outside of Guernsey). This provision, for example, applies to any proceeding brought against Burford by a shareholder in its capacity as a shareholder under the Companies Law or our articles of incorporation. Article 40 of our articles of incorporation does not apply to any proceeding brought against a director, officer or affiliate of Burford. This means that if a shareholder brings an action against the Company in the Royal Court of Guernsey, Burford may request that the Royal Court order such shareholder to provide security (which will need to be in a form acceptable to the Royal Court and may be directly or through a third party surety) to satisfy any award of costs the Royal Court of Guernsey may award to Burford. See “Item 10. Additional Information — B. Memorandum and Articles of Incorporation — Exclusive Forum; Fees”.
The Royal Court’s ability to award costs to Burford and the provision in our articles requiring shareholders to provide security for any such award of costs to Burford could discourage shareholders from bringing lawsuits that might otherwise benefit the Company’s shareholders.
The insolvency laws of Guernsey and other jurisdictions may not be as favorable to you as the U.S. bankruptcy laws.
The Company is incorporated under the laws of Guernsey. In the event of a bankruptcy, insolvency or similar event, proceedings could be initiated in Guernsey or another relevant jurisdiction. The bankruptcy, insolvency, administrative and other laws of the Company’s and its subsidiaries’ jurisdictions of organization or incorporation may be materially different from, or in conflict with, each other and those of the United States, including in the areas of rights of creditors, shareholders, priority of governmental and other creditors and duration of the proceeding. The application of these laws, or any conflict among them, could call into question whether any particular jurisdiction’s law should apply, adversely affecting your ability to enforce your rights under the ordinary shares in those jurisdictions or limit any amounts that you may receive.
It may be complex or time consuming to effect service of U.S. court process or enforcement of U.S. judgments against us or certain of our directors and officers.
The Company is incorporated under the laws of Guernsey. Certain of our directors and officers reside outside of the United States. In addition, a substantial portion of our assets is located outside the United States. It may be more complex or time consuming to serve U.S. court process on us or on our officers or directors or to enforce U.S. court judgments against us than if we were a U.S. company with all of our officers and directors located in the United States, including judgments predicated upon civil liabilities under U.S. federal securities laws.
ITEM 4.
INFORMATION ON THE COMPANY
A.
History and Development of the Company
We are composed of our parent company, Burford Capital Limited, and a number of wholly owned subsidiaries in various jurisdictions through which we conduct our operations and make our investments. Burford Capital LLC is the principal operating entity in the U.S. and Burford Capital (UK) Limited is the principal operating entity in the U.K. Those two entities provide various corporate and investment advisory services to other group companies. Burford Capital Limited, the parent company, does not have any operations or employees itself.
We were incorporated in Guernsey on September 11, 2009. Initially, we were established as a registered closed-ended collective investment scheme. In October 2009, our ordinary shares commenced trading on the London Stock Exchange’s AIM under the symbol “BUR”.
In late 2012, we altered our corporate structure by deregistering as a registered closed-ended collective investment scheme and reorganizing to implement a new group structure incorporating certain of our wholly owned subsidiaries. In connection with this reorganization, we acquired our investment adviser, Burford Group Limited, through a cashless merger.
In 2011, we acquired Firstassist Legal Expenses Insurance, a leading provider of litigation expenses insurance in the U.K., which was the basis of our legacy adverse cost insurance business, now in run-off. In 2015, we acquired Focus Intelligence Ltd., a business intelligence firm that specialized in investigative litigation and arbitration, asset tracing and judgment enforcement. In December 2016, we acquired GKC Holdings, LLC, a law-focused asset manager registered as an investment adviser with the SEC. This acquisition added a third-party asset management business to our structure to expand the diversity of capital offerings to investing clients and generate an asset management revenue stream. In 2018, we re-entered the insurance business with BWIL. BWIL provides adverse cost insurance to litigants in cost-shifting jurisdictions where Burford has provided funding.
Burford Capital Limited has a single class of ordinary shares which are traded on AIM. Subsidiaries have issued bonds traded on the Main Market of the London Stock Exchange.
The chart below contains a summary of our organizational structure as of December 31, 2019. The chart does not depict all of our subsidiaries, including intermediate holding companies through which certain of the subsidiaries depicted are held.
Information about our “significant subsidiaries” as defined in Rule 1-02(w) of Regulation S-X under the Securities Act is set forth below:
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Name of Subsidiary
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Jurisdiction of Incorporation
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Proportion of
Ownership Interest
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Burford Capital LLC
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United States
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100%
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Ireton LLC
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United States
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100%
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Prospect Investments LLC
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United States
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100%
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Winfields LLC
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United States
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100%
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Burford Capital Holdings (UK) Limited
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United Kingdom
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100%
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Burford Capital PLC
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United Kingdom
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100%
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We maintain our principal executive offices and our registered address at Regency Court, Glategny Esplanade, St. Peter Port GY1 1WW, Guernsey. Our telephone number at that address is +44 1481 723 450.
Upon effectiveness of this registration statement, we will be subject to the informational requirements of the Exchange Act. In accordance with these requirements, we file reports and other information as a foreign private issuer with the SEC. You may inspect reports and other information regarding registrants, such as us, that file electronically with the SEC without charge at a website maintained by the SEC at http://www.sec.gov. These documents and other important information on our governance are posted on our website and may be viewed at http://www.burfordcapital.com. The information on, or that can be accessed through, our website is not incorporated by reference into this registration statement.
B.
Business Overview
Our Products and Services
The following is a discussion of our products and services, which comprise: (i) legal finance, (ii) complex strategies, (iii) post-settlement finance and (iv) asset management. For a description of our operating segment presentation, see “Item 5. Operating and Financial Review and Prospects”.
Legal Finance
Core Litigation Finance
Our litigation finance business provides capital and expertise to many of the world’s largest law firms and their clients. We finance commercial high-value single litigation matters or portfolios of matters at any stage of the litigation process, from before inception to after a final judgment has been entered. In some instances, we provide financing to a law firm that has agreed to take on a case on a contingent fee or alternative fee basis. In other situations, we provide financing to monetize the value of a claim by offering a client an upfront cash payment for a claim with significant potential value. We in turn receive our funded cost and return from the ultimate settlement or judgment on the claim.
We also provide financing to law firms and corporate clients for portfolios of cases. In these instances, we provide financing for a group of cases with the same counterparty on terms that tend to recognize the lower risk of loss generally associated with multi-case portfolios. We underwrite each case in these portfolios. Typically, the cases in a portfolio are cross-collateralized, such that we can recover losses in one case from successes in another. This structure reduces our risk and allows us to offer more attractive terms while still achieving a similar risk-adjusted return as with single cases. Portfolios allow us to originate larger volumes of assets with greater efficiency.
For corporate clients, legal finance allows them to hire law firms that will only agree to work on an hourly fee basis. Further, our financing allows corporate clients to avoid incurring legal fees as an operating expense, thereby improving their net income metrics. Monetizations allow corporate clients to obtain value and cash for an asset that otherwise would not appear in their financial statements. We work with all sizes of businesses, including Fortune 100 and FTSE 100 companies, to monetize their litigation positions to unlock the value of pending litigation and unenforced judgments and to enhance corporate balance sheets.
For law firm clients, our financing allows them to obtain cash to operate their businesses and pay their lawyers even when they have taken a case on a contingent fee basis. It also allows law firms that prefer to operate on an hourly basis to compete for contingency fee work.
Origination and Underwriting
We engage in extensive marketing and operate a dedicated origination team. Although a primary focus for the origination team continues to be law firms and lawyers (the traditional source of most of our opportunities), we have also been increasingly directly targeting potential corporate clients, resulting in the procurement of several large financing opportunities.
In 2019, we had 1,414 inquiries generated from marketing and our origination team (2018: 1,470).
Before we make a commitment, we conduct extensive in-house due diligence. All financing agreements must be approved by one of our dedicated Commitments Committees which consider legal merits, risks, reasonably recoverable damages, proposed budget, proposed terms, credit issues and enforceability.
The manner in which we provide funding on a commitment varies widely. Some financing agreements require us to provide funding over a period of time, whereas other agreements require us to fund the total commitment up front. In addition, our undrawn commitments are either discretionary or definitive. Discretionary commitments are those commitments where we retain a considerable degree of discretion over whether to advance capital and generally would not suffer an adverse financial consequence from failing to do so. Definitive commitments are those commitments where we are contractually obligated to fund incremental capital and failure to do so without good reason (such as a negative change in a case’s prospects) would typically result in adverse contractual consequences.
The terms of our financing agreements also vary. In some cases, we have broad discretion as to each incremental funding, and in others, we have little discretion and would suffer adverse consequences were we to fail to provide incremental funding.
In 2019, our in-house diligence team reviewed 570 potential legal finance assets (2018: 456).
Pricing and Returns
We use a wide range of economic structures for our legal finance assets. The structure of each legal finance asset varies and our returns can have several components, including:
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return of our funded capital;
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time-based return such as an interest rate or multiple; or
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percentage of the ultimate proceeds received.
In a basic single case funding transaction, we pay some or all of the costs of a claimant bringing a litigation matter. In such transactions, we typically use a structure that provides for our capital back plus a time-based return followed by an entitlement to some portion of the net recovery. For example, we might structure our return so that upon conclusion of a successful claim, we would receive our funded cost back plus two times our cost plus 20% of net proceeds from the claim. Alternatively, we might structure our return so that upon conclusion of a successful claim, we receive our funded cost back plus 40% of net proceeds from the claim plus an interest rate on our entitlement that begins to accrue at some point after closing. As another alternative, we might have an entitlement that is based solely on the funded amount and not any percentage of the proceeds, but increases over time. For example, the structure may be such that if the claim is successfully resolved within one year after closing, our entitlement is our funded cost back plus our cost, if it is resolved more than one and less than two years after closing our entitlement is our funded cost back plus two times our cost, and if it is resolved more than two years after closing our entitlement is our funded cost back plus three times our cost. Terms are bespoke, the foregoing examples are hypothetical and not every investment will have all of these components, and some will have other structures. Moreover, the larger or more complex a matter, the more likely it is that we will use an individually designed transactional structure to fit the needs of the matter, to accommodate what are often multiple parties with economic interests and to align interests and incentivizerational economic behavior.
We also engage in transactions in which the risk of loss can be reduced, typically by using a portfolio or multi-case structure, but occasionally through a variety of other structures such as interest-bearing recourse debt (sometimes with a premium based on net recoveries) or the purchase of equity or debt assets that underlie the relevant litigation or arbitration claims.
We have built proprietary analytical tools that enhance our ability to analyze and price any legal finance matter. Using the significant data set we have developed over 10 years of operation as well as the views of our experienced underwriters, we employ a bespoke asset return model to calculate the likelihood of loss and probability-weighted risk-adjusted returns for each asset that goes to the Commitments Committees.
We price our capital commensurate with the risks we identify and quantify. Broadly, as we underwrite new legal finance assets, we are targeting risk-adjusted returns consistent with the historic performance of our concluded portfolio.
In 2019, we closed 99 new legal finance arrangements (2018: 87).
Asset Monitoring; Realizations
We have a robust internal portfolio management process to optimize legal finance assets. Each of our matters has a Burford professional assigned to monitor the underlying case. We generally schedule regular calls with clients to discuss case developments. Case updates are reported monthly to senior management. We also conduct a quarterly risk review and provide an in-depth quarterly report on our entire portfolio to senior management and our Board. We conduct an extensive semi-annual review of every legal finance asset for valuation purposes. In addition to receiving reports from counsel, we proactively keep ourselves informed of case developments, including receiving docket alerts and reviewing court documents filed.
Our matters resolve in various ways consistent with the outcomes in the litigation process generally. Many of our matters reach a negotiated resolution — a settlement — between the litigants, either before or after going to trial. Others do not resolve amicably and go all the way through the formal dispute resolution process, including trial and appeal(s). The duration of those outcomes varies widely and depends on the complexity of the matter and the schedule of the relevant tribunal. In a small number of instances, we have made a secondary sale of all or a portion of a legal finance asset prior to the conclusion of the underlying matter. For example, we have sold 38.75% of our interest in the proceeds of the Petersen claim for $236 million in cash in a series of third-party transactions over the past three years. See “Item 5. Operating and Financial Review and Prospects — D. Trend Information — Fair Value Data.”
In many instances, our clients receive full cash payment for the entitlement from matters at the time of their conclusion. However, there are some instances where payments are delayed by agreement (for example, when a settlement is paid in installments over time) or where the parties agree on an entitlement that includes non-cash value that must be monetized over time. Because our client is giving up some valuable leverage through the pendency of the litigation process by agreeing to a resolution, clients tend not to do so unless payment is quite certain, and it is very rare in our experience for there to be a default in connection with such payments. There are, of course, some instances where defendants lose and refuse to pay, in which case enforcement efforts may be needed.
Once there is no longer any litigation risk on a matter, such as when there has been an agreed (but unpaid) settlement, the matter becomes a due from settlement of capital provision asset. At that point, we record the estimated value to be received (discounted appropriately) as income, and thereafter recognize separately any further increments in value caused by the passage of time, such as from interest running on the entitlement. Due from settlement receivables for legal finance assets typically are resolved into cash during a financial reporting period, though some can take varying lengths of time before generating cash. In a small number of cases (less than 5% of realizations by value to date), we have received an asset other than cash (such as stock, a mortgage or a note) for our entitlement upon conclusion of a case. In these cases, we estimate the value of the asset for purposes of recording realization income, and then record gains or losses on the asset over time on our income statement until it is resolved into cash. At December 31, 2019, we had less than $30,000 of this kind of asset on our books.
Privilege and Confidentiality
In order to make our underwriting decisions and conduct our ongoing asset monitoring, we receive from our clients confidential and legally privileged information (what in the U.S. is called “attorney work product”). That sensitive information can lose its protection and become accessible to a litigation opponent if it is disclosed (a concept called “waiver”), which could have catastrophic consequences for the litigant. We are entitled to receive such information but are under a strict obligation to protect it to minimize the risk of waiver. Among other things, this obligation requires us to tightly restrict access to the information itself and conclusions drawn from it. As an example, the release of individual valuations of ongoing legal finance assets may create a risk of waiver over sensitive information since a court order or other event that might give rise to an asset valuation can only be put in context with the use of privileged information. We thus do not release asset valuations of ongoing matters, including partially concluded cases, and are similarly unable to provide other asset-specific information about our portfolio unless that information becomes publicly available through other means.
Legal Risk Management
In many legal jurisdictions (although generally not in the United States), the loser in a litigation must pay the winner’s legal expenses, creating adverse cost risk. As a result, there is a market for insurance against that adverse cost risk.
In 2011, we acquired a leading provider of adverse cost insurance in the U.K. Following certain unfavorable changes in regulations that we anticipated at the time of the acquisition, we stopped issuing new insurance policies through this legacy business at the end of 2016, and it has been in run-off since then. This business wrote about 57,000 insurance policies while open to new business. Of those matters, 79% resolved favorably, 21% suffered losses and fewer than 200 cases remain unresolved. Our operating profits from this business have exceeded $80 million. We have only 11 cases from this legacy business remaining in the 250,000 pounds sterling (approximately $313,975 as of June 15, 2020) and above category of potential liability.
Adverse legal cost risk remains a key issue, however, especially in the kind of larger complex litigation that is the focus of our core business. For example, it is difficult to find a path forward on English litigation claims once the adverse cost exposure approaches 20 million pounds sterling (approximately $25,118,000 as of June 15, 2020), as there is limited capacity in the insurance market for such claims. Moreover, adverse cost protection is often a prerequisite in large cases as individual claimants are typically unwilling to take on the kind of joint-and-several adverse cost exposure that can exist in such cases and large institutional claimants are often unwilling to have exposure to the risk of loss.
Given our historical experience as an insurance provider and our expertise in litigation risk assessment, we re-entered the adverse cost insurance business in 2018 with BWIL, our wholly owned Guernsey insurer. BWIL offers adverse cost insurance globally in litigation and arbitration cases. BWIL currently takes on 20% of the insurance risk and enter into contracts with reinsurers to take the remaining risk.
Currently, BWIL only writes coverage for matters which we are financing as part of our core litigation finance business. We view this business as enabling our more profitable litigation finance business, not as a material standalone business in its own right.
Asset Recovery
Once a matter has been litigated through to a final judgment, and all appeals have been exhausted, that judgment is enforceable as a debt obligation of the judgment debtor. While many litigants do pay their judgments when they ultimately lose a matter, some do not, and further effort is needed to collect the judgment debt.
Our asset recovery team provides expert assistance to lawyers and clients on global asset location and enforcement, including providing legal expertise, critical research and investigative strategies as part of a recovery effort. We use global legal tactics and strategies to obtain information and ultimately to seize assets to satisfy judgments.
Asset recovery offers two additional benefits beyond its financial contribution. First, it is an additional service to offer to our clients. Second, our asset recovery team can provide valuable insight into judgment collectability as part of our legal finance underwriting process, as well as critical assistance in enforcing judgments in our own legal finance portfolio should the need arise, although it has done so only rarely.
Historically, we provided asset recovery services on a fee-for-services basis. However, over the past several years, we have been adding a capital provision model such that the bulk of our business is now done on risk in exchange for a share of whatever recovery is generated.
This capital provision approach gives rise to a legal finance asset for our balance sheet. We underwrite, structure and price these asset recovery assets in a similar manner to our other legal finance assets. As a consequence, we anticipate that these assets will have risk-adjusted returns similar to the rest of our portfolio and should ultimately be more profitable than the fee-for-services approach.
Recently, two international banks have contracted with our asset recovery business to outsource on a capital provision basis their asset recovery work arising out of non-performing loans and other similar assets. These arrangements are attractive to us because we can structure desirable economics based on recoveries across the bank’s portfolio as opposed to a single case basis.
In 2016, in order to enhance our ability to serve asset recovery clients, we launched Burford Law, a three-person internal law firm we operate that works closely alongside our asset recovery team to provide a flexible, seamless and cost-effective service to judgment, award, insolvency and other creditors. Burford Law is a trade name and not a separate legal entity; the license to operate Burford Law, issued by the Solicitors Regulation Authority of England and Wales (the “SRA”), is held by BCH(UK)L.
Complex Strategies
In our complex strategies business, we act as a principal and acquire assets that we believe are mispriced and where value can be realized through recourse to litigation and regulatory processes, as opposed to our core litigation finance business, where we provide financing for clients but do not acquire an ownership interest in the client’s underlying litigation claims or the assets underlying disputes. We typically acquire complex strategies assets, for example equity interests in companies, in either public or private transactions. We can operate across the spectrum of legal assets with a wide variety of duration, risk and return characteristics in pursuit of desirable risk-adjusted returns. In most cases, there is underlying asset value to support the position, in addition to potential value from legal or regulatory proceedings.
Unlike in our legal finance business, where we are financing a client who retains decision-making authority in the litigation, in complex strategies matters, we are the owner of the asset associated with the claim and assert a claim ourselves based on those assets. We control the claim and can manage it actively. Moreover, if the claim fails and does not produce proceeds, we will still own the underlying assets. Otherwise, much of the two approaches is identical, including reliance on our legal and financial diligence process and our post-financing management process. With both types of assets, we view the outcome of litigation and regulatory processes as the key driver of returns. Complex strategies assets generally permit us to deploy more capital per situation and to have a more predictable level of total capital deployed than would be the case with our core litigation finance assets.
There are also significant risk management benefits with complex strategies investments because, if we lose the litigation, we still own the underlying asset, allowing us to recoup all or a portion of our funded cost by means of selling or otherwise realizing the value of the asset itself, as opposed to the core litigation finance business where a loss of the case will generally cause us to lose our entire funded cost. Most complex strategies assets are much lower risk than the corresponding client-financing asset but still deliver attractive returns.
In recognition of the impact of the underlying asset value on complex strategies assets, we have a separate complex strategies Commitments Committee, which includes members with significant financial market expertise and members with legal backgrounds.
We began our complex strategies activities in 2017 and these are undertaken largely through a consolidated fund, the Strategic Value Fund, in which we have made a substantial general partner investment alongside the capital provided by the fund’s limited partners (see “— Asset Management”).
An example of our complex strategies assets is in merger appraisal situations. In these, we typically take largely offsetting long and short equity securities positions in conjunction with merger transactions where we pursue judicial appraisal of the fair value of the acquired company’s share price to determine whether an adequate control premium was offered. To illustrate better how this strategy works, consider that many U.S. companies are incorporated in Delaware, which has a statutory provision that permits shareholders of Delaware companies to challenge in court the price at which a company proposes to enter into a merger transaction. By holding shares in the targeted company prior to the transaction closing, we become entitled to pursue that Delaware litigation directly. In such an example, we typically isolate the litigation risk by hedging the underlying equity position. In many jurisdictions, including Delaware, acquirors are required to pay a statutory interest rate on funds owed to a shareholder pursuing an appraisal claim while that claim is pending. As a consequence, acquirors very often prepay the value of the acquisition price even while our appraisal claim is ongoing to reduce the amount of interest owed while the appraisal claim is pending.
Post-Settlement Finance
In addition to our legal finance business, we also offer clients the ability to monetize post-settlement and other legal receivables. There can be significant delays between the point at which parties to a litigation matter agree upon a settlement and the finalization of and payment under the settlement. Often, those delays are due to the operation of the judicial process, which may require notice periods and fairness hearings before approval of settlements. In the interim period, both law firms awaiting payment of their fees and clients eager for cash to flow may well find it attractive to secure funding against those expected receipts.
In addition, law firms are often looking for funding at various points, particularly over their fiscal year end when cash is needed to pay partners and employees. In those situations, we offer the ability to monetize or purchase a law firm’s receivables, which typically are high quality.
In both types of situations, as well as others where a lower-risk but legal-related financing opportunity arises, we are able to provide capital at pricing levels considerably lower than traditional litigation finance. We provide this type of finance through one of our managed funds, BAIF (see “— Asset Management”). Though we manage this fund and receive management and performance fees from it, we are not an investor in it and it is not consolidated into our consolidated financial statements.
Asset Management
We operate eight private funds as an investment adviser registered with and regulated by the SEC, in addition to certain “sidecar” funds pertaining to specific assets. A sidecar is a pooled investment vehicle through which certain investors co-invest directly in specific assets alongside our private funds. As of December 31, 2019, we had two active sidecars. Our interest in such sidecar funds is generally limited to incentive fees; no incentive fees were recognized in 2019. The discussion of our funds ignores sidecars unless specifically included and we collapse fund structures into overall strategies, ignoring, for example, onshore and offshore separations and parallel funds. As of December 31, 2019, our total assets under management were $2.9 billion. We believe that we are the largest investment manager focused on the legal finance sector by a considerable margin.
We view our funds business as an important addition to our balance sheet business. Having access to private fund capital has improved our ability to pursue financing opportunities and has also permitted us to engage in larger transactions without seeking external partners.
Under our current internal policy, we allocate certain portions of every new commitment to our own balance sheet and our various funds as follows.
•
Core Litigation Finance: We allocate 25% of each new matter to BOF, our flagship litigation finance fund; 50% to our SWF arrangement, and 25% to our balance sheet. The structure of our SWF arrangement is such that the SWF contributes two-thirds of the capital and we contribute one-third, with the result that the balance sheet is effectively providing 42% of all new advances. BOF-C is the fund through which the SWF contributes its portion of the capital. Therefore, in presenting BOF-C data throughout this registration statement, we are presenting data on just the SWF’s portion of
the arrangement; our portion is included in our balance sheet data. In that context, BOF-C is allocated 33% of each new eligible asset. Also note that BOF-C does not, by pre-agreement, participate in certain specified types of litigation finance assets, in which case BOF-C’s allocation is attributed between BOF and our balance sheet. Once BOF is fully committed, which is expected to occur during 2020, the SWF has agreed that BOF-C’s share of eligible commitments will increase from 33% today (two-thirds of 50%) to 50% while BOF or its successor fund are unavailable to make further commitments. In that circumstance, the balance sheet’s share of eligible commitments will increase from 42% to 50%.
•
Asset Recovery and Legal Risk Management: We allocate 100% of our asset recovery and legal risk management matters to our balance sheet.
•
Post-Settlement: We allocate 100% of our post-settlement assets to BAIF.
•
Complex Strategies: We allocate 100% of certain specified assets to the Strategic Value Fund; other complex strategies assets that do not meet the mandate of the Strategic Value Fund are allocated to our balance sheet.
We generally conduct the sponsorship and management of our funds through limited partnerships. Each fund that is a limited partnership has a Burford-owned general partner that is responsible for the management and operation of the fund’s affairs and makes all policy and asset selection decisions relating to the conduct of the fund’s business. Except as required by law, the limited partners of such funds take no part in the conduct or control of the business of such funds, have no right or authority to act for or bind such funds and have no influence over the voting or disposition of the securities or other assets held by such funds. Each fund engages an investment adviser. Burford Capital Investment Management LLC serves as the investment adviser for all our funds and is registered under the Investment Advisers Act of 1940, as amended.
We fund a revolving credit facility from our balance sheet to two of our funds (Strategic Value Fund and BOF). Each of the funds can draw on this facility at our discretion in order to fund assets in which it is investing while the fund completes a call of capital from its limited partners, at which point the fund repays the borrowed amount. The purpose of this facility is to allow the funds to consolidate their limited partner capital calls into larger, less frequent calls, which limited partners generally prefer. While balances under that revolving credit facility sometimes rise at period end given our high level of activity at such times, draws under the revolving credit facility tend to be modest in size and short in duration, and we retain complete discretion over whether to allow use of the facility at any time.
Our Group-wide Portfolio
Set forth below is a brief summary of our Group-wide portfolio. See “Item 5. Operating and Financial Review and Prospects — D. Trend Information” for additional details on our portfolio.
We provide our financing and other services through three principal operating segments: (i) capital provision, which includes our capital provision direct portfolio and capital provision indirect portfolio, (ii) asset management and (iii) services and other corporate. For a description of our operating segment presentation, see “Item 5. Operating and Financial Review and Prospects”.
The top two geographic locations for our Group-wide capital-provision direct commitments are North America (42%) and Europe (30%). The Group-wide capital provision-direct portfolio encompasses 13 case types across 20 industries. The top three case types, excluding mixed cases, are antitrust (15%), intellectual property (12%) and arbitration (10%). The top three industries, excluding mixed industries, are insurance (7%), diversified financials (7%) and utilities (6%).
Across the Group, new funding commitments increased 19% in 2019 to $1.573 billion (2018: $1.326 billion), reflecting robust demand for our financing as well as the trend we have observed in recent years of rising asset sizes, a segment of the market where our scale and financial strength provides competitive advantage. Of our Group-wide commitments, corporate clients account for 52% of such commitments, law firms account for 44% of such commitments and other clients account for the remaining 4% of such commitments.
Our annual Group-wide realizations increased by 22% from $841.0 million for the year ended December 31, 2018 to $1,028.0 million for the year ended December 31, 2019.
Our Clients
We engage with law firms and corporate litigants around the world. We have worked with 93 of the AmLaw 100 and 89 of the 100 largest global law firms by revenue according to rankings by The American Lawyer, along with numerous litigation boutiques. As legal finance has become more widely known and as we have developed more direct relationships with corporate litigants, we are sourcing an increasing share of our corporate business directly, including from Fortune 100 and FTSE 100 clients.
Geographic Activity
We have offices in New York, Chicago, Washington, London, Singapore and Sydney. We have a diverse group of lawyers qualified in the U.S., England, Australia, Germany, Switzerland, Hong Kong and Israel. See “Item 5. Operating and Financial Review and Prospects — D. Trend Information — Details on the Portfolio” for a breakdown of our portfolio by geographic location.
Compliance and Risk Management
Framework
The Board oversees our risk management and internal control systems. In conjunction with the strategy set by the Group, the Board forms the risk appetite, determines the type and tolerance levels of significant risks it is prepared to take and ensures that judgments and decisions are taken that promote the success of the business. The Board also monitors actual or potential conflicts of interest while avoiding unnecessary risks and maintaining adequate capital and liquidity. Our risk management culture is critical to the effectiveness of our risk management framework.
Our risk appetite policy is founded on a set of robust and comprehensive financing and asset management procedures as well as a conservative approach to capital and liquidity management. The key risks are identified through our consideration of our strategy, external risk factors, the operating environment for our businesses and an analysis of individual processes and procedures. At each Board meeting, these principal risks are reviewed and updated.
The Board’s review of key risks focuses on identifying those risks that could threaten the business model or the future performance, capital or liquidity of the business. Risks are screened for the potential impact of external developments, regulatory expectations and, as the legal finance industry leader, market standards.
Assets
As applied to our portfolio of legal finance assets, we manage risk by employing a disciplined, comprehensive, multi-stage process to evaluate potential assets, in which we benefit from the judgment and experience of our highly qualified team of experienced lawyers and finance professionals. We also use an internal, proprietary risk tool to assess risk during the asset assessment process and regularly thereafter once financing has been made and engage in substantial portfolio management activities applying a risk-based approach.
Enterprise
We regularly consider business and systemic risk in our operating units and overall. We have long been focused on operational risk and have a system of internal controls designed to protect and enhance the integrity of our internal processes and data. Among other steps, we have a dedicated functional team focused on the implementation of our operational controls and data management.
Moreover, we are fundamentally a business run by experienced lawyers, including some who have functioned in senior legal roles in major global corporations. The challenge in many businesses is reining in individuals who take on unacceptable or ill-considered risk, and it is the function of the lawyers to hold those
reins. At Burford, we have a business run by people accustomed to that role. Our culture is a disciplined, risk-focused one, augmented by an eight-member in-house legal and compliance team. In addition to our ongoing risk management activities within the business, a comprehensive risk presentation is made to the Board at each quarterly meeting.
Financial Controls
Our finance team currently has 17 dedicated finance staff, including eight with public accounting qualifications located throughout the business and present in all three of our large offices. By having the Finance team embedded in the business and privy to asset-financing activity, we gain considerable control benefits in addition to a more effective operation. We make a relatively small number of investments each year, closing only a couple of new legal finance assets per week on average, which limits the number of processes and transactions required.
We also have controls around access to payment systems and the release of payments. For example, for any payment, regardless of size, to be released, that payment must be created within the banking system by one of several team members, none of whom have the authority to release payments, and then the payment’s release must be authorized by two other team members separately, neither of whom is able to create a payment. Thus, at least three different people from two different groups are required to provide sign-off before a single wire payment leaves Burford’s account. Moreover, payments are not created without a formal process of approval, with investment payments being circulated widely among and approved by the underwriting team. Senior executives in the business, including the Chief Executive Officer (CEO) and the Chief Investment Officer (CIO), do not have access to our payment systems and cannot create or release payments as a control matter.
Foreign Exchange
We are a U.S. dollar reporting business with the considerable majority of our operations occurring in dollar-denominated activities. We also pay our dividends in U.S. dollars. However, our first three bond issues, totaling 365 million pounds sterling, are denominated in pounds sterling and thus we are exposed to currency risk. We also have a minority of our assets denominated in currencies other than U.S. dollars. We generally do not hedge our currency exposure although our asset exposure to different currencies, especially pounds sterling, does provide a degree of natural hedging.
Brexit
We do not anticipate a materially negative impact from Brexit. Indeed, Brexit creates uncertainty, and uncertainty is generally good for the legal sector as it drives demand for services and creates disputes, so from that perspective Brexit may be positive for us.
Compliance Program
We have channels for reporting misconduct or other workplace issues. Employees are asked to escalate any known or suspected compliance policy violations or misconduct to the Chief Compliance Officer (CCO) or, if they prefer, employees have the option to call or email a hotline (which is administered by a third party) on an anonymous basis. We also maintain a global anti-retaliation and whistleblower policy. Nothing in the policy prohibits an employee from reporting potential violations of law or regulation directly to a government agency. Retaliation of any type against an individual who reports any suspected misconduct or assists in the investigation of misconduct is strictly prohibited.
Diligence
Before we make a commitment, we conduct extensive in-house diligence. All financing agreements must be approved by one of our dedicated Commitments Committees, which consider legal merits, risks, reasonably recoverable damages, proposed budget, proposed terms, credit issues and enforceability.
Technology
We are always alert to the risk associated with the dissemination of our confidential information publicly, especially as that information contains highly sensitive client litigation information. We have also
focused on the risk associated with attacks on our financial systems. We have never had a widespread data breach, but we have protocols in place should one occur.
From our inception, we have been sensitive to these issues and have operated on an entirely cloud-based platform. Our data does not sit on our own servers, but rather on the servers of world-class technology companies. The use of those platforms also comes with built-in disaster recovery protection.
However, data security is much more than protecting data against invasive hacking. Human error and inattention is arguably a greater risk than sophisticated penetration attacks. Thus, we engage in a variety of training and testing, and we also introduce restrictions on technology use designed to minimize those risks. We regularly review best practices from both the legal and the financial services industries and are engaged in a program of continuous improvement. We have an internal cybersecurity committee, composed of senior representatives of all our offices, and we regularly review, benchmark and audit our cybersecurity controls against peer norms, including those promulgated by the SEC and best practices identified in the legal and the financial services industries. A formal internal IT review is provided by the IT department to the Board annually. Moreover, we maintain a set of cybersecurity and information security policies. The policies provide escalation points for reporting potential breaches to the Chief Information Officer and CCO. If a potential breach were to occur, the Chief Information Officer would escalate to the CEO. The Chief Information Officer and Information Technology team maintain a protocol for responding to a potential breach.
Finally, we strive to create a pervasive culture of information technology security, focusing particularly on the tone set from the top when it comes to these issues. Our senior management regularly spends time on these issues and communicates their importance to all staff.
In addition to data security, we are focused on privacy and are sensitive to the various obligations we face in that regard. Given that we do not deal with consumers and are purely a corporate business, the burdens on us are far less than on businesses amassing considerable personal data. We also have procedures in place to address conflicts of interest; those procedures have operated effectively in the period under review.
Our Industry
Despite the overall size and stability of the legal industry, certain trends have fueled the growth of legal finance. In particular, increasing numbers of corporate clients prefer to pay law firms for success rather than on an hourly fee basis. Yet law firms operate as cash businesses with little balance sheet capacity and often need the steady stream of income that hourly fees provide. Legal finance has grown rapidly over the past decade to bridge this gap. In addition, corporate legal departments are under pressure to extract value from their litigation assets, and legal finance gives them a tool to do so.
We believe our addressable market to be three areas of legal activity: (i) a portion of the amount paid to law firms each year as legal fees, (ii) the underlying asset value of claims, settlements, judgments and awards and (iii) the value of assets affected by legal and regulatory processes. We believe that each of these areas is of significant size and much greater than the supply of capital available, and that we are at an early stage of total market penetration.
Regulations
We are regulated in a number of different ways. The SEC regulates our investment management business. The U.K. Financial Conduct Authority (the “FCA”) regulates our legacy insurance business. The Guernsey Financial Services Commission regulates our new insurance business conducted through BWIL. The FCA reviews our debt prospectuses for our London Stock Exchange Main Market-traded debt and regulates our U.K. insurance intermediation business. AIM and Numis Securities Limited, our nominated adviser, regulate our activities as a public company in the U.K. We will be subject to the rules and regulations of the NYSE and the SEC as a public company in the U.S. We are also subject to a myriad of laws and regulations, ranging from the Bribery Act and the Foreign Corrupt Practices Act to Anti-Money Laundering and Know Your Customer regulations in many jurisdictions.
Regulation is also a matter that varies by jurisdiction. For example, the U.S. has a long tradition of not regulating non-bank finance providers who deal with corporate clients, as we do. Most states have quite a clear ceiling above which sophisticated parties like us and our corporate clients are free to contract without
regulatory oversight; for example, in New York, that point is when the capital provision generally exceeds $500,000, well below Burford’s smallest investment. On the other hand, the U.K. does engage in some regulation of legal finance conduct, as expressed in a Code of Conduct promulgated by the Association of Litigation Funders, a self-regulatory body that operates under the auspices of the Ministry of Justice and of which we were a founder. In Australia, there are specific conflicts of interest rules for litigation funders to follow. Some newer entrants to the market, such as Singapore and Hong Kong, have also enacted regulatory regimes largely focused on capital adequacy and constraining abusive behavior.
There is no question that certain lobbyists for large corporate interests have added legal finance to the long list of litigation-related items to which they are opposed. However, we have not seen any indication that there is any groundswell of support for regulation of this sector; ongoing discussion tends to be around subsidiary issues such as disclosure and capital adequacy. For example, the “Litigation Funding Transparency Act of 2019”, which is currently pending, would require litigants to “produce for inspection and copying” any legal funding agreements creating contingent rights to payment in class actions and multidistrict litigations. That bill, like its nearly identical predecessors introduced in previous sessions, has not progressed beyond the Senate Judiciary Committee. The Safe to Work Act, which is also current pending, would require the court in coronavirus-related class actions or multidistrict litigations where counsel have obtained legal finance to direct notice to potential class members, including “a description of the financing arrangement”, although the impact of any such requirement on our business is currently unclear. From time to time, similar legislation is introduced in state legislatures in the United States. For example, a bill is pending in the Ohio Senate, S.B. 322, which would require a claimant to file his or her litigation funding agreement with the court and provide it to the opposing party upon service of his or her complaint. The bill was referred to the Senate Judiciary Committee and no further action has been taken to date. In the U.S., state and federal legislatures as well as the federal courts have generally declined to impose new regulations on commercial legal finance. Even if there were support for additional regulation, it seems probable that such regulation would create a further barrier to entry for others and thus protect our market position. Nevertheless, we engage in a constant level of activity around monitoring and engagement on regulatory initiatives.
Additionally, Burford Law is subject to separate regulations, principally, the SRA Handbook and its Code of Conduct 2011. Information barriers are in place to ensure that client information is not shared between Burford Law and Burford’s other businesses without the appropriate informed and specific consent from the client and unless it is in the best interests of the client to do so. Further, client money is regulated and is kept in a separate client account. An accountant’s report must be also be filed with the SRA in respect of any accounting period during which transactions occurred using the client account.
Legal Proceedings
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business; however, we are not a party to any legal proceedings that we believe may have a significant adverse effect on our business, financial position, results of operations or liquidity.
C.
Organizational Structure
See “— A. History and Development of the Company”.
D.
Property, Plant and Equipment
We do not own any real property. We lease our six principal office spaces in New York, Chicago, London, Washington, Singapore and Sydney from third parties. The following table sets forth information regarding our leased offices:
|
Location
|
|
|
Size (Square Footage)
|
|
|
Main Use
|
|
|
New York, New York
|
|
|
19,516
|
|
|
Office space
|
|
|
Chicago, Illinois
|
|
|
8,321
|
|
|
Office space
|
|
|
London, United Kingdom
|
|
|
9,378
|
|
|
Office space
|
|
|
Washington, D.C.
|
|
|
*
|
|
|
Office space
|
|
|
Singapore, Singapore
|
|
|
*
|
|
|
Office space
|
|
|
Sydney, Australia
|
|
|
*
|
|
|
Office space
|
|
*
Represents shared office space.
ITEM 4.A.
UNRESOLVED STAFF COMMENTS
None.
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this registration statement. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under “Item 3. Key Information — D. Risk Factors” and elsewhere in this registration statement, our actual results may differ materially from those anticipated in these forward-looking statements. Please see the section “Forward-Looking Statements” at the beginning of this registration statement.
We refer to our activities as follows:
•
Legal finance includes our traditional core litigation finance activities in which we are providing clients with financing against the future value of legal claims. It also encompasses our asset recovery and legal risk management activities, which often are provided to the same clients.
•
Complex strategies encompasses our activities providing capital as a principal in legal-related assets, often securities, loans and other financial assets where a significant portion of the expected return arises from the outcome of legal or regulatory activity. Most of our complex strategies activities over the past two years have been conducted through our Strategic Value Fund.
•
Post-settlement finance includes our financing of legal-related assets in situations where litigation has been resolved, such as financing of settlements and law firm receivables.
•
Asset management includes our activities administering the funds we manage for third-party investors.
Our funding sources, however, are not organized based on these services but by expected return, risk and life of the assets we originate. We use our balance sheet and certain dedicated funds to provide capital for higher risk, higher-return, longer-lived assets such as those created in our legal finance business. We typically use dedicated funds, in which our balance sheet is an investor, to provide capital for the kind of lower-risk, lower-return, shorter-lived assets that typify complex strategies activities. And we use still other dedicated funds (without balance sheet investment) for low-risk, low-return, very short-lived assets, such as post-settlement and law firm receivables financing.
To present our business in line with this stratification of asset types, we provide our financing and other services through three principal operating segments:
•
Capital provision, which includes both (i) direct, where we provide our capital directly to clients or as principal in our legal finance activities and (ii) indirect, where we provide our capital by investing through funds that we manage. Our capital provision direct portfolio includes many of the assets originated through our core litigation finance, legal risk management and asset recovery activities, along with a small number of complex strategies assets, while most of our complex strategies assets are included in our capital provision indirect portfolio.
•
Asset management, which includes our activities in managing our eight investment funds and resulting fee stream, including managing the funds that hold assets originated by our post-settlement finance activity.
•
Services and other corporate, which includes fees generated for services provided by our fee-for-service asset recovery and legal risk management (including insurance) activities as well as corporate financial activity.
A.
Operating Results
Set forth below is a discussion of our consolidated results of operations as reported under IFRS. See “— D. Trend Information” for a discussion of certain alternative performance measures (some of which are presented on a non-IFRS basis) that are also used by management to review our ongoing operations. These APMs and non-IFRS measures are supplemental and should not be considered as a substitute for, or superior to, our consolidated results of operation as reported under IFRS.
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
The following table provides an overview of our consolidated results of operations for the years ended December 31, 2019 and 2018.
|
|
|
|
For the year ended December 31,
|
|
|
|
|
|
|
|
|
Percentage
Change
|
|
|
(in U.S. dollar thousands, unless otherwise indicated)
|
|
|
2019
|
|
|
2018
|
|
|
Change
|
|
|
|
|
|
(audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital provision income
|
|
|
|
|
351,828
|
|
|
|
|
|
404,230
|
|
|
|
|
|
(52,402)
|
|
|
|
|
|
(13.0)%
|
|
|
|
Asset management income
|
|
|
|
|
15,160
|
|
|
|
|
|
11,691
|
|
|
|
|
|
3,469
|
|
|
|
|
|
29.7%
|
|
|
|
Insurance income
|
|
|
|
|
3,545
|
|
|
|
|
|
10,406
|
|
|
|
|
|
(6,861)
|
|
|
|
|
|
(65.9)%
|
|
|
|
Services income
|
|
|
|
|
2,133
|
|
|
|
|
|
1,650
|
|
|
|
|
|
483
|
|
|
|
|
|
29.3%
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
6,703
|
|
|
|
|
|
1,801
|
|
|
|
|
|
4,902
|
|
|
|
|
|
272.2%
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
1,992
|
|
|
|
|
|
(1,453)
|
|
|
|
|
|
3,445
|
|
|
|
|
|
N/M
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
(15,318)
|
|
|
|
|
|
(3,348)
|
|
|
|
|
|
(11,970)
|
|
|
|
|
|
357.5%
|
|
|
|
Total income
|
|
|
|
|
366,043
|
|
|
|
|
|
424,977
|
|
|
|
|
|
(58,934)
|
|
|
|
|
|
(13.9)%
|
|
|
|
Operating expenses
|
|
|
|
|
(91,402)
|
|
|
|
|
|
(71,831)
|
|
|
|
|
|
(19,571)
|
|
|
|
|
|
27.2%
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
(9,495)
|
|
|
|
|
|
(9,494)
|
|
|
|
|
|
(1)
|
|
|
|
|
|
0.0%
|
|
|
|
Operating profit
|
|
|
|
|
265,146
|
|
|
|
|
|
343,652
|
|
|
|
|
|
(78,506)
|
|
|
|
|
|
(22.8)%
|
|
|
|
Finance costs
|
|
|
|
|
(39,622)
|
|
|
|
|
|
(38,538)
|
|
|
|
|
|
(1,084)
|
|
|
|
|
|
2.8%
|
|
|
|
Profit for the year before taxation
|
|
|
|
|
225,524
|
|
|
|
|
|
305,114
|
|
|
|
|
|
(79,590)
|
|
|
|
|
|
(26.1)%
|
|
|
|
Taxation (expense)/credit
|
|
|
|
|
(13,417)
|
|
|
|
|
|
12,463
|
|
|
|
|
|
(25,880)
|
|
|
|
|
|
N/M
|
|
|
|
Profit for the year after taxation
|
|
|
|
|
212,107
|
|
|
|
|
|
317,577
|
|
|
|
|
|
(105,470)
|
|
|
|
|
|
(33.2)%
|
|
|
Capital Provision Income
Capital provision income decreased by 13.0% from $404.2 million for the year ended December 31, 2018 to $351.8 million for the year ended December 31, 2019. The decrease was primarily due to lower realized gains and lower fair value adjustments on capital provision assets. Realized gains on capital provision assets were $151.9 million for the year ended December 31, 2019, a decrease of 10.6% from $169.9 million
for the year ended December 31, 2018. The decline in realized gains was attributable in large part to the 15.0% decline in capital provision asset realizations from $634.9 million for the year ended December 31, 2018 to $539.4 million for the year ended December 31, 2019. Fair value adjustments on capital provision assets declined 6.6% from $310.4 million for the year ended December 31, 2018 to $289.8 million for the year ended December 31, 2019 because of the lower net aggregate impact on asset valuations of positive case progress and transaction activity during the period.
Asset Management Income
Asset management income increased by 29.7% from $11.7 million for the year ended December 31, 2018 to $15.2 million for the year ended December 31, 2019. The increase was largely driven by the launch of the new BOF and BAIF funds at the end of 2018, which caused management fees to increase 38.6% from $10.9 million for the year ended December 31, 2018 to $15.2 million for the year ended December 31, 2019.
Insurance Income
Insurance income decreased by 65.9% from $10.4 million for the year ended December 31, 2018 to $3.5 million for the year ended December 31, 2019. The decrease was primarily due to the after the event (“ATE”) business, which provides insurance for legal cost shifting incurred in pursuing or defending legal proceedings, being in run-off since 2016.
Services Income
Services income increased by 29.3% from $1.7 million for the year ended December 31, 2018 to $2.1 million for the year ended December 31, 2019. Although much of the growth in our asset recovery business has been through a contingent risk approach, in which our returns come from the capital provision assets generated from our asset recovery activity rather than through fees for the services we provide, the overall growth in the business nonetheless contributed to growth in fee-for-service income for the year ended December 31, 2019 compared to the year ended December 31, 2018.
Cash Management Income and Bank Interest
Cash management income and bank interest increased by 272.2% from $1.8 million for the year ended December 31, 2018 to $6.7 million for the year ended December 31, 2019. The increase was primarily due to a 24.4% increase in interest earnings on bank deposits from $3.9 million in the year ended December 31, 2018 to $4.9 million in the year ended December 31, 2019 because of generally higher market rates, along with a decline in unfavorable fair value movements on cash management assets from $(4.6) million in the year ended December 31, 2018 to $(0.2) million in the year ended December 31, 2019.
Foreign Exchange Gains/(Losses)
Foreign exchange gains/(losses) increased from a loss of $1.5 million for the year ended December 31, 2018 to a gain of $2.0 million for the year ended December 31, 2019. This increase was primarily due to positive foreign exchange movements.
Third-Party Share of Gains Relating to Interests in Consolidated Entities
The third-party share of gains relating to interests in consolidated entities increased by 357.5% from $3.3 million for the year ended December 31, 2018 to $15.3 million for the year ended December 31, 2019. The increase was due to continuing activity in the consolidated Strategic Value Fund (for which the third party share of gains increased from $3.3 million in the year ended December 31, 2018 to $3.5 million for the year ended December 31, 2019) and the addition of the consolidated BOF-C fund with associated third-party interests at the end of 2018 (for which the third-party-share of gains was $6.3 million for the year ended December 31, 2019 compared to $0 for the year ended December 31, 2018). As well, other consolidated entities accounted for $5.5 million of the third party share of gains in the year ended December 31, 2019, compared to a de minimis amount for the year ended December 31, 2018.
We consolidate two fund entities, the Strategic Value and BOF-C funds, in which we are both the appointed investment advisor and have a significant financial interest. In relation to the Strategic Value fund, Burford has a significant investment in the fund in addition to earning management and incentive fees as the investment advisor. In relation to the BOF-C fund, under the co-investing arrangement with the SWF, Burford receives reimbursement of expenses from BOF-C up to a certain level before Burford or the SWF receives a return of capital. After the repayment of capital, Burford then receives a portion of the return generated from the assets held by BOF-C. Accordingly, under both fund arrangements, Burford is deemed to control the funds under IFRS as it is exposed, or has rights, to variable returns from its involvement with the funds and has the ability to affect those returns through its power over the funds.
Operating Expenses
Operating expenses increased by 27.2% from $71.8 million for the year ended December 31, 2018 to $91.4 million for the year ended December 31, 2019. The increase was principally due to increasing headcount and related office space costs together with costs associated with the marketing, due diligence and ongoing maintenance of the increasing capital provision asset portfolio. Staff costs (including share-based payments and pension costs) increased 8.6% from $50.6 million in the year ended December 31, 2018 to $55.0 million in the year ended December 31, 2019. Non-staff operating costs increased 37.0% from $11.5 million in the year ended December 31, 2018 to $15.7 million in the year ended December 31, 2019. Other expenses, including asset-related costs, one-time and ongoing legal expenses and expenses incurred by consolidated entities and other expenses, increased 117% from $9.3 million in the year ended December 31, 2018 to $20.2 million in the year ended December 31, 2019.
Finance Costs
Finance costs increased by 2.8% from $38.5 million for the year ended December 31, 2018 to $39.6 million for the year ended December 31, 2019. The small increase was largely driven by inclusion of $0.9 million of lease liabilities interest arising from the implementation of the new lease accounting standard during 2019 that requires the recognition of a liability and associated interest expense for the present value of the future lease obligations.
Taxation
Taxation expense increased from a tax credit of $12.5 million for the year ended December 31, 2018 to taxation expense of $13.4 million for the year ended December 31, 2019. The increase in taxation expense was mainly driven by the Group’s non-recognition of a deferred tax asset of $10.9 million relating to an interest expense deduction limitation relating to the U.S. Tax Code under the Tax Cuts and Job Act of 2017 (the “TCJA”).
Burford’s gradual progression from a tax-free fund prior to 2012 to a multinational taxpayer was altered somewhat by the GKC acquisition in 2016. Under U.S. tax law, given that GKC had very few tangible assets, the bulk of the acquisition price of $160 million was characterized as goodwill and other intangible assets for U.S. tax purposes, and those assets are amortized for tax purposes, significantly reducing future U.S. taxable income for some years while the tax benefit of that amortization is used over time. The value of that tax offset has been impacted by the TCJA, which lowered U.S. corporate tax rates substantially.
Burford continues to maintain a significant net deferred tax asset on its balance sheet. This is primarily attributable to future benefits from net operating losses and compensation and benefits expenses, net of the GKC intangibles amortization and net unrealized gains/losses. The TCJA also enacted significant limitations on interest deductibility and the Group has not recognized a deferred tax asset for the currently unused interest deductions. We do expect to obtain some relief for the interest limitations from the Coronavirus Aid, Relief and Economic Security Act recently signed into law in the U.S.
We believe that our tax cost will remain below our expected future run-rate level for some time while we continue to reap the benefit of the U.S. tax amortization and the deferred tax asset, although there will be annual variations, as is the case in 2019. Once those benefits are exhausted, based on currently available information, we will expect long-term tax rates for our business to ultimately be in the low teens. A
reconciliation of the company’s profit on ordinary activities before tax to the total taxation charge is provided in Note 4 to our consolidated financial statements.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
The following table provides an overview of our consolidated results of operations for the years ended December 31, 2018 and 2017.
|
|
|
|
For the year ended December 31,
|
|
|
|
|
|
|
|
|
Percentage
Change
|
|
|
(in U.S. dollar thousands, unless otherwise indicated)
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
|
|
|
(audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital provision income
|
|
|
|
|
404,230
|
|
|
|
|
|
315,280
|
|
|
|
|
|
88,950
|
|
|
|
|
|
28.2%
|
|
|
|
Asset management income
|
|
|
|
|
11,691
|
|
|
|
|
|
14,458
|
|
|
|
|
|
(2,767)
|
|
|
|
|
|
(19.1)%
|
|
|
|
Insurance income
|
|
|
|
|
10,406
|
|
|
|
|
|
7,613
|
|
|
|
|
|
2,793
|
|
|
|
|
|
36.7%
|
|
|
|
Services income
|
|
|
|
|
1,650
|
|
|
|
|
|
1,837
|
|
|
|
|
|
(187)
|
|
|
|
|
|
(10.2)%
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
1,801
|
|
|
|
|
|
2,650
|
|
|
|
|
|
(849)
|
|
|
|
|
|
(32.0)%
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
(1,453)
|
|
|
|
|
|
1,639
|
|
|
|
|
|
(3,092)
|
|
|
|
|
|
N/M
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
(3,348)
|
|
|
|
|
|
(863)
|
|
|
|
|
|
(2,485)
|
|
|
|
|
|
288%
|
|
|
|
Total income
|
|
|
|
|
424,977
|
|
|
|
|
|
342,614
|
|
|
|
|
|
82,363
|
|
|
|
|
|
24.0%
|
|
|
|
Operating expenses
|
|
|
|
|
(71,831)
|
|
|
|
|
|
(57,479)
|
|
|
|
|
|
(14,352)
|
|
|
|
|
|
25.0%
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
(9,494)
|
|
|
|
|
|
(11,703)
|
|
|
|
|
|
2,209
|
|
|
|
|
|
(18.9)%
|
|
|
|
Operating profit
|
|
|
|
|
343,652
|
|
|
|
|
|
273,432
|
|
|
|
|
|
70,220
|
|
|
|
|
|
25.7%
|
|
|
|
Finance costs
|
|
|
|
|
(38,538)
|
|
|
|
|
|
(24,251)
|
|
|
|
|
|
(14,287)
|
|
|
|
|
|
58.9%
|
|
|
|
Profit for the year before taxation
|
|
|
|
|
305,114
|
|
|
|
|
|
249,181
|
|
|
|
|
|
55,933
|
|
|
|
|
|
22.4%
|
|
|
|
Taxation (expense)/credit
|
|
|
|
|
12,463
|
|
|
|
|
|
123
|
|
|
|
|
|
12,340
|
|
|
|
|
|
N/M
|
|
|
|
Profit for the year after taxation
|
|
|
|
|
317,577
|
|
|
|
|
|
249,304
|
|
|
|
|
|
68,273
|
|
|
|
|
|
27.4%
|
|
|
Capital Provision Income
Capital provision income increased by 28.2% from $315.3 million for the year ended December 31, 2017 to $404.2 million for the year ended December 31, 2018. The increase was due to increased realized gains and positive fair value adjustments on capital provision assets, partially offset by losses on derivatives. Driven by higher realizations, realized gains on capital provision assets were $169.9 million for the year ended December 31, 2018, up 38.5% from $122.7 million for the year ended December 31, 2017. Fair value adjustments on capital provision assets increased 27.6% from $243.3 million for the year ended December 31, 2017 to $310.4 million for the year ended December 31, 2018 because of the higher net aggregate impact on asset valuations of positive case progress and transaction activity during the period.
Asset Management Income
Asset management income decreased by 19.1% from $14.5 million for the year ended December 31, 2017 to $11.7 million for the year ended December 31, 2018. The decrease was primarily due to lower income from management fees and lower performance fees. Management fees declined 9.4% from $12.1 million in the year ended December 31, 2017 to $10.9 million in the year ended December 31, 2018 as some older funds (Partners II and COLP) reached a point where management fees were calculated on a lower base while newer successor funds (BOF and BAIF) with additional management fees only commenced operation late in 2018. Performance fees declined from $2.4 million in the year ended December 31, 2017 to $0.8 million in the year ended December 31, 2018 largely because a performance fee from Partners 1 in 2017 did not recur in 2018.
Insurance Income
Insurance income increased by 36.7% from $7.6 million for the year ended December 31, 2017 to $10.4 million for the year ended December 31, 2018. While there has been a cessation in writing new ATE
business so that income from insurance has generally been declining, the increase from 2017 to 2018 was due to the settlement of two large cases in the period.
Services Income
Services income decreased by 10.2% from $1.8 million for the year ended December 31, 2017 to $1.7 million for the year ended December 31, 2018. Our fee-for-service income from our asset recovery business remained largely consistent year on year as much of the incremental growth in this business gave rise to capital provision assets as we transitioned to a contingent risk model.
Cash Management Income and Bank Interest
Cash management income and bank interest decreased by 32.0% from $2.7 million for the year ended December 31, 2017 to $1.8 million for the year ended December 31, 2018. The decrease was primarily due to an increase in unfavorable fair-value movements from $0.8 million in the year ended December 31, 2017 to $(4.6) million in the year ended December 31, 2018, partially offset by higher interest received on cash due to higher market rates, with bank interest income increasing from $0.8 million in the year ended December 31, 2017 to $3.9 million in the year ended December 31, 2018.
Foreign Exchange Gains/(Losses)
Foreign exchange gains/(losses) decreased from a gain $1.6 million for the year ended December 31, 2017 to a loss of $1.5 million for the year ended December 31, 2018. The decrease was primarily due to unfavorable foreign exchange movements.
Third-Party Share of Gains Relating to Interests in Consolidated Entities
Third-party share of gains relating to interests in consolidated entities increased by 288% from $0.9 million for the year ended December 31, 2017 to $3.3 million for the year ended December 31, 2018. The increase was almost entirely due to increased activity in the consolidated Strategic Value Fund with a de minimis amount attributable to the addition of the consolidated BOF-C fund with associated third-party interests at the end of 2018.
Operating Expenses
Operating expenses increased by 25.0% from $57.5 million for the year ended December 31, 2017 to $71.8 million for the year ended December 31, 2018. The increase was principally due to increasing headcount as well as an increase in general and administrative expenses. Staff costs (including share-based payments and pension costs) increased 21.1% from $41.8 million in the year ended December 31, 2017 to $50.6 million in the year ended December 31, 2018. Non-staff operating costs increased 59.8% from $7.2 million in the year ended December 31, 2017 to $11.5 million in the year ended December 31, 2018.
Finance Costs
Finance costs increased by 58.9% from $24.3 million for the year ended December 31, 2017 to $38.5 million for the year ended December 31, 2018. The increase in financing costs was due to the interest expense on a new debt issuance of $180 million in early 2018.
Taxation
Taxation credit increased from $0.1 million for the year ended December 31, 2017 to $12.5 million for the year ended December 31, 2018. The increase was largely driven by the TCJA, reducing the U.S. federal corporate tax rate from 35% to 21%.
Segments
We have three operating business segments: (i) provision of capital to the legal industry or in connection with legal matters, both directly and through investment in our managed funds; (ii) asset management activities; (iii) provision of services to the legal industry, including litigation insurance and asset recovery
(judgment enforcement and other corporate activities). All of our segment income is aligned with the corresponding line items of the income statement and therefore our segment results are also discussed under “— Operating Results” above.
The following table provides a breakdown of our income by operating segment for the years ended December 31, 2019, 2018 and 2017.
|
|
|
|
For the year ended December 31,
|
|
|
(in U.S. dollar thousands)
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(audited)
|
|
|
Capital provision
|
|
|
|
|
336,510
|
|
|
|
|
|
400,882
|
|
|
|
|
|
314,417
|
|
|
|
Asset management
|
|
|
|
|
15,160
|
|
|
|
|
|
11,691
|
|
|
|
|
|
14,458
|
|
|
|
Services and other corporate activities
|
|
|
|
|
14,373
|
|
|
|
|
|
12,404
|
|
|
|
|
|
13,739
|
|
|
The following table sets forth our income in the capital provision operating segment net of the third-party interest amounts for the years ended December 31, 2019, 2018 and 2017.
|
|
|
|
For the year ended December 31,
|
|
|
(in U.S. dollar thousands)
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(audited)
|
|
|
Capital provision
|
|
|
|
|
351,828
|
|
|
|
|
|
404,230
|
|
|
|
|
|
315,280
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
(15,318)
|
|
|
|
|
|
(3,348)
|
|
|
|
|
|
(863)
|
|
|
|
Total
|
|
|
|
|
336,510
|
|
|
|
|
|
400,882
|
|
|
|
|
|
314,417
|
|
|
The following table provides a breakdown of our profit/(loss) before taxation by operating segment for the years ended December 31, 2019, 2018 and 2017.
December 31, 2019
(in U.S. dollar thousands)
|
|
|
Capital
Provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
Income
|
|
|
|
|
336,510
|
|
|
|
|
|
15,160
|
|
|
|
|
|
14,373
|
|
|
|
|
|
366,043
|
|
|
|
Operating expenses
|
|
|
|
|
(57,919)
|
|
|
|
|
|
(19,797)
|
|
|
|
|
|
(13,686)
|
|
|
|
|
|
(91,402)
|
|
|
|
Amortization of intangible asset arising on acquisition
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,495)
|
|
|
|
|
|
(9,495)
|
|
|
|
Finance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(39,622)
|
|
|
|
|
|
(39,622)
|
|
|
|
Profit/(loss) for the year before taxation
|
|
|
|
|
278,591
|
|
|
|
|
|
(4,637)
|
|
|
|
|
|
(48,430)
|
|
|
|
|
|
225,524
|
|
|
|
|
December 31, 2018
(in U.S. dollar thousands)
|
|
|
Capital
Provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
Income
|
|
|
|
|
400,882
|
|
|
|
|
|
11,691
|
|
|
|
|
|
12,404
|
|
|
|
|
|
424,977
|
|
|
|
Operating expenses
|
|
|
|
|
(44,046)
|
|
|
|
|
|
(12,175)
|
|
|
|
|
|
(15,610)
|
|
|
|
|
|
(71,831)
|
|
|
|
Amortization of intangible asset arising on acquisition
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,494)
|
|
|
|
|
|
(9,494)
|
|
|
|
Finance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(38,538)
|
|
|
|
|
|
(38,538)
|
|
|
|
Profit/(loss) before taxation
|
|
|
|
|
356,836
|
|
|
|
|
|
(484)
|
|
|
|
|
|
(51,238)
|
|
|
|
|
|
305,114
|
|
|
|
|
December 31, 2017
(in U.S. dollar thousands)
|
|
|
Capital
Provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
Income
|
|
|
|
|
314,417
|
|
|
|
|
|
14,458
|
|
|
|
|
|
13,739
|
|
|
|
|
|
342,614
|
|
|
|
Operating expenses
|
|
|
|
|
(38,750)
|
|
|
|
|
|
(7,159)
|
|
|
|
|
|
(11,570)
|
|
|
|
|
|
(57,479)
|
|
|
|
Amortization of intangible asset arising on acquisition
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(11,703)
|
|
|
|
|
|
(11,703)
|
|
|
|
Finance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(24,251)
|
|
|
|
|
|
(24,251)
|
|
|
|
Profit/(loss) before taxation
|
|
|
|
|
275,667
|
|
|
|
|
|
7,299
|
|
|
|
|
|
(33,785)
|
|
|
|
|
|
249,181
|
|
|
Profit before taxation in the capital provision segment declined 21.9% from $356.8 million in the year ended December 31, 2018 to $278.6 million in the year ended December 31, 2019 because of a 16.1% decline in capital provision income combined with a 31.5% increase in segment operating expenses. Profit before taxation in the capital provision segment increased 29.4% from $275.7 million in the year ended December 31, 2017 to $356.8 million in the year ended December 31, 2018 because of a 27.5% increase in capital provision income partially offset by a 13.7% increase in segment operating expenses.
Profit before taxation in the asset management segment declined from $(0.5) million in the year ended December 31, 2018 to $(4.6) million in the year ended December 31, 2019 because a 29.7% increase in asset management income was more than offset by a 62.6% increase in segment operating expenses. Profit before taxation in the asset management segment declined from $7.3 million in the year ended December 31, 2017 to $(0.5) million in the year ended December 31, 2018 because of a 19.1% decline in asset management income combined with a 70.1% increase in segment operating expenses. Growth in assets under management over the past several years has driven the current period increases in operating expenses in this segment, while much of the income (in particular, performance fees) would be expected to occur in future periods.
Profit before taxation in the Services and other corporate segment improved by 5.5% from $(51.2) million in the year ended December 31, 2018 to $(48.4) million in the year ended December 31, 2019 as income increased by 15.9% while segment operating expenses declined by 12.3%, partially offset by a 2.8% increase in finance costs. Profit before taxation in the Services and other corporate segment declined by 51.7% from $(33.8) million in the year ended December 31, 2017 to $(51.2) million in the year ended December 31, 2018 as income declined by 9.7%, segment operating expenses increased by 34.9% and finance costs increased by 58.9%.
Critical Accounting Policies and Significant Estimates
The most significant estimates in our financial reporting relate to the estimates involved in (i) the valuation of capital provision assets at fair value through profit or loss, (ii) the impairment testing for goodwill and (iii) the recoverability of the deferred tax asset. These are discussed in turn below.
Fair Value
We hold legal finance assets at initial fair value, which is equivalent to deployed funded cost, until there is some objective event in the underlying litigation that would cause a change in value, whereupon we are required under IFRS to reflect the impact (up or down) of that objective event through a fair value adjustment.
We estimate fair values based on the specifics of each asset and the fair value will typically change upon an asset having a return entitlement or progressing in a manner that, in our judgment, would result in a third party being prepared to pay an amount different from the original sum invested for our rights in connection with the asset. Positive, material progression of an asset will give rise to an increase in fair value while adverse outcomes give rise to a reduction. The quantum of change depends on the potential future stages of asset progression. The consequent effect when an adjustment is made is that the fair value of an asset with few remaining stages is adjusted closer to its predicted final outcome than one with many remaining stages. In litigation matters, before a judgment is entered following trial or other adjudication, the key stages of any matter and their impact on fair value is substantially case specific but may include the motion to dismiss and the summary judgment stages. Following adjudication, appeals proceedings provide further opportunities to re-assess the fair value of an asset.
The estimation of fair value is inherently uncertain. Awards and settlements are hard to predict and often have a wide range of possible outcomes. Furthermore, there is much unpredictability in the actions of courts, litigants and defendants because of the large number of variables involved and consequent difficulty of predictive analysis. In addition, there is little activity in transacting assets and hence little relevant data for benchmarking the effect of asset progression on fair value, although the existence of our secondary market sales is a valuation input.
Applicable Accounting Standards
We are required to account for our investments pursuant to IFRS 9 — Financial Instruments and have done so since 2012. The relevant standards provide:
IAS 32 — Financial Instruments: Presentation defines a financial asset as any asset that is a contractual right to receive cash or another financial asset from another entity. The ability to exercise a contractual right may be absolute, or it may be contingent on the occurrence of a future event. Our investments generally fall within the definition of a financial asset.
IFRS 9 — Financial Instruments requires financial assets to be carried at (i) amortized cost, (ii) fair value through other comprehensive income or (iii) fair value through profit and loss. However, the first two of those three options requires that the contractual terms must give rise on specified dates to cash flows that are solely the payments of principal and interest on the principal amount outstanding. Our assets generally do not meet this condition and accordingly they are required to be measured at fair value through profit and loss.
Fair Value Process
Each of our assets has a Burford professional in the Underwriting team who “owns” the asset. That owner monitors the asset on an ongoing basis and provides monthly commentary about developments as part of a global reporting framework which is supplied to senior management. A full confidential report on the status of each asset is prepared each quarter and provided to senior management and the Board along with overall portfolio and risk reporting. At each half-year, asset developments that could give rise to valuation changes are also flagged at the management level and rolled up for consideration by senior management and ultimately by our Valuation Committee pursuant to our valuation policy. Our Valuation Committee consists of the Chief Executive Officer, Chief Investment Officer, Deputy Chief Investment Officer, Chief Financial Officer, Co-Chief Operating Officer and the Managing Director responsible for portfolio oversight. The entire valuation process is overseen by the Audit Committee.
Valuation Policy
We operate under a valuation policy that emphasizes clarity and certainty and relies on objective events to drive valuation changes. For the vast majority of our legal finance assets, the objective events considered under the fair value policy (which is in line with IFRS 13 — Fair Value Measurements) relate to the litigation process. When the objective event in question is a court ruling, Burford discounts the potential impact of that ruling commensurate with the remaining litigation risk. Our policy assigns valuation changes in fixed ranges based on, among other things:
•
a significant positive ruling or other objective event but where there is not yet a trial court judgment;
•
a favorable trial court judgment;
•
a favorable judgment on the first appeal;
•
the exhaustion of as-of-right appeals;
•
in arbitration cases, where there are limited opportunities for appeal, issuance of a tribunal award; and
•
an objective negative event at various stages in a litigation.
In a small number of instances, we have the benefit of a secondary sale of a portion of an asset. When that occurs, we factor the market evidence into our valuation process; the more robust the market testing of value is, the more weight we accord to the market price.
Management considers the above policy as the most appropriate way to estimate the fair value of capital provision assets which is supported by an established historical track record of how the fair value of individual assets have trended, with both positive and negative developments, through to the conclusion of the asset. While the fair value of individual assets may vary significantly from one period to the next, the valuation policy has been consistent, and consistently applied, through the applicable periods.
At December 31, 2019, if the value of those capital provision assets had been 10% higher or lower than provided for in the Group’s fair value estimation, while all other variables remained constant, the Group’s income and net assets both would have increased, or decreased, respectively by $173.0 million. The impact has been provided on a pre-tax basis on both income and net assets as the Group considers the fluctuation in the Group’s effective tax rate from period to period could indicate changes in sensitivity not driven by the valuation that are difficult to follow and detract from the comparability of this information.
Impairment Testing for Goodwill
Our testing of goodwill for impairment requires the identification of independent cash-generating units (“CGU”) and the allocation of goodwill to these units based on which units are expected to benefit from the acquisition. Cash flow projections necessarily take into account changes in the market in which a business operates including the level of growth, competitive activity, and the impacts of regulatory change. Determining both the expected cash flows and the risk-adjusted interest rate appropriate to the CGUs requires the exercise of judgment. The estimation of cash flows is sensitive to the periods for which the projections are made and to assumptions regarding long-term sustainable cash flows.
We perform a quantitative test for impairment on at least an annual basis, or more frequently if impairment indicators are present, by leveraging the internal models and data used by management. The model output and all key assumptions are analyzed and challenged by the Finance team and subject to senior management review and approval.
Refer to Note 20 of our consolidated financial statements for further details on the key assumptions utilized in the goodwill impairment assessment and their sensitivity to changes.
Recoverability of the Deferred Tax Asset
Our assessment to support the recoverability of the deferred tax asset includes an amount relating to carried-forward U.S. tax losses that can be utilized against future taxable profits of our U.S. business. The estimation of the future taxable profits is based on the business plans and approved budgets for those entities that require the use of assumptions for expected returns on capital provision assets, the level of future business activity and the structuring of capital provision assets for tax efficiency. The tax losses can be carried forward indefinitely and have no expiry date. At December 31, 2019 the deferred tax asset balance contained $16.9 million of net operating losses carried forward relating to the U.S. taxable group. The estimated amount of future taxable income required to realize the benefit of this component of the deferred tax asset is $67.6 million.
We perform a quantitative test to assess the recoverability of the deferred tax asset at each reporting period end leveraging the same internal models and data used by management as noted above for the goodwill impairment test. The model output and all key assumptions are analyzed and challenged by the Finance team and subject to senior management review and approval.
The key assumptions underlying the assessment of impairment for goodwill and the recoverability of the deferred tax asset balances relate to the continuing ability of the business to generate sustainable returns from its capital provision activity. This is principally measured through the level of expected growth in the portfolio and the level of return (IRR) achieved. Our 10-year track record shows both portfolio growth and returns well in excess of the levels assumed for the purposes of these impairment and recoverability assessments. As the track record has matured in the past and continues to grow in the future the assumption for returns has increased marginally to an assumed 22.5% IRR effective for the assessments performed as at December 31, 2019. Management expects this may be increased in future periods if the current realized IRR trend of approximately 30% continues to be observed.
Internal Control Over Financial Reporting
In preparation for filing this registration statement with the SEC, we and our independent registered public accounting firm undertook procedures to assess our internal control over financial reporting in accordance with the PCAOB auditing standards applicable to SEC registrants. In the course of those procedures, we and our accounting firm identified two areas related to (i) the lack of information technology general controls around user access and change management for information systems that are relevant to the preparation of financial statements and (ii) the inadequate segregation of duties in our internal control environment that represent material weaknesses under the PCAOB standards. Pursuant to Section 404 of Sarbanes-Oxley, we will need to assess and report on the effectiveness of our internal control over financial reporting in connection with our second annual report filing after completing our registration (which we anticipate to be the annual report for the year ending December 31, 2021). Accordingly, we will need to remediate these control items prior to that date in order to determine that our internal control over financial reporting is effective for purposes of Section 404 of Sarbanes-Oxley.
Neither of the control items identified resulted in any errors or inaccuracies in our financial statements.
We have begun to implement measures designed to remediate these control items, including implementing additional policies and procedures with respect to information technology general controls, performing procedures to monitor activity of individuals with administrator access, establishing complementary user controls in respect of third party service organizations and working to improve our financial statement closing process by replacing certain manual processes with automated processes. Although we believe these measures will remediate the identified control items, we can provide no assurances. Our failure to remediate these deficiencies or our failure to discover and address any other control deficiencies them by the time we need to be compliant with Section 404 of Sarbanes-Oxley could have an adverse impact on us. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Ordinary Shares — If we are unable to satisfy the requirements of Sarbanes-Oxley, or our internal control over financial reporting are not effective, the reliability of our financial statements may be questioned.”
B.
Liquidity and Capital Resources
Cash Flows
The following table sets forth the principal components of our cash flows for the years ended December 31, 2019, 2018 and 2017.
|
|
|
|
For the year ended December 31,
|
|
|
(in U.S. dollar thousands)
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(audited)
|
|
|
Net cash (outflow) from operating activities
|
|
|
|
|
(8,306)
|
|
|
|
|
|
(233,313)
|
|
|
|
|
|
(102,323)
|
|
|
|
Net cash (outflow)/inflow from financing activities
|
|
|
|
|
(67,425)
|
|
|
|
|
|
364,881
|
|
|
|
|
|
136,358
|
|
|
|
Net cash (outflow) from investing activities
|
|
|
|
|
(3,398)
|
|
|
|
|
|
(104)
|
|
|
|
|
|
(58,513)
|
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
|
|
|
(79,129)
|
|
|
|
|
|
131,464
|
|
|
|
|
|
(24,478)
|
|
|
Net cash (outflow) from operating activities
Net cash outflow from operating activities decreased from a cash outflow of $233.3 million for the year ended December 31, 2018 to a cash outflow of $8.3 million for the year ended December 31, 2019. The decrease was largely driven by lower new funding of capital provision assets.
Net cash outflow from operating activities increased from a cash outflow of $102.3 million for the year ended December 31, 2017 to a cash outflow of $233.3 million for the year ended December 31, 2018. The increase in outflow was primarily due to increased funding of capital provision assets in 2018.
Our operating cash flow is negative due to the cash outflow from our new funding of capital provision assets being greater than the cash inflow from realizations on our existing capital provision assets.
The following table sets forth the principal components of our net cash outflow from operating activities for the years ended December 31, 2019, 2018 and 2017.
|
|
|
|
For the year ended December 31,
|
|
|
(in U.S. dollar thousands)
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Net cash inflow from operating activities before funding of capital provision assets
|
|
|
|
|
553,712
|
|
|
|
|
|
538,096
|
|
|
|
|
|
464,490
|
|
|
|
Capital provision assets*:
New funding of capital provision assets
|
|
|
|
|
(562,018)
|
|
|
|
|
|
(771,409)
|
|
|
|
|
|
(566,813)
|
|
|
|
Net cash (outflow) from operating activities
|
|
|
|
|
(8,306)
|
|
|
|
|
|
(233,313)
|
|
|
|
|
|
(102,323)
|
|
|
*
See Note 3 to our consolidated financial statements.
Net cash (outflow)/inflow from financing activities
Net cash outflow from financing activities decreased from an inflow of $364.9 million for the year ended December 31, 2018 to an outflow of $67.4 million for the year ended December 31, 2019. The outflow of $67.4 million comprised primarily of $28.4 million of dividend payments and $37.6 million of loan capital interest in connection with the issuance of $250.0 million of share capital and the issuance of $180.0 million of bonds during the year ended December 31, 2018, while there were no share capital or bond issuances during the year ended December 31, 2019.
Net cash inflow from financing activities increased from an inflow of $136.4 million for the year ended December 31, 2017 to an inflow of $364.9 million for the year ended December 31, 2018. The increase was largely driven by the issuance of $250.0 million of share capital and the issuance of $180.0 million of bonds during the year ended December 31, 2018, while we issued $225.8 million of new bonds during the year ended December 31, 2017.
Net cash (outflow) from investing activities
Net cash outflow from investing activities increased from an outflow of $0.1 million for the year ended December 31, 2018 to an outflow of $3.4 million for the year ended December 31, 2019. The increase was largely due to the capitalization of leasehold improvements with the new office spaces.
Net cash outflow from investing activities decreased from an outflow of $58.5 million for the year ended December 31, 2017 to an outflow of $0.1 million for the year ended December 31, 2018. The increase was largely driven by payment of $57.9 million relating to our acquisition of GKC in the year ended December 31, 2017.
Financial Instruments
We have issued four series of debt securities that are listed on the London Stock Exchange’s Order Book for Retail Bonds through finance subsidiaries. Burford Capital PLC has currently outstanding (i) £90 million aggregate principal amount of 6.500% notes due 2022, (ii) £100 million aggregate principal amount of 6.125% notes due 2024 and (iii) £175 million aggregate principal amount of 5.000% notes due 2026. Burford Capital Finance LLC has currently outstanding $180 million aggregate principal amount of 6.125% notes due 2025.
The trust deeds governing our debt securities contain certain covenants, including a leverage ratio requirement that we maintain a level of consolidated net debt that is less than 50% of the level of our tangible assets. See “Item 10. Additional Information — C. Material Contracts”. As of December 31, 2019, we were in compliance with all of the covenants under the trust deeds.
Capital Management; Working Capital Position
Our approach to capital management is intended to ensure adequate liquidity to meet our funding commitments and ongoing expenses while also ensuring that adequate resources are available to finance
new assets as opportunities arise. We seek to manage our balance sheet with relatively low levels of leverage. We expect from time to time to issue additional debt, depending on our liquidity needs, capital deployment prospects and market conditions. Our Chief Financial Officer and Finance team are primarily responsible for monitoring and overseeing the implementation and execution of our liquidity and funding strategy.
We anticipate that our primary sources of funds will be available cash and cash from operations, which includes proceeds from our capital provision assets. We may also issue additional debt. We believe that these sources of funds will be sufficient to fund our operations, including our working capital requirements.
Capital Expenditures
We do not have material capital expenditures. As of December 31, 2019, we had $3.5 million carrying value relating to fixtures, fittings and equipment. We do not anticipate incurring material capital expenditures in the year ending December 31, 2020.
C.
Research and Development, Patents and Licenses, etc.
We do not spend material amounts on research and development, nor do we own any patents.
D.
Trend Information
Introduction
See “— A. Operating Results” for a discussion of trends related to our consolidated results of operation. Set forth below is a discussion of our current portfolio and the APMs or non-IFRS measures we believe best facilitate an understanding of the trends in our business. See “Item 3. Key Information — Other Financial and Operating Measures” for definitions of our APMs. Consistent with how management assesses Burford’s business, we also present our portfolio data and certain of these APMs on a (1) Burford-only, Burford standalone and Burford-only balance sheet basis and (2) Group-wide basis. Information presented on a Burford-only, Burford standalone, Burford-only balance sheet and Group-wide basis is non-IFRS information. We further describe the methodology for that non-IFRS information below and provide reconciliations and other important information about non-IFRS measures below.
Non-IFRS Supplemental Financial Measures
We report under IFRS. However, management also reviews certain non-IFRS financial measures to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating our financial performance over time.
IFRS requires us to present financials that consolidate some of the limited partner interests in funds we manage as well as assets held by our balance sheet where we have a partner or minority investor. See Note 23 to our consolidated financial statements included elsewhere in this registration statement. As described below, we refer to this presentation as “Consolidated” or “IFRS”. We endeavor to provide clarity on Burford as a stand-alone business by furnishing information on a non-IFRS basis that eliminates the effect of this consolidation. As described below, we refer to this presentation as “Burford-only”, “Burford standalone” and “Burford-only balance sheet” as the context requires. We also strive to provide clarity on the business of Burford and its managed funds as a whole by furnishing information on a non-IFRS basis that reflects the contribution of both our consolidated and unconsolidated funds. As described below, we refer to this presentation as “Group-wide”.
We refer to our funding configuration as follows:
•
“Consolidated” refers to assets, liabilities and activities that include those third-party interests, partially owned subsidiaries and special purpose vehicles that we are required to consolidate under IFRS accounting. This presentation conforms to the presentation of Burford on a consolidated basis in our financials. The major entities consolidated into Burford include the Strategic Value Fund, BOF-C and several entities in which Burford holds investments where there is also a third-party partner in or owner of those entities. Note that in our financial statements, our consolidated presentation is referred to as Group.
•
“Burford-only”, “Burford standalone”, “Burford-only balance sheet” or similar terms refer to assets, liabilities and activities that pertain only to Burford itself, excluding any third-party interests and the portions of jointly owned entities owned by others.
•
“Group-wide” refers to Burford and its managed funds taken together, including those portions of the funds owned by third parties and including funds that are not consolidated into Burford’s consolidated financials. In addition to the consolidated funds, Group-wide includes the Partners funds, Burford Opportunity Fund and Burford Alternative Income Fund and its predecessor.
We use Burford-only and Group-wide financial measures, which are calculated and presented using methodologies other than in accordance with IFRS, to supplement our analysis and discussion of our operating performance. We believe Group-wide financial measures, including Group-wide information on our capital provision assets and undrawn commitments, are useful to investors because they convey the scale of our existing (in the case of Group-wide capital provision assets) and potential future (in the case of Group-wide undrawn commitments) business and the performance of all legal finance assets originated by us. Although we do not receive all of the returns of our funds, we do receive performance fees as part of our income. Further, we believe that Group-wide performance, including the performance of our managed funds, is an important measure by which to assess our ability to attract additional capital and to grow our business, whether directly or through managed funds. These non-IFRS financial measures should not be considered as a substitute for, or superior to, financial measures calculated in accordance with IFRS.
The tables below provide a full reconciliation of the consolidated statement of comprehensive income and consolidated statement of financial position to Burford-only results to facilitate an understanding of the discussion of our performance, including our APMs, set forth below.
Burford-only Results
Reconciliation of Consolidated Statement of Comprehensive Income to Burford-only results
|
|
|
|
Elimination of third-party interests
|
|
December 31, 2019
(in U.S. dollar thousands)
|
|
|
Consolidated
IFRS
|
|
|
Strategic
Value fund
|
|
|
BOF-C
fund
|
|
|
Other
|
|
|
Burford-only
|
|
|
Capital provision income
|
|
|
|
|
351,828
|
|
|
|
|
|
(16,036)
|
|
|
|
|
|
(13,399)
|
|
|
|
|
|
(5,613)
|
|
|
|
|
|
316,780
|
|
|
|
Asset management income
|
|
|
|
|
15,160
|
|
|
|
|
|
3,833
|
|
|
|
|
|
7,137
|
|
|
|
|
|
—
|
|
|
|
|
|
26,130
|
|
|
|
Insurance income
|
|
|
|
|
3,545
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,545
|
|
|
|
Services income
|
|
|
|
|
2,133
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,133
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
6,703
|
|
|
|
|
|
(571)
|
|
|
|
|
|
(62)
|
|
|
|
|
|
—
|
|
|
|
|
|
6,070
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
1,992
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
60
|
|
|
|
|
|
2,052
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
(15,318)
|
|
|
|
|
|
3,463
|
|
|
|
|
|
6,304
|
|
|
|
|
|
5,551
|
|
|
|
|
|
—
|
|
|
|
Total income
|
|
|
|
|
366,043
|
|
|
|
|
|
(9,311)
|
|
|
|
|
|
(20)
|
|
|
|
|
|
(2)
|
|
|
|
|
|
356,710
|
|
|
|
Operating expenses
|
|
|
|
|
(91,402)
|
|
|
|
|
|
9,311
|
|
|
|
|
|
20
|
|
|
|
|
|
2
|
|
|
|
|
|
(82,069)
|
|
|
|
Amortisation of intangible asset
|
|
|
|
|
(9,495)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,495)
|
|
|
|
Operating profit
|
|
|
|
|
265,146
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
265,146
|
|
|
|
Finance costs
|
|
|
|
|
(39,622)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(39,622)
|
|
|
|
Profit before tax
|
|
|
|
|
225,524
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
225,524
|
|
|
|
Taxation
|
|
|
|
|
(13,417)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(13,417)
|
|
|
|
Profit after tax
|
|
|
|
|
212,107
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
212,107
|
|
|
|
Other comprehensive income
|
|
|
|
|
(17,525)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(17,525)
|
|
|
|
Total comprehensive income
|
|
|
|
|
194,582
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
194,582
|
|
|
|
|
|
|
|
|
Elimination of third-party interests
|
|
December 31, 2018
(in U.S. dollar thousands)
|
|
|
Consolidated
IFRS
|
|
|
Strategic
Value fund
|
|
|
BOF-C
fund
|
|
|
Other
|
|
|
Burford-only
|
|
|
Capital provision income
|
|
|
|
|
404,230
|
|
|
|
|
|
(11,705)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
392,525
|
|
|
|
Asset management income
|
|
|
|
|
11,691
|
|
|
|
|
|
4,108
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
15,799
|
|
|
|
Insurance income
|
|
|
|
|
10,406
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
10,406
|
|
|
|
Services income
|
|
|
|
|
1,650
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,650
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
1,801
|
|
|
|
|
|
(334)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,467
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
(1,453)
|
|
|
|
|
|
(4)
|
|
|
|
|
|
—
|
|
|
|
|
|
(16)
|
|
|
|
|
|
(1,473)
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
(3,348)
|
|
|
|
|
|
3,336
|
|
|
|
|
|
—
|
|
|
|
|
|
12
|
|
|
|
|
|
—
|
|
|
|
Total income
|
|
|
|
|
424,977
|
|
|
|
|
|
(4,599)
|
|
|
|
|
|
—
|
|
|
|
|
|
(4)
|
|
|
|
|
|
420,374
|
|
|
|
Operating expenses
|
|
|
|
|
(71,831)
|
|
|
|
|
|
4,599
|
|
|
|
|
|
—
|
|
|
|
|
|
4
|
|
|
|
|
|
(67,228)
|
|
|
|
Amortization of intangible asset
|
|
|
|
|
(9,494)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,494)
|
|
|
|
Operating profit
|
|
|
|
|
343,652
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
343,652
|
|
|
|
Finance costs
|
|
|
|
|
(38,538)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(38,538)
|
|
|
|
Profit before tax
|
|
|
|
|
305,114
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
305,114
|
|
|
|
Taxation (expense)/credit
|
|
|
|
|
12,463
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
12,463
|
|
|
|
Profit after tax
|
|
|
|
|
317,577
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
317,577
|
|
|
|
Other comprehensive income
|
|
|
|
|
24,701
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
24,701
|
|
|
|
Total comprehensive income
|
|
|
|
|
342,278
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
342,278
|
|
|
December 31, 2017
(in U.S. dollar thousands)
|
|
|
Consolidated
IFRS
|
|
|
Strategic
Value fund
|
|
|
BOF-C
fund
|
|
|
Other
|
|
|
Burford-only
|
|
|
Capital provision income
|
|
|
|
|
315,280
|
|
|
|
|
|
(2,868)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
312,412
|
|
|
|
Asset management income
|
|
|
|
|
14,458
|
|
|
|
|
|
1,168
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
15,626
|
|
|
|
Insurance income
|
|
|
|
|
7,613
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,613
|
|
|
|
Services income
|
|
|
|
|
1,837
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,837
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
2,650
|
|
|
|
|
|
(451)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,199
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
1,639
|
|
|
|
|
|
(85)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,554
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
(863)
|
|
|
|
|
|
863
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Total income
|
|
|
|
|
342,614
|
|
|
|
|
|
(1,373)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
341,241
|
|
|
|
Operating expenses
|
|
|
|
|
(57,479)
|
|
|
|
|
|
1,372
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(56,107)
|
|
|
|
Amortisation of intangible asset
|
|
|
|
|
(11,703)
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(11,702)
|
|
|
|
Operating profit
|
|
|
|
|
273,432
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
273,432
|
|
|
|
Finance costs
|
|
|
|
|
(24,251)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(24,251)
|
|
|
|
Profit before tax
|
|
|
|
|
249,181
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
249,181
|
|
|
|
Taxation (expense)/credit
|
|
|
|
|
123
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
123
|
|
|
|
Profit after tax
|
|
|
|
|
249,304
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
249,304
|
|
|
|
Other comprehensive income
|
|
|
|
|
(28,206)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,206)
|
|
|
|
Total comprehensive income
|
|
|
|
|
221,098
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
221,098
|
|
|
Reconciliation of Consolidated Statement of Financial Position to Burford-only results
|
|
|
|
Elimination of third-party interests
|
|
December 31, 2019
(in U.S. dollar thousands)
|
|
|
Consolidated
IFRS
|
|
|
Strategic
Value fund
|
|
|
BOF-C
fund
|
|
|
Other
|
|
|
Burford-only
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
186,621
|
|
|
|
|
|
(3,235)
|
|
|
|
|
|
(14,810)
|
|
|
|
|
|
(113)
|
|
|
|
|
|
168,463
|
|
|
|
Cash management assets
|
|
|
|
|
37,966
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
37,966
|
|
|
|
Due from brokers
|
|
|
|
|
95,226
|
|
|
|
|
|
(95,226)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Other assets
|
|
|
|
|
13,263
|
|
|
|
|
|
712
|
|
|
|
|
|
5,720
|
|
|
|
|
|
70
|
|
|
|
|
|
19,765
|
|
|
|
Due from settlement of capital provision
assets
|
|
|
|
|
54,358
|
|
|
|
|
|
(22,899)
|
|
|
|
|
|
(9,796)
|
|
|
|
|
|
(2,674)
|
|
|
|
|
|
18,989
|
|
|
|
Capital provision assets
|
|
|
|
|
2,045,329
|
|
|
|
|
|
(73,535)
|
|
|
|
|
|
(92,162)
|
|
|
|
|
|
(45,642)
|
|
|
|
|
|
1,833,990
|
|
|
|
Equity securities
|
|
|
|
|
31,396
|
|
|
|
|
|
(31,367)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
29
|
|
|
|
Tangible fixed assets
|
|
|
|
|
20,184
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
20,184
|
|
|
|
Intangible asset
|
|
|
|
|
8,703
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,703
|
|
|
|
Goodwill
|
|
|
|
|
133,999
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133,999
|
|
|
|
Deferred tax asset
|
|
|
|
|
24,939
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
24,939
|
|
|
|
Total assets
|
|
|
|
|
2,651,984
|
|
|
|
|
|
(225,550)
|
|
|
|
|
|
(111,048)
|
|
|
|
|
|
(48,359)
|
|
|
|
|
|
2,267,027
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
91,493
|
|
|
|
|
|
(91,493)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Due to brokers
|
|
|
|
|
51,401
|
|
|
|
|
|
(51,401)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Loan interest payable
|
|
|
|
|
9,462
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,462
|
|
|
|
Other liabilities
|
|
|
|
|
51,430
|
|
|
|
|
|
(329)
|
|
|
|
|
|
(65)
|
|
|
|
|
|
(41)
|
|
|
|
|
|
50,995
|
|
|
|
Loan capital
|
|
|
|
|
655,880
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
655,880
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
13,944
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,566)
|
|
|
|
|
|
(2,342)
|
|
|
|
|
|
8,036
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
235,720
|
|
|
|
|
|
(82,327)
|
|
|
|
|
|
(107,417)
|
|
|
|
|
|
(45,976)
|
|
|
|
|
|
—
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
9,662
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,662
|
|
|
|
Total liabilities
|
|
|
|
|
1,118,992
|
|
|
|
|
|
(225,550)
|
|
|
|
|
|
(111,048)
|
|
|
|
|
|
(48,359)
|
|
|
|
|
|
734,035
|
|
|
|
Total net assets
|
|
|
|
|
1,532,992
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,532,992
|
|
|
|
|
|
|
|
|
Elimination of third-party interests
|
|
December 31, 2018
(in U.S. dollar thousands)
|
|
|
Consolidated
IFRS
|
|
|
Strategic
Value fund
|
|
|
BOF-C
fund
|
|
|
Other
|
|
|
Burford-only
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
265,551
|
|
|
|
|
|
(14,574)
|
|
|
|
|
|
(15,000)
|
|
|
|
|
|
—
|
|
|
|
|
|
235,977
|
|
|
|
Cash management assets
|
|
|
|
|
41,449
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
41,449
|
|
|
|
Due from brokers
|
|
|
|
|
129,911
|
|
|
|
|
|
(129,911)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Other assets
|
|
|
|
|
16,313
|
|
|
|
|
|
5,477
|
|
|
|
|
|
14,916
|
|
|
|
|
|
—
|
|
|
|
|
|
36,706
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
37,109
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
37,109
|
|
|
|
Capital provision assets
|
|
|
|
|
1,641,035
|
|
|
|
|
|
(87,006)
|
|
|
|
|
|
—
|
|
|
|
|
|
(32,438)
|
|
|
|
|
|
1,521,591
|
|
|
|
Derivative financial asset
|
|
|
|
|
4,154
|
|
|
|
|
|
(4,154)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Equity securities
|
|
|
|
|
582
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
582
|
|
|
|
Tangible fixed assets
|
|
|
|
|
1,866
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,866
|
|
|
|
Intangible asset
|
|
|
|
|
18,198
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,198
|
|
|
|
Goodwill
|
|
|
|
|
133,966
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133,966
|
|
|
|
Deferred tax asset
|
|
|
|
|
28,848
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
28,848
|
|
|
|
Total assets
|
|
|
|
|
2,318,982
|
|
|
|
|
|
(230,168)
|
|
|
|
|
|
(84)
|
|
|
|
|
|
(32,438)
|
|
|
|
|
|
2,056,292
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
112,821
|
|
|
|
|
|
(112,821)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Due to brokers
|
|
|
|
|
12,667
|
|
|
|
|
|
(12,667)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Loan interest payable
|
|
|
|
|
9,327
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,327
|
|
|
|
Other liabilities
|
|
|
|
|
31,046
|
|
|
|
|
|
(329)
|
|
|
|
|
|
(84)
|
|
|
|
|
|
(1)
|
|
|
|
|
|
30,632
|
|
|
|
Loan capital
|
|
|
|
|
638,665
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
638,665
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
3,244
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
171
|
|
|
|
|
|
3,415
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
136,959
|
|
|
|
|
|
(104,351)
|
|
|
|
|
|
—
|
|
|
|
|
|
(32,608)
|
|
|
|
|
|
—
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
4,099
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,099
|
|
|
|
Total liabilities
|
|
|
|
|
955,828
|
|
|
|
|
|
(230,168)
|
|
|
|
|
|
(84)
|
|
|
|
|
|
(32,438)
|
|
|
|
|
|
693,138
|
|
|
|
Total net assets
|
|
|
|
|
1,363,154
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,363,154
|
|
|
Current Portfolio
We count each of our contractual relationships as an “asset”, although many such relationships are composed of multiple underlying litigation matters that are often cross-collateralized rather than reliant on the performance of a single matter. As of December 31, 2019, our Burford-only balance sheet portfolio consisted of 151 assets held directly and nine other assets held indirectly through our investment in the Strategic Value Fund. Additionally, a number of the capital provision portfolio assets have multiple claims underlying them, although some of those claims relate to the same underlying legal theory and thus have some correlation.
We originate legal finance assets using a wide range of economic structures. The starting point in a single case asset is typically an arrangement under which we will receive our capital back as a first dollar matter followed by some preferred return on that capital along with a share of the ultimate recovery. Even in straightforward assets, the terms agreed will vary widely based on our assessment of the risk and likely tenor of the matter. Moreover, the larger or more complex a matter, the more likely it is to have an individually designed transactional structure to fit the needs of the matter, to accommodate what are often multiple parties with economic interests and to align interests and incentivize rational economic behavior. It is, therefore, difficult to generalize about the financial terms of legal finance assets, although Burford underwrites all of its assets to have the ability to produce desirable returns.
At December 31, 2019, our Consolidated portfolio was $3.1 billion, including deployed cost, unrealized gain and undrawn commitments. At December 31, 2019, the Group-wide portfolio was $4.2 billion of which $2.7 billion was attributable to the Burford-only balance sheet. The table below reconciles the calculation of our current portfolio on a Burford-only balance sheet basis to the calculation on a Group-wide basis.
Current Portfolio — Group-wide
As of December 31, 2019
(in U.S. dollar millions)
|
|
|
Burford-only
Balance Sheet
|
|
|
Funds
|
|
|
BOF — C
|
|
|
Group-wide
Total
|
|
|
Capital Provision — Direct:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deployed cost
|
|
|
|
|
877.3
|
|
|
|
|
|
424.7
|
|
|
|
|
|
85.1
|
|
|
|
|
|
1,387.1
|
|
|
|
+ Fair Value adjustments
|
|
|
|
|
772.1
|
|
|
|
|
|
83.0
|
|
|
|
|
|
7.1
|
|
|
|
|
|
862.2
|
|
|
|
= Carrying Value
|
|
|
|
|
1,649.4
|
|
|
|
|
|
507.7
|
|
|
|
|
|
92.2
|
|
|
|
|
|
2,249.3
|
|
|
|
+ Undrawn commitments
|
|
|
|
|
911.7
|
|
|
|
|
|
307.6
|
|
|
|
|
|
152.4
|
|
|
|
|
|
1,371.7
|
|
|
|
= Total
|
|
|
|
|
2,561.1
|
|
|
|
|
|
815.3
|
|
|
|
|
|
244.6
|
|
|
|
|
|
3,621.0
|
|
|
|
Capital Provision — Indirect:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Value*
|
|
|
|
|
184.6
|
|
|
|
|
|
104.9
|
|
|
|
|
|
0.0
|
|
|
|
|
|
289.5
|
|
|
|
+ Undrawn commitments
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
= Total
|
|
|
|
|
184.6
|
|
|
|
|
|
104.9
|
|
|
|
|
|
0.0
|
|
|
|
|
|
289.5
|
|
|
|
Post-Settlement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deployed cost
|
|
|
|
|
0.0
|
|
|
|
|
|
218.7
|
|
|
|
|
|
0.0
|
|
|
|
|
|
218.7
|
|
|
|
+ Fair Value adjustments
|
|
|
|
|
0.0
|
|
|
|
|
|
16.6
|
|
|
|
|
|
0.0
|
|
|
|
|
|
16.6
|
|
|
|
= Carrying Value
|
|
|
|
|
0.0
|
|
|
|
|
|
235.3
|
|
|
|
|
|
0.0
|
|
|
|
|
|
235.3
|
|
|
|
+ Undrawn commitments
|
|
|
|
|
0.0
|
|
|
|
|
|
63.3
|
|
|
|
|
|
0.0
|
|
|
|
|
|
63.3
|
|
|
|
= Total
|
|
|
|
|
0.0
|
|
|
|
|
|
298.6
|
|
|
|
|
|
0.0
|
|
|
|
|
|
298.6
|
|
|
|
Total Portfolio
|
|
|
|
|
2,745.7
|
|
|
|
|
|
1,218.8
|
|
|
|
|
|
244.6
|
|
|
|
|
|
4,209.1
|
|
|
*
Does not include hedging-related assets of $92 million which are included on the balance sheet in lines other than capital provision assets.
The first table below reconciles the calculation of our current portfolio on a Consolidated basis to the calculation on a Group-wide basis. The second table below provides additional details on the reconciliation.
Reconciliation of Current Portfolio — Consolidated IFRS to Group-wide
|
|
|
|
|
|
|
|
|
|
Capital
Provision-Direct
|
|
|
Post Settlement
|
|
|
Capital
Provision-Indirect
|
|
|
|
|
|
|
|
As of December 31,2019
(in U.S. dollar millions)
|
|
|
Consolidated
IFRS total
|
|
|
Non-consolidated
Funds (e)
|
|
|
Non-consolidated
Funds (e)
|
|
|
Plus: reported
in equity securities
|
|
|
Group-wide
total
|
|
|
Deployed cost
|
|
|
|
|
1,237.0(b)
|
|
|
|
|
|
383.5
|
|
|
|
|
|
218.7(d)
|
|
|
|
|
|
29.7
|
|
|
|
|
|
1,868.9
|
|
|
|
+ Fair Value adjustments
|
|
|
|
|
808.3(a)
|
|
|
|
|
|
78.6
|
|
|
|
|
|
16.6(d)
|
|
|
|
|
|
1.7
|
|
|
|
|
|
905.2
|
|
|
|
= Carrying value
|
|
|
|
|
2,045.3(a)
|
|
|
|
|
|
462.1
|
|
|
|
|
|
235.3(d)
|
|
|
|
|
|
31.4
|
|
|
|
|
|
2,774.1
|
|
|
|
+ Undrawn commitments
|
|
|
|
|
1,070.9(f)
|
|
|
|
|
|
300.8
|
|
|
|
|
|
63.3(d)
|
|
|
|
|
|
—
|
|
|
|
|
|
1,435.0
|
|
|
|
Total
|
|
|
|
|
3,116.2(g)
|
|
|
|
|
|
762.9(e)
|
|
|
|
|
|
298.6(d)
|
|
|
|
|
|
31.4(c)
|
|
|
|
|
|
4,209.1(d)
|
|
|
(a)
From Note 6 (capital provision assets) to our consolidated financial statements.
(b)
Derived by subtracting fair value adjustments from period end carrying value.
(c)
On an IFRS consolidated basis, some of the assets held within the Strategic Value Fund are included in the “Equity Securities” line of the statement of financial position. However, they are classified within capital provision assets in the Group-wide total amounts and the “Current Portfolio — Group-wide” table above.
(d)
From “Current Portfolio — Group-wide” table above.
(e)
These amounts represent the funds that are not consolidated under IFRS within the Group financial statements.
(f)
From Note 30 (financial commitments and contingent liabilities) to our consolidated financial statements — the amounts in this table represent the sum of total unfunded commitments for capital provision and legal risk in Note 30. Commitments are off-balance sheet under IFRS.
(g)
This amount represents a non-IFRS figure.
Additional Details on Reconciliation
|
|
|
|
Capital Provision-Direct
|
|
|
Capital Provision-Indirect
|
|
As of December 31, 2019
(in U.S. dollar millions)
|
|
|
Consolidated
IFRS
total
|
|
|
Burford-
only
Balance
Sheet
|
|
|
Consolidated
Funds(d)
|
|
|
BOF-C
|
|
|
Capital
Provision-
Direct total
|
|
|
Strategic
Value
Fund
|
|
|
Less:
reported
in equity
securities
|
|
|
Capital
Provision-
Indirect total
|
|
|
Deployed cost
|
|
|
|
|
1,237.0(e)
|
|
|
|
|
|
877.3(c)
|
|
|
|
|
|
41.2
|
|
|
|
|
|
85.1(c)
|
|
|
|
|
|
1,003.6
|
|
|
|
|
|
263.1
|
|
|
|
|
|
(29.7)
|
|
|
|
|
|
233.4
|
|
|
|
+ Fair Value adjustments
|
|
|
|
|
808.3(a)
|
|
|
|
|
|
772.1(c)
|
|
|
|
|
|
4.4
|
|
|
|
|
|
7.1(c)
|
|
|
|
|
|
783.6
|
|
|
|
|
|
26.4
|
|
|
|
|
|
(1.7)
|
|
|
|
|
|
24.7
|
|
|
|
Carrying value
|
|
|
|
|
2,045.3(a)
|
|
|
|
|
|
1,649.4(c)
|
|
|
|
|
|
45.6
|
|
|
|
|
|
92.2(c)
|
|
|
|
|
|
1,787.2
|
|
|
|
|
|
289.5(c)
|
|
|
|
|
|
(31.4)
|
|
|
|
|
|
258.1
|
|
|
|
+ Undrawn commitments
|
|
|
|
|
1,070.9(b)
|
|
|
|
|
|
911.7(c)
|
|
|
|
|
|
6.8
|
|
|
|
|
|
152.4(c)
|
|
|
|
|
|
1,070.9(b)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Total
|
|
|
|
|
3,116.2(g)
|
|
|
|
|
|
2,561.1(c)
|
|
|
|
|
|
52.4
|
|
|
|
|
|
244.6(c)
|
|
|
|
|
|
2,858.1
|
|
|
|
|
|
289.5(c)
|
|
|
|
|
|
(31.4)(f)
|
|
|
|
|
|
258.1
|
|
|
|
|
(a)
From Note 6 (capital provision assets) to our consolidated financial statements.
(b)
From Note 30 (financial commitments and contingent liabilities) to our consolidated financial statements; the amounts in this table represent the sum of total unfunded commitments for capital provision and legal risk in Note 30. Commitments are off-balance sheet under IFRS.
(c)
From “Current Portfolio — Group-wide” table above.
(d)
The sum of the amounts in the “Capital Provision-Direct — Consolidated Funds” column in the “Additional Details on Reconciliation” table above and “Capital Provision-Direct — Non-consolidated Funds” column in the “Reconciliation of Current Portfolio — Consolidated IFRS to Group-wide” table above is equal to the amounts in the “Funds” column of the “Capital Provision-Direct” section of the “Current Portfolio — Group-wide” table above.
(e)
Derived by subtracting fair value adjustments from period end carrying value.
(f)
On an IFRS consolidated basis, some of the assets held within the Strategic Value Fund are included in the “Equity Securities” line of the statement of financial position. However, they are classified within capital provision assets in the Group-wide total amounts and the “Current Portfolio — Group-wide” table above.
(g)
This amount represents a non-IFRS figure.
In the “Current Portfolio — Group-wide” table above, the “Funds” column includes some funds that are consolidated into our IFRS financial statements and some funds that are not; these funds are presented in separate columns in the “Reconciliation of Current Portfolio — IFRS Financials to Group-wide” table above. When the consolidated funds are added to the “Burford-only Balance Sheet” and “BOF-C” columns in the “Current Portfolio — Group-wide” table above, the sum corresponds to the amounts presented in Note 6 to our consolidated financial statements. When the amount of our non-consolidated funds is added to this sum, the total represents our Group-wide portfolio amounts, including both consolidated and non-consolidated funds.
The “Capital Provision-Indirect” assets are presented in the “Current Portfolio — Group-wide” table above on a deconsolidated basis, such that the “Burford-only Balance Sheet” column shows the Burford-only share of the Strategic Value Fund and the “Funds” column shows the LP’s share. On a consolidated basis, some of the assets of this fund are included in the “Equity Securities” line of the balance sheet. The “Reconciliation of Current Portfolio — IFRS Financials to Group-wide” table above presents that adjustment.
The undrawn commitment amounts in the “Current Portfolio — Group-wide” table above correspond to the amounts included in Note 30 to our consolidated financial statements, as indicated above.
The portfolio has grown steadily over the past several years, with a compound annual growth rate (CAGR) of 50% (Burford only) and 66% (Group-wide) since 2015. The significant portfolio growth over time provides the basis for future continued growth of our income and profits from the portfolio.
Undrawn Commitments
Our portfolio includes both commitments that have been funded and, therefore, have become deployments, as well as commitments that have not been funded and, therefore, are expected to become deployments at some future date. Although our realizations are neither controllable nor predictable, we do have significantly more visibility of and control over our deployments. Although some portion of these deployments are on prior definitive commitments which we are obligated to fund, a significant portion of deployments on prior commitments is discretionary, so that we have control over whether to fund.
As of December 31, 2019, our Consolidated unfunded commitments were $1.1 billion. As of the same date, our Burford-only balance sheet unfunded commitments were $911.7 million and our Group-wide total unfunded commitments were $1.435 billion. Deployments on new potential commitments are entirely within our control, since we can decline to make the commitment in the first instance if we do not want to deploy capital at that time.
The table below sets forth our Group-wide unfunded commitments outstanding at December 31, 2019 and December 31, 2018 on a Consolidated basis, a Burford balance sheet only basis and a Group-wide basis and provides a reconciliation.
As of December 31, 2019 (2018)
(in U.S. dollar millions)
|
|
|
|
|
|
|
|
|
Consolidated
commitments
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
balance sheet
commitments
|
|
|
Fund
commitments
|
|
|
BOF-C
commitments
|
|
|
Group-wide
total
commitments
|
|
|
Capital provision-direct:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal finance commitments
|
|
|
|
|
2019
|
|
|
|
|
|
981.5(a)
|
|
|
|
|
|
(152.9)
|
|
|
|
|
|
828.6
|
|
|
|
|
|
287.4
|
|
|
|
|
|
146.2
|
|
|
|
|
|
1,262.2
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
646.6(a)
|
|
|
|
|
|
(31.7)
|
|
|
|
|
|
614.9
|
|
|
|
|
|
248.2
|
|
|
|
|
|
31.8
|
|
|
|
|
|
894.9
|
|
|
|
Legal risk management
|
|
|
|
|
2019
|
|
|
|
|
|
89.3(a)
|
|
|
|
|
|
(6.2)
|
|
|
|
|
|
83.1
|
|
|
|
|
|
20.2
|
|
|
|
|
|
6.2
|
|
|
|
|
|
109.5
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
72.5(a)
|
|
|
|
|
|
0.0
|
|
|
|
|
|
72.5
|
|
|
|
|
|
15.4
|
|
|
|
|
|
0.0
|
|
|
|
|
|
87.9
|
|
|
|
Capital provision-indirect:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments in the Strategic Value Fund
|
|
|
|
|
2019
|
|
|
|
|
|
0.0(a)
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
0.0(a)
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
Commitments in Post-Settlement Funds
|
|
|
|
|
2019
|
|
|
|
|
|
0.0(a)
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
63.3
|
|
|
|
|
|
0.0
|
|
|
|
|
|
63.3
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
0.0(a)
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
19.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
19.0
|
|
|
|
Total unfunded
commitments
|
|
|
|
|
2019
|
|
|
|
|
|
1,070.8
|
|
|
|
|
|
(159.1)
|
|
|
|
|
|
911.7
|
|
|
|
|
|
370.9
|
|
|
|
|
|
152.4
|
|
|
|
|
|
1,435.0
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
719.1
|
|
|
|
|
|
31.7
|
|
|
|
|
|
687.4
|
|
|
|
|
|
282.6
|
|
|
|
|
|
31.8
|
|
|
|
|
|
1,001.8
|
|
|
(a)
From Note 30 (financial commitments and contingent liabilities) to our financial statements.
The table above shows $912 million of unfunded (undrawn) commitments attributable to the capital provision-direct portfolio on the Burford-only balance sheet. Other undrawn commitments are the
responsibility of funds and other capital pools, which plan separately to be able to meet those commitments, typically by calling capital from investors. Of that number, $83 million is attributable to legal risk management, none of which we expect to need to fund and none of which would be required on any sort of accelerated basis. The remaining $829 million relates to existing legal finance arrangements. Note that, since our funding commitments may not be deployed for a variety of reasons, they are considered contingent liabilities, as presented in Note 30 to our consolidated financial statements.
While $829 million of legal finance arrangements seems like a large number, there are three important points to bear in mind about undrawn commitments. First, our undrawn commitments can be divided into two categories: discretionary and definitive. Discretionary commitments are those commitments where we retain a considerable degree of discretion over whether to advance capital and generally would not suffer an adverse financial consequence from failing to do so. As an example, if we have committed to a law firm to fund future new cases for them, that commitment would be subject to underwriting and approving those new cases; we would not be obligated to provide funding unless we have given those approvals. Definitive commitments are those commitments where we are contractually obliged to fund incremental capital and failure to do so without good reason (such as a negative change in a case’s prospects) would typically come with adverse contractual consequences. Of the $829 million of litigation finance commitments, $540 million (65%) are discretionary and $289 million (35%) are definitive.
Capital provision-direct unfunded commitments
Burford-only balance sheet
(in U.S. dollar thousands, unless otherwise indicated)
December 31, 2019
|
|
|
$
|
|
|
% of total
|
|
|
Unfunded commitments — legal finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Definitive
|
|
|
|
|
288,513
|
|
|
|
|
|
35
|
|
|
|
Discretionary
|
|
|
|
|
540,095
|
|
|
|
|
|
65
|
|
|
|
Total
|
|
|
|
|
828,608
|
|
|
|
|
|
100
|
|
|
Second, we have good visibility into the timing of when definitive commitments will be drawn, and the ability to plan for those draws. This visibility is partly because many of our agreements actually structure future draws on an explicit timetable or with reference to case events, and partly because we have good insight into the timing of individual legal actions. For example, we know that the median time to trial in the U.S. federal courts was recently reported as 27.8 months, and has not been lower than 26.3 months in the last five years. Thus, we know that the significant portion of our funding that relates to a case’s trial in those courts for a new matter in 2020 won’t be drawn until 2022 at the earliest. Because of the longer-term nature of such deployments, our aggregate deployments on undrawn commitments remain gradual, with a median over the last three years of 16% deployments during the course of the year on undrawn commitments at prior year’s end.
Third, the incidence of settlement means that not all of our commitments will in any event be drawn. Historically, we have ended up deploying on average 89% of our commitments on concluded (fully and partially) matters, but it can take many years to reach that level.
Burford-only Balance Sheet Capital Provision-Direct Portfolio
Before considering the performance of the legal finance assets in our capital provision-direct portfolio, it may be worth reviewing the typical life of a litigation matter. While different legal fora have somewhat different approaches, this generic approach is generally applicable. Once a case is commenced, pre-trial activity begins, including discovery and pre-trial motions. Often, as the case develops through this phase, one side or the other will conclude its position is not as strong as it thought, which can often lead to settlement discussions. If a case doesn’t settle, it moves to trial and a judgment; again, settlement can often occur at or around the trial phase. After a judgment has been entered, there is typically an appeal process (during which settlements can also occur) before the judgment becomes final. This entire process can occur over the course of several years but, in some jurisdictions, can take longer (or, in some small number of cases, be faster).
Of our concluded cases to date, 68% based on deployed cost have settled, while 32% have gone to adjudication (note that we include assets sold within the adjudication category for purposes of this analysis).
Returns are robust from settlements, but strong return outperformance comes from asymmetric returns on judgments. This is not anything unusual nor are those outperforming assets unique or non-repeatable; rather, it is the fundamental nature of the litigation process to produce dispersed returns. It is inevitable that a small portion of our portfolio will deliver an outsized percentage of our returns. Our underwriting process and deal structures are designed to put potential outperformers in the portfolio and make sure we get significant returns if they go all the way to a positive judgment.
Losses are a normal part of our business, but are well tolerated within our portfolio in light of our high returns in the event of successful matters.
Set forth below is a discussion of the portfolio tenor and returns for the Burford-only balance sheet capital provision-direct portfolio.
Portfolio Tenor
The reality of litigation is that a majority of cases settle and pay proceeds in a relatively short period of time, and a minority of our portfolio goes on to adjudication, which takes longer. The chart below shows the impact of those outcomes over Burford’s history of realizations since inception.
While we believe strongly that our Petersen investment is a part of Burford’s overall performance and should not be treated separately, we have presented the chart below both with and without the impact of the secondary sales we have made of our Petersen investment, since we think it is useful to consider the data in both ways.
![[MISSING IMAGE: TM2023161D1-LC_PORTTENOR4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2020/09/11/0001104659-20-104384_TM2023161D1-LC_PORTTENOR4C.JPG)
Note that the vintage cash flows and weighted average lives in the charts above are calculated from initial commitment dates. We have historically presented weighted average life (or duration) data from the time of average deployment to the time of average realization, which has to date been about a half-year shorter than measuring from initial commitment. Said another way, it typically takes about a half a year to get to average deployment on a commitment since initial deployments of a portion of the commitment are often followed by subsequent deployments that take place over several years. In calculating a portfolio WAL, we compute a weighted average of the individual asset WALs. On that basis, we can look at the historical weighted average lives (beginning at the point of average deployment) of the capital provision-direct portfolio, weighted both by deployed cost (our historical method) and by recoveries. Weighting by deployed cost
provides a view on how long on average a dollar of capital is deployed while weighting by recoveries provides a view on how long on average it takes to recover a dollar of return.
Burford’s capital provision-direct portfolio, though sizeable at this point, is still relatively young because of its rapid growth. As a consequence, weighted average lives on the concluded portfolio in aggregate are likely shorter than they would be on a mature portfolio because we have realized some of the shorter-tenor assets in our more recent, larger vintages while still being some time away from realizing the longer-tenor assets in those vintages.
Portfolio Returns
As of December 31, 2019, concluded assets in the Burford-only balance sheet capital provision-direct portfolio had generated, on a cumulative basis, an ROIC of 88% and an IRR of 31% since our inception.
We do not believe it makes sense to exclude our highest-returning assets from our return metrics in a business where we are currently originating new assets with the potential to generate outsized returns. Nonetheless, we have in the past provided our returns data excluding our Petersen realizations; at December 31, 2019, excluding proceeds from our sales of Petersen participations, our capital provision-direct ROIC would have been 54% and our IRR 24% instead of an ROIC of 88% and an IRR of 31%.
Set forth below is a table with a summary by vintage of every asset that we have funded in our capital provision-direct portfolio over our history.
Details on the Group-wide Portfolio
The following chart shows the products and services we provide that give rise to the assets in our capital provision-direct portfolio. The total amounts shown in the table below correspond to amounts presented in the “Current Portfolio — Group-wide” table above. See the “Reconciliation of Current Portfolio — Group-wide” table above for a reconciliation of the total amounts calculated on a Consolidated basis.
Total Group-wide portfolio (funded cost + unrealized gain + undrawn commitment) by product/service
|
|
|
|
Capital provision-direct
|
|
As of December 31, 2019
(in U.S. dollar millions)
|
|
|
Burford-only
balance sheet
|
|
|
BOF-C
|
|
|
Other funds
|
|
|
Group-wide
total
|
|
|
Single
|
|
|
|
|
560.0
|
|
|
|
|
|
84.8
|
|
|
|
|
|
245.7
|
|
|
|
|
|
890.5
|
|
|
|
Portfolio
|
|
|
|
|
1,742.9
|
|
|
|
|
|
153.6
|
|
|
|
|
|
549.4
|
|
|
|
|
|
2,445.9
|
|
|
|
Asset recovery
|
|
|
|
|
173.5
|
|
|
|
|
|
0.0
|
|
|
|
|
|
0.0
|
|
|
|
|
|
173.5
|
|
|
|
Legal risk
|
|
|
|
|
84.7
|
|
|
|
|
|
6.2
|
|
|
|
|
|
20.2
|
|
|
|
|
|
111.1
|
|
|
|
Total
|
|
|
|
|
2,561.1
|
|
|
|
|
|
244.6
|
|
|
|
|
|
815.3
|
|
|
|
|
|
3,621.0
|
|
|
We classify cases by the jurisdiction in which they are pending (or, for arbitration, “seated” in the jurisdiction which establishes the court regime and supervises the underlying arbitration) regardless of the nationality of the parties, and in the case of multinational matters we classify them based on their predominant connection, if one can be discerned. When we have matters that simply defy such categorization, we have classified them as “global”. The following chart shows a breakdown of Group-wide commitments by geography as of December 31, 2019. The Group-wide commitments shown below include capital provision direct deployed cost of $1,387.1 million and undrawn commitments of $1,371.7 million, which amount to $2,758.8 million; these amounts do not include unrealized gains. These amounts correspond to amounts presented in the “Current Portfolio — Group-wide” table above. See “Reconciliation of Current Portfolio — Group-wide” table above for a reconciliation of such amounts calculated on a Consolidated basis.
![[MISSING IMAGE: TM2023161D3-PC_CAPITAL4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2020/09/11/0001104659-20-104384_TM2023161D3-PC_CAPITAL4C.JPG)
Although our business is global, the bulk of our commitments (and, correspondingly, our deployments and realizations) are denominated in U.S. dollars. The following are charts showing a breakdown of Group-wide commitments by currency as of December 31, 2019. The Group-wide commitments shown below include deployed cost and undrawn commitments but do not include unrealized gains. See the table
under “— Current Portfolio” for a reconciliation of these Group-wide financial measures to the most directly comparable financial measures calculated and presented in accordance with IFRS.
![[MISSING IMAGE: TM2023161D1-PC_CAPITALB4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2020/09/11/0001104659-20-104384_TM2023161D1-PC_CAPITALB4CLR.JPG)
These charts do not capture all of the currency risk to which the business is subject and are not intended to do so; they merely show the currency in which our capital provision-direct commitments are written. While generally our returns are computed based on that contractual currency (so that if we advance U.S. dollars we are entitled to be repaid in U.S. dollars), the underlying litigation may expose us to currency risk. For example, if we finance an arbitration claim in which the underlying damages will be assessed by the tribunal in local currency and if that currency devalues against the U.S. dollar during the course of our investment, our share of the underlying recovery would be worth less in U.S. dollars (and we do not generally hedge that risk because of the uncertainty both of outcome and timing of the underlying adjudication). However, we are often entitled to recover our principal in the contractual currency regardless of underlying currency movements, so while the currency movement could reduce (or increase) our profits, it would be less likely to affect the recovery of our U.S. dollar principal.
The Group capital provision-direct portfolio encompasses 13 case types across 20 industries (as classified by the Standard Industrial Classification).
![[MISSING IMAGE: TM2023161D1-PC_CAPITALD4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2020/09/11/0001104659-20-104384_TM2023161D1-PC_CAPITALD4CLR.JPG)
The claims underlying our legal finance assets are generally diverse, as are our relationships with law firms. Our largest relationship with a single law firm consists of (i) financing arrangements between us and the firm, where the firm seeks to monetize the risk that the firm has taken with some of its clients, and (ii) direct financing arrangements with counterparties who elect to hire the firm. This law firm is one of the 50 largest law firms in the United States based on revenue according to The American Lawyer, and has more than 500 lawyers and more than 20 offices around the world. As of December 31, 2019, our portfolio of matters with the law firm included over 40 different litigation matters handled by more than 50 different partners in 13 different offices. Taken together, these arrangements accounted for approximately 13% of our Group-wide commitments (14% Burford-only balance sheet) as of December 31, 2019 and for the year ended December 31, 2019 represented approximately 7% of our consolidated total income (7% Burford-only total income). In regards to our overall portfolio, as of December 31, 2019, our capital provision-direct portfolio included 151 different assets. The portfolio does include certain related exposures where we have financed different clients relative to the same or very similar claims, such that outcomes on these related exposures are likely to be correlated. At December 31, 2019, our five largest related groups of exposures were:
Capital Provision-Direct Portfolio
Five Largest Related Exposures by Deployed Cost at December 31, 2019
|
Industry
|
|
|
Case Type
|
|
|
Geography
|
|
|
Number of
Assets
|
|
|
Number of
Cases
|
|
|
Group-Wide
Deployed
Cost $000
|
|
|
Burford-only
Balance Sheet
Deployed
Cost $000
|
|
|
Burford-only
Balance Sheet %
of Total Capital
Provision-Direct
Portfolio
Deployed Cost
|
|
|
Insurance
|
|
|
Federal Statutory
|
|
|
North America
|
|
|
|
|
10
|
|
|
|
|
|
17
|
|
|
|
|
|
143,974
|
|
|
|
|
|
94,240
|
|
|
|
|
|
11
|
|
|
|
Utilities
|
|
|
Arbitration
|
|
|
Europe
|
|
|
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
83,815
|
|
|
|
|
|
62,273
|
|
|
|
|
|
7
|
|
|
|
Food, beverage & tobacco
|
|
|
Antitrust
|
|
|
North America
|
|
|
|
|
2
|
|
|
|
|
|
2
|
|
|
|
|
|
81,900
|
|
|
|
|
|
34,128
|
|
|
|
|
|
4
|
|
|
|
Energy
|
|
|
Contract
|
|
|
North America
|
|
|
|
|
4
|
|
|
|
|
|
2
|
|
|
|
|
|
79,186
|
|
|
|
|
|
39,190
|
|
|
|
|
|
5
|
|
|
|
Software & services
|
|
|
Antitrust
|
|
|
North America
|
|
|
|
|
6
|
|
|
|
|
|
1
|
|
|
|
|
|
59,887
|
|
|
|
|
|
41,725
|
|
|
|
|
|
5
|
|
|
Capital Provision-Indirect Portfolio
We began deploying capital in our capital provision-indirect portfolio in 2017. To date we have originated 18 assets in this portfolio of which nine have concluded. Those concluded assets have generated an overall ROIC of 8% and an IRR of 17% (without regard to allocation between the balance sheet and the fund). Note that because of the shorter weighted average lives and lower risk of these assets, ROICs will generally be lower than deployed litigation finance assets. In addition to direct investment returns, Burford earns management and performance fees from these assets, increasing the balance sheet’s total returns from this portfolio.
Both the cash flows and the accounting for investments in our capital provision-indirect portfolio are complex, and the accounting tends to generate losses first and then gains later. On a cash basis, we often receive significant amounts of our invested capital back before the matter concludes, de-risking the asset and enhancing our IRRs.
As an accounting matter, because we typically hedge our positions to remove market risk (all we are trying to take is litigation risk), when we have an outstanding asset, both sides of the hedge flow through unrealized gains, but netting is not permitted so we show both unrealized gains and unrealized losses. However, once our traded Level 1 asset becomes a Level 3 asset as it proceeds to litigation, the gain/loss on the hedge is then realized even though the asset is not concluded but any gain/loss on the long position remains in unrealized gains. Only when the asset concludes will the gain/loss on the long move to realized gains. As a result of this accounting approach, we regularly have mismatches between realized and unrealized gains and losses, and the bulk of our reported income relates to concluded matters as opposed to ongoing ones.
Commitments
We build our business by, first, making commitments to fund legal finance assets, which in turn generate deployments of our capital, followed sometime later by a realization of our capital (through settlements, judgments or sales of our entitlement) and the return on it. Our origination and underwriting teams focus on generating commitments to our clients since these commitments are what will give rise to our capital provision assets, both in our funds and on our balance sheet.
Across the Group, new funding commitments increased 19% in 2019 to $1.6 billion (2018: $1.3 billion), reflecting robust demand for our financing as well as the trend we have observed in recent years of rising asset sizes, a segment of the market where our scale and financial strength provides competitive advantage.
![[MISSING IMAGE: TM2023161D1-BC_GROUP4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2020/09/11/0001104659-20-104384_TM2023161D1-BC_GROUP4C.JPG)
Of these new commitments, the Burford-only balance sheet accounted for $726 million or 46%. While Burford’s balance sheet commitment remained consistent with prior years, BOF and BOF-C, both put in place in December 2018, enabled Burford to make more commitments overall. This outcome is consistent with our goal of diversifying our funding sources to allow for further growth in the business while enabling the balance sheet to increase its returns without having to advance every dollar of capital. Investors may notice in the case-specific data some deviation from the investment allocation policy we announced at the time of the SWF transaction; the net impact of that policy is generally to have eligible legal finance assets allocated 42% to the balance sheet, 33% to the SWF and 25% to BOF. The reason for any deviation is generally because certain categories of legal finance assets are excluded from the sovereign wealth fund’s participation for comity reasons, and when an exclusion applies, assets are instead allocated 63% to the balance sheet and 37% to BOF. From time to time other deviations may also occur among the three capital sources due to risk limits, historical participation in a prior transaction, concentration limits or other objective factors.
We anticipate that, during 2020, BOF will have become fully committed to fund assets. At that point, BOF could only take on new commitments to the degree that it has recycled capital from recoveries on prior
deployed assets. When BOF becomes fully committed, BOF-C has agreed to increase its participation in each eligible transaction from 33% to 50%; as a consequence, the effective portion committed to by Burford’s balance sheet will rise from 42% to 50% on those transactions.
Group-wide commitments by type entered into during the year
|
($ in millions)
|
|
|
|
|
|
|
|
|
Burford-only
balance sheet
|
|
|
BOF-C
|
|
|
Other funds
|
|
|
Group-wide
total
|
|
|
Capital provision-direct
|
|
|
|
|
2019
|
|
|
|
|
|
530
|
|
|
|
|
|
55%
|
|
|
|
|
|
196
|
|
|
|
|
|
21%
|
|
|
|
|
|
229
|
|
|
|
|
|
24%
|
|
|
|
|
|
955
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
491
|
|
|
|
|
|
66%
|
|
|
|
|
|
53
|
|
|
|
|
|
7%
|
|
|
|
|
|
195
|
|
|
|
|
|
27%
|
|
|
|
|
|
739
|
|
|
|
Capital provision-indirect*
|
|
|
|
|
2019
|
|
|
|
|
|
196
|
|
|
|
|
|
61%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
123
|
|
|
|
|
|
39%
|
|
|
|
|
|
319
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
270
|
|
|
|
|
|
64%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
149
|
|
|
|
|
|
36%
|
|
|
|
|
|
419
|
|
|
|
Post-settlement
|
|
|
|
|
2019
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
299
|
|
|
|
|
|
100%
|
|
|
|
|
|
299
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
168
|
|
|
|
|
|
100%
|
|
|
|
|
|
168
|
|
|
|
Total
|
|
|
|
|
2019
|
|
|
|
|
|
726
|
|
|
|
|
|
46%
|
|
|
|
|
|
196
|
|
|
|
|
|
13%
|
|
|
|
|
|
651
|
|
|
|
|
|
41%
|
|
|
|
|
|
1,573
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
761
|
|
|
|
|
|
57%
|
|
|
|
|
|
53
|
|
|
|
|
|
4%
|
|
|
|
|
|
512
|
|
|
|
|
|
39%
|
|
|
|
|
|
1,326
|
|
|
*
Includes commitments for hedging-related assets, which increased amounts for 2018 by $53 million from what was previously reported.
Of our Group-wide commitments, corporate clients account for 52% of such commitments, law firms account for 44% of such commitments and other clients account for the remaining 4% of such commitments.
Capital provision-direct
Commitments to fund legal finance assets where we provide our capital directly grew 29% in 2019, fueled by continued strong demand for capital across our range of offerings, including an increase in corporate monetizations. During 2019, we committed to eight such monetizations in excess of $10 million each. Capital provision-direct commitment growth in 2019 continued a multi-year trend of robust increases in commitments in this area.
Capital provision-indirect
New commitments in our capital provision-indirect portfolio declined because the Strategic Value investment fund through which we make those commitments was largely fully committed for much of the year, constraining its ability to make new commitments. When the fund had resolutions during the year that freed up capacity, that capacity was soon committed again. When we raised the Strategic Value fund in June 2017, it closed with $500 million in investor commitments, including a $150 million commitment from the Burford-only balance sheet. The Strategic Value fund structure allows limited partners to opt in or out of each specific investment, and we are able to scale the balance sheet participation to absorb some of those opt-outs if desired. In addition to our original commitment, we have the opportunity to take investment overages when available, which we have exercised. Burford’s balance sheet is now the largest investor in the fund, with outstanding deployments of $184.6 million invested at December 31, 2019 out of total fund assets on that date of $289.5 million.
In the strategy that we conduct in the Strategic Value fund that presently comprises the entirety of the capital provision-indirect portfolio, we typically hedge away market risk. The margin we are required to post against those hedges is included in the due from brokers line in our consolidated statement of financial
position; it does not run through the capital provision assets line on the balance sheet. The impact of these hedging-related assets on these statistics can be seen from the charts below.
Annualized commitment data is supplemental financial information that we do not calculate or present on a Consolidated basis.
Deployments
We had deployments above $1 billion Group-wide in 2019. The table below sets forth our Group-wide deployments for the year ended December 31, 2019.
Group-wide deployments by type made during the year
|
($ in millions)
|
|
|
|
|
|
|
|
|
Burford-only
balance sheet
|
|
|
BOF-C
|
|
|
Other funds
|
|
|
Group-wide
total
|
|
|
Capital provision-direct
|
|
|
|
|
2019
|
|
|
|
|
|
269
|
|
|
|
|
|
54%
|
|
|
|
|
|
76
|
|
|
|
|
|
15%
|
|
|
|
|
|
156
|
|
|
|
|
|
31%
|
|
|
|
|
|
501
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
366
|
|
|
|
|
|
66%
|
|
|
|
|
|
21
|
|
|
|
|
|
4%
|
|
|
|
|
|
167
|
|
|
|
|
|
30%
|
|
|
|
|
|
554
|
|
|
|
Capital provision-indirect*
|
|
|
|
|
2019
|
|
|
|
|
|
196
|
|
|
|
|
|
61%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
123
|
|
|
|
|
|
39%
|
|
|
|
|
|
319
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
304
|
|
|
|
|
|
73%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
115
|
|
|
|
|
|
27%
|
|
|
|
|
|
419
|
|
|
|
Post-settlement commitments
|
|
|
|
|
2019
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
254
|
|
|
|
|
|
100%
|
|
|
|
|
|
254
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
160
|
|
|
|
|
|
100%
|
|
|
|
|
|
160
|
|
|
|
Total
|
|
|
|
|
2019
|
|
|
|
|
|
465
|
|
|
|
|
|
43%
|
|
|
|
|
|
76
|
|
|
|
|
|
7%
|
|
|
|
|
|
533
|
|
|
|
|
|
50%
|
|
|
|
|
|
1,074
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
670
|
|
|
|
|
|
59%
|
|
|
|
|
|
21
|
|
|
|
|
|
2%
|
|
|
|
|
|
442
|
|
|
|
|
|
39%
|
|
|
|
|
|
1,133
|
|
|
*
Includes deployments for hedging-related assets.
Capital provision-direct
Group-wide capital provision-direct deployments in 2019 were consistent with 2018. In 2019, we experienced the first full year of deployments against the revised capital allocation framework we announced in December 2018, after concluding a new funding arrangement with a sovereign wealth fund and third-party institutional investors in BOF. As such, BOF and BOF-C played a significant role in funding deployments in the period, so that the Burford-only balance sheet only accounted for 54% of capital provision-direct deployments during 2019 compared to 66% in 2018. If the balance sheet had comprised a similar percentage of the overall deployments as in 2018, Burford-only total deployments during 2019 would have been $527 million, or 13% higher than they actually were. Given the attractive economics of these third-party funding structures, especially the BOF-C arrangement where we receive 60% of investment profits while investing 33% of the investment capital, we believe that our Burford-only profitability will ultimately be higher despite the lower level of balance sheet deployments.
Capital provision-indirect
Since deployments in our capital provision-indirect portfolio tend to occur at or shortly after the time of commitment, the lower level of 2019 commitments in this area also led to a lower level of deployments than in 2018.
Deployments are supplemental financial information that we do not calculate or present on a Consolidated basis.
Realizations
Our annual Group-wide realizations increased by 22% from $841.0 million for the year ended December 31, 2018 to $1,028.0 million for the year ended December 31, 2019. We consider a legal finance asset to be concluded where there is no longer any litigation risk remaining, either because of an agreed settlement or a final judgment. Upon conclusion, we record the legal finance asset, including both capital and return, as having been realized. At that point, we book the amount due to us for our capital and return as either cash or a due from settlement receivable. Cash from realizations during the year net of any change in due from settlement receivables comprises our cash proceeds for the period.
Group-wide realizations by type
2019 (2018)
(in U.S. dollar millions, unless otherwise indicated)
|
|
|
|
|
|
|
|
|
Burford-only
Balance sheet
|
|
|
BOF-C
|
|
|
Other funds
|
|
|
Group-wide
total
|
|
|
Capital provision-direct
|
|
|
|
|
2019
|
|
|
|
|
|
228
|
|
|
|
|
|
64%
|
|
|
|
|
|
21
|
|
|
|
|
|
6%
|
|
|
|
|
|
105
|
|
|
|
|
|
30%
|
|
|
|
|
|
354
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
321
|
|
|
|
|
|
84%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
60
|
|
|
|
|
|
16%
|
|
|
|
|
|
381
|
|
|
|
Capital provision-indirect*
|
|
|
|
|
2019
|
|
|
|
|
|
233
|
|
|
|
|
|
54%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
199
|
|
|
|
|
|
46%
|
|
|
|
|
|
432
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
216
|
|
|
|
|
|
64%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
122
|
|
|
|
|
|
36%
|
|
|
|
|
|
338
|
|
|
|
Post-settlement
|
|
|
|
|
2019
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
250
|
|
|
|
|
|
100%
|
|
|
|
|
|
250
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
122
|
|
|
|
|
|
100%
|
|
|
|
|
|
122
|
|
|
|
Total
|
|
|
|
|
2019
|
|
|
|
|
|
461
|
|
|
|
|
|
44%
|
|
|
|
|
|
21
|
|
|
|
|
|
2%
|
|
|
|
|
|
554
|
|
|
|
|
|
54%
|
|
|
|
|
|
1,036
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
537
|
|
|
|
|
|
64%
|
|
|
|
|
|
—
|
|
|
|
|
|
0%
|
|
|
|
|
|
304
|
|
|
|
|
|
36%
|
|
|
|
|
|
841
|
|
|
*
Includes realizations from hedging positions.
The table below provides a reconciliation of our total realizations in 2019 on a Consolidated basis to a Group-wide basis.
As of December 31, 2019
(in U.S. dollar millions)
|
|
|
|
|
|
|
|
|
Consolidated IFRS realizations*
|
|
|
|
|
539.4
|
|
|
|
Warehousing realizations
|
|
|
|
|
33.1
|
|
|
|
Refinancing realizations
|
|
|
|
|
16.5
|
|
|
|
Cash from margin/hedging
|
|
|
|
|
97.1
|
|
|
|
Capital provision non-consolidated funds
|
|
|
|
|
100.0
|
|
|
|
Post Settlement non-consolidated funds
|
|
|
|
|
250.3
|
|
|
|
Group-wide realizations
|
|
|
|
|
1,036.4
|
|
|
*
See Note 6 to our consolidated financial statements.
Capital provision-direct
Since inception, from our capital provision-direct assets on the Burford-only balance sheet, we have generated $1.3 billion in realizations from 117 concluded or partially concluded assets which had a deployed cost of $672 million, while we have $877 million in capital deployed in ongoing assets.
Note that we continue to have a small number of ongoing assets in our older vintages. Given that we do not conclude our assets until there is no longer any litigation risk remaining and that adjudications can
take a long time, this is not surprising. Some of these longer-dated assets may turn out to be successes. Others could be losses. We will not know until legal activity concludes.
Realizations in capital provision-direct in 2019 were down 7% compared with the prior year. As with deployments, we saw a skew towards Burford’s investment funds, with balance sheet realizations from capital provision-direct assets declining 29% while investment fund realizations increased by 75%.
From our perspective, much of the volatility in capital provision-direct realizations is a timing issue. As we have long made clear, we can neither predict nor control the timing of the generation of litigation returns. We finance large, complex commercial claims. Our realizations come from their resolution. There is no “normal” for such claims; they are inherently idiosyncratic. We have had cases resolve in less than a week, and we have matters from 2010 still going strong. That is the opportunity in our business and it is why we are able to generate the returns we have historically delivered. We saw several drivers behind this timing issue in 2019:
•
Our portfolio consists of a relatively small number (151) of assets. Although a number of these assets (such as portfolio matters) have multiple cases underlying them, the timing of realizations on those assets is idiosyncratic and unpredictable, depending as it does on the legal process. As a consequence, it is entirely possible that we can go through a reporting period with relatively little realization activity even while the investment cases are progressing in a favorable manner.
•
Certain types of cases take longer to mature than others; international arbitration and intellectual property cases in particular can take quite a while to work through the legal process. As our mix of cases changes from vintage to vintage, this can impact the expected life and realization timing from that vintage. Since our pricing is designed to maintain our overall return levels even if a case takes longer to pursue, we are largely indifferent to longer case lives.
•
This idiosyncratic timing is also exacerbated by the relatively young overall life of our portfolio. Burford saw a dramatic increase in commitments beginning in 2017. Deployments on that and subsequent vintages occur with a lag; based on our concluded case history, it typically takes six months from initial commitment to have capital deployed on average and 1.5 years to have it fully deployed. Then, from the point of average deployment, it takes 2.3 years on average (weighted by recoveries) for realization, meaning that a 2017 vintage commitment wouldn’t be expected to turn into a realization for three years on average — and there are significant deviations from the mean.
Despite the modest level of realizations from our capital provision-direct portfolio, we were pleased with the progress during 2019 of a number of our cases and look forward to favorable results as the portfolio continues to mature. Burford posted less than $6 million in realized losses on cases concluded during 2019. As a percentage of average capital provision-direct assets at cost during the year, that represented 0.7%, lower
than in any year since our first full year of operations. We don’t present this as a trend, but rather as affirmation that 2019 was simply a quiet year.
Capital provision-indirect
Group-wide realizations from our capital provision-indirect assets rose 25% in 2019, again demonstrating the lower risk and shorter duration of those investments.
Due from Settlement Receivables
When the underlying case has been concluded and a legal finance asset has been realized, we book the amount due to us for our capital and return as a due from settlement receivable. In a substantial majority of situations, we are due cash and our receivable is typically paid within the reporting period. In a small number of cases (typically where our client does not receive cash for the settlement or judgment), we receive non-cash consideration, such as stock or some form of debt such as a mortgage or a loan. As of December 31, 2019, the current outstanding receivables were $19.0 million (2018: $37.1 million).
Capital provision-direct — Burford-only balance sheet
|
For concluded (fully and partially) assets since inception as of December 31, 2019
|
|
|
Realizations
($000)
|
|
|
% Realizations
|
|
|
Cash receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid within the same annual period
|
|
|
|
|
1,068,771
|
|
|
|
|
|
85%
|
|
|
|
Paid within 30 days of period end
|
|
|
|
|
21,300
|
|
|
|
|
|
2%
|
|
|
|
Paid by the end of the next annual period
|
|
|
|
|
83,130
|
|
|
|
|
|
7%
|
|
|
|
Paid in longer than one year
|
|
|
|
|
23,866
|
|
|
|
|
|
2%
|
|
|
|
Current outstanding receivables
|
|
|
|
|
18,989
|
|
|
|
|
|
1%
|
|
|
|
Non-cash consideration received:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debts monetized into cash
|
|
|
|
|
43,658
|
|
|
|
|
|
3%
|
|
|
|
Stock monetized into cash
|
|
|
|
|
624
|
|
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
1,260,338
|
|
|
|
|
|
|
|
|
Capital provision-indirect — Burford-only balance sheet
|
For concluded (fully and partially) assets since inception as of December 31, 2019
|
|
|
Realizations
($000)
|
|
|
% Realizations
|
|
|
Cash receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid within the same annual period
|
|
|
|
|
451,468
|
|
|
|
|
|
100%
|
|
|
|
Paid within 30 days of period end
|
|
|
|
|
1,592
|
|
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
453,060
|
|
|
|
|
|
|
|
|
At December 31, 2019, Burford had on its balance sheet $18.989 million of current outstanding receivables of which $4.5 million had been outstanding at June 30, 2019 and $29,000 of non-cash due from settlement assets on its book.
As due from settlement receivables are collected, they generate cash proceeds for us.
Fair Value Data
In our 10-year history, we have taken a total of $134 million of annual fair value adjustments (gains net of any losses) on our capital provision-direct portfolio excluding fair value gains on YPF-related assets. Of those fair value gains, $38 million remain on Burford’s balance sheet today. Burford has had one investment written up by more than $1 million that resulted in an eventual loss. Setting aside YPF-related assets, it should be noted that from the total pool of assets on which it took those cumulative $134 million in annual fair value adjustments, Burford has generated over $1 billion of recoveries and over $350 million in gains.
For the vast majority of our legal finance assets, where fair value is based on objective events in the legal process, valuation changes have typically been both late in the life of the asset, as the legal process draws to a more certain conclusion, and modest in amount.
The chart below illustrates both of these points. This chart shows the cumulative fair value adjustment on average across our fully concluded capital provision-direct assets as a percentage of the ultimately realized value of the asset. What the chart shows is that, on average, our fair value adjustment was only 4% of the ultimately realized value five years before the time of realization, growing to 27% of realized amount on average one year prior to realization.
Further evidence of the reasonableness of our fair value approach can be found by examining how our fair value marks compared with realized amounts in our concluded capital provision-direct assets to date.
•
33% of profit on successes taken as fair value gains
•
49% of losses taken as fair value write-downs
Realized profits/(loss) of fully concluded capital provision-direct assets
Burford balance sheet only
|
($ in U.S. dollar millions)
|
|
|
Percent*
|
|
|
Total realized
profit/(loss)
|
|
|
Total FV
write-ups/downs
|
|
|
FV mark %
of realized
profits/(loss)
|
|
|
Number of
assets
|
|
|
Profit > $l.0m
|
|
|
|
|
85%
|
|
|
|
|
|
382.9
|
|
|
|
|
|
125.3
|
|
|
|
|
|
33%
|
|
|
|
|
|
44
|
|
|
|
Losses > $1.0m
|
|
|
|
|
15%
|
|
|
|
|
|
(66.3)
|
|
|
|
|
|
(32.6)
|
|
|
|
|
|
49%
|
|
|
|
|
|
16
|
|
|
|
Results < $1.0m**
|
|
|
|
|
0%
|
|
|
|
|
|
(0.3)
|
|
|
|
|
|
(0.9)
|
|
|
|
|
|
N/A
|
|
|
|
|
|
24
|
|
|
|
Total concluded
|
|
|
|
|
100%
|
|
|
|
|
|
316.3
|
|
|
|
|
|
91.8
|
|
|
|
|
|
29%
|
|
|
|
|
|
84
|
|
|
*
Dollar-weighted by gain or loss
**
These 24 investments had realized profits/(loss) and fair value write ups/downs of less than $1 million both individually and in the aggregate
However, this general approach to fair value has been disrupted by our YPF-related assets — our financing of the Petersen and Eton Park claims. We have sold 38.75% of our interest in the proceeds of the Petersen claim for $236 million in cash in a series of third-party transactions over the past three years. As those transactions have increased in size and number of participants, they have become increasingly relevant to the fair value of the YPF-related assets under the accounting standards, and they have obliged us to record meaningful amounts of unrealized gain given the significant acceleration in implied value from the transactions.
Our most recent sale of a portion of our proceeds of our Petersen entitlement in June 2019 was part of a $148 million placement to a number of institutional investors, of which we sold $100 million and other third-party holders sold the remaining portion. Given the size of this latest sale and the participation of a meaningful number of third-party institutional investors, we have concluded that the significant input in valuing our YPF-assets at year-end 2019 was this market transaction. This does not imply that these assets will henceforth be carried based on trading in the secondary market for the Petersen interests.
As a consequence, and as an exception to the usual rule that we cannot disclose individual matters’ fair values given the use of privileged and protected information in the assessment of those values, we can disclose the following information to assist investors in understanding the impact of the YPF-related assets:
•
The carrying value of our YPF-related assets on its balance sheet (both Petersen and Eton Park combined) was $773 million at December 31, 2019 including $734 million of unrealized gain.
•
During 2019, the capital provision income from the YPF-related assets was $188 million, consisting of realized gains relative to cost of $98 million, previous unrealized gains transferred to realized gains of $(78) million and fair value adjustment in the period of $168 million.
Otherwise, in order to protect client confidentiality and legal privilege, we cannot provide our fair value valuations on individual legal finance assets, nor can we provide data that would allow inference of those valuations.
Our YPF-related assets have been clear successes to date. From an investment on our balance sheet of less than $50 million, we have realized cash proceeds of $236 million and have assets on our books at December 31, 2019 with a fair value of $773 million representing in total over $1 billion in realized and unrealized value to date.
The tables below set forth the proportion of unrealized gains contained in our balance sheet asset and illustrates that the bulk of these gains are related to our YPF-related assets. The table below breaks down our historical fair value gains into “gross” and “net,” showing each year our total balance sheet fair value component and the division of the year’s movements into new unrealized gains and the reversal of prior years’ gains as matters turn into realized gains.
Unrealized gains on capital provision assets (direct and indirect) on Burford’s balance sheet
(in U.S. dollar millions)
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
2019
|
|
|
Total
|
|
|
Unrealized gain as at January 1
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
8
|
|
|
|
|
|
18
|
|
|
|
|
|
41
|
|
|
|
|
|
60
|
|
|
|
|
|
82
|
|
|
|
|
|
169
|
|
|
|
|
|
352
|
|
|
|
|
|
590
|
|
|
|
|
|
|
|
|
|
FV adjustment in the period
|
|
|
|
|
4
|
|
|
|
|
|
8
|
|
|
|
|
|
10
|
|
|
|
|
|
29
|
|
|
|
|
|
18
|
|
|
|
|
|
40
|
|
|
|
|
|
100
|
|
|
|
|
|
233
|
|
|
|
|
|
315
|
|
|
|
|
|
265
|
|
|
|
|
|
1,022
|
|
|
|
Previous unrealized (gains)/losses transferred to realized (gains)/losses
|
|
|
|
|
—
|
|
|
|
|
|
(4)
|
|
|
|
|
|
—
|
|
|
|
|
|
(6)
|
|
|
|
|
|
1
|
|
|
|
|
|
(18)
|
|
|
|
|
|
(13)
|
|
|
|
|
|
(50)
|
|
|
|
|
|
(77)
|
|
|
|
|
|
(79)
|
|
|
|
|
|
(246)
|
|
|
|
FV movement (net of transfers to realizations)
|
|
|
|
|
4
|
|
|
|
|
|
4
|
|
|
|
|
|
10
|
|
|
|
|
|
23
|
|
|
|
|
|
19
|
|
|
|
|
|
22
|
|
|
|
|
|
87
|
|
|
|
|
|
183
|
|
|
|
|
|
238
|
|
|
|
|
|
186
|
|
|
|
|
|
776
|
|
|
|
Unrealized gain as at December 31
|
|
|
|
|
4
|
|
|
|
|
|
8
|
|
|
|
|
|
18
|
|
|
|
|
|
41
|
|
|
|
|
|
60
|
|
|
|
|
|
82
|
|
|
|
|
|
169
|
|
|
|
|
|
352
|
|
|
|
|
|
590
|
|
|
|
|
|
776
|
|
|
|
|
|
|
|
|
Since the beginning of 2015, YPF-related assets accounted for:
•
$878 million in fair value adjustment, less
•
$144 million in previous unrealized gains transferred to realizations, resulting in
•
$734 million in fair value movement net of transfers.
Summary of components of carrying value at December 31, 2019
Burford-only balance sheet
(in U.S. dollar millions)
|
|
|
|
Deployed
Cost
|
|
|
Unrealized
Gain
|
|
|
Carrying
Value
|
|
|
Capital provision direct:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YPF-related assets
|
|
|
|
|
39
|
|
|
|
|
|
734
|
|
|
|
|
|
773
|
|
|
|
Other assets
|
|
|
|
|
838
|
|
|
|
|
|
38
|
|
|
|
|
|
876
|
|
|
|
Total:
|
|
|
|
|
877
|
|
|
|
|
|
772
|
|
|
|
|
|
1,649
|
|
|
|
Capital provision indirect:
|
|
|
|
|
181
|
|
|
|
|
|
4
|
|
|
|
|
|
185
|
|
|
|
Total capital provision assets:
|
|
|
|
|
1,058
|
|
|
|
|
|
776
|
|
|
|
|
|
1,834
|
|
|
YPF-Related Assets
We are constrained from discussing ongoing matters for a number of reasons:
•
Clients tend not to wish their litigation to be discussed publicly, and we are generally subject to contractual confidentiality obligations to our clients;
•
We are regularly the recipient of information subject to various litigation privileges, and would risk waiving our clients’ protection should we discuss such information (or anything derived from it); and
•
Courts and tribunals universally dislike public statements about ongoing matters, and often forbid them — and much as we appreciate investor interest, we think it is better to win cases and not anger judges than meet investor demand for mid-case updates.
We are, however, able to say somewhat more about our YPF-related claims simply because of the substantial amount of material about those claims that is freely in the public domain, although we are constrained from discussing legal strategy or anticipating future events.
We have funded two claims relating to Argentina’s renationalization of YPF, the Argentine energy company (“YPF”). Both are claims by significant former YPF shareholders that YPF and Argentina breached their obligations under YPF’s by-laws to buy out all other shareholders when Argentina renationalized YPF by expropriating a majority of its shares. According to YPF’s by-laws, Argentina was required to tender for the 49% of shares that it did not expropriate when it re-took control of YPF in 2012. YPF’s by-laws set out a formula for calculating the price that Argentina should have paid for those shares. The formula is objective and relies on inputs such as corporate earnings and historical share trading prices.
Specifically, the relevant formula calculates share value by taking the highest price to earnings (P/E) ratio over the two years prior to Argentina providing notice of the expropriation and multiplying it by the last twelve-month earnings.
•
If one uses as the operative date the moment when Argentina notified the public that it was planning to expropriate YPF shares (January 2012) the value of the Petersen shares under the formula exceeds $9 billion.
•
Defendants might argue that the court should instead use the date when Argentina actually took control of the company several months later (April 2012) to try to reduce the value of Petersen’s shares below $6 billion.
The date selected may not be the only variable that would go into the calculation of damages; other factors might include such matters as an addition for pre-judgment interest running from 2012. We do not mean to address all the variables or engage in an exhaustive damages analysis in this forum, but rather simply to show how a mechanical application of the by-laws might work. Naturally, litigation must be evaluated on the basis of a possible discounted settlement, but here Repsol’s experience is instructive, as Argentina settled with Repsol (whose 51% YPF ownership stake Argentina expropriated in 2012) for around 50 cents on the dollar of equity value.
We have two assets based on claims relating to Argentina’s renationalization of YPF:
The first is with respect to claims brought by two Spanish companies, both in insolvency proceedings (the Petersen companies, or “Petersen”), which owned about 100 million YPF shares prior to its renationalization.
•
We have thus far invested $20.2 million in the Petersen claims
•
We are entitled to 70% of the proceeds recovered from the Petersen claims, less contracted amounts due to law firms
•
We therefore expect to retain 58-59% of proceeds net of those expenses
•
We have already sold 38.75% of our entitlement in the Petersen claims to other investors for total cash proceeds of $236 million
•
We are contractually obliged to retain a majority interest in its entitlement throughout the pendency of the case
The second is with respect to claims brought by Eton Park, a major U.S. hedge fund, which owned about 12 million YPF shares prior to its renationalization.
•
We have thus far invested $26 million in the Eton Park claims, which are essentially identical to the Petersen claims and following the same US litigation path
•
We are entitled to approximately 75% of the proceeds recovered from the Eton Park claims
•
Burford has not sold any of its interest in the Eton Park matter
Both the Petersen and the Eton Park claims against Argentina and YPF are pending in U.S. federal court in the Southern District of New York, the same court in which Repsol brought its claims against Argentina over the YPF renationalization.
Over the past several years, Argentina and YPF have been focused on collateral matters in the Petersen litigation and have been trying to avoid the jurisdiction of the US courts by invoking a piece of US legislation, the Foreign Sovereign Immunities Act (“FSIA”), which regulates when foreign sovereigns may be sued in US court. Petersen won on the application of the FSIA before the trial court, meaning that the trial court would retain the case and proceed with the underlying litigation. Argentina and YPF appealed that decision to the intermediate appellate court, the US Court of Appeals for the Second Circuit, which they were entitled to do as of right. A three-judge panel of the Second Circuit rejected the appeal in July 2018. Argentina and YPF then petitioned all 13 judges of the Second Circuit to hear the case all together, which they rapidly and unanimously declined to do, without even calling for a response from Petersen. That brought to an end Argentina’s appeals as of right. However, Argentina asked the Supreme Court of the United
States, the highest court in the US, to hear its further appeal on the FSIA issues. The Supreme Court called for the views of the Solicitor-General of the United States, which recommended against the Court hearing the case. In June 2019, the US Supreme Court rejected the case, ending the FSIA arguments permanently. The case has now returned to the trial court for merits proceedings. Argentina and YPF have answered the case and the trial-level litigation process is ongoing.
In the context of these claims, weakness in Argentina’s currency should be irrelevant — Petersen and Eton Park held U.S. dollar-denominated ADRs traded on the New York Stock Exchange and any judgment should be rendered in U.S. dollars based on the formula inputs in 2012 at the time Argentina breached its obligations; this judgment should be enforceable in the U.S. and in many other countries against assets Argentina and YPF hold in those countries. Note that individual litigation and arbitration matters operate differently than sovereign debt in that there is no framework established by a debt agreement that can constrain or delay creditors’ rights. A claimant like Petersen is entitled to take advantage of the full range of global enforcement options once it has a judgment in hand. That process operates entirely separately from any kind of sovereign debt resolution process. It should be noted that both the Macri and Kirchner governments have regularly settled international litigation and arbitration disputes — indeed, it was the Kirchner government that settled the Repsol/YPF dispute.
Of course, litigation risk is present in the Petersen claim as in any litigation matter, and it is possible that the claim will lose or produce no recovery.
We from time to time sell participations in our entitlements in certain legal finance assets in our portfolio, as a means of risk and liquidity management and more broadly to encourage development of a more active secondary market for legal finance assets. During 2019, we executed sales of participations in its entitlements in two of our legal finance assets, including the sale of a portion of our Petersen investment.
Beginning in 2016, we began a program of selling participations in the proceeds of its Petersen entitlement to institutional investors as a means of de-risking its exposure to an asset that had grown significantly in value. Over the course of four such sales, we have received $236 million of proceeds. At December 31, 2019, our balance sheet retained 61.25% of the Petersen entitlement and 100% of the Eton Park entitlement.
Although we sold participations in the proceeds of our Petersen entitlement primarily to lower our exposure to the YPF assets and harvest some of our gains, we have also been able to use proceeds from these sales to accelerate the growth of the business.
Asset Management
We believe we are the largest asset manager focused on the legal finance sector with assets under management of $2.9 billion. The table below sets forth key statistics on our managed funds.
|
As of December 31, 2019
|
|
|
Strategy
|
|
|
Investor
Commitments
Closed
(in $ millions)
|
|
|
Asset
Commitments
to date
(in $ millions)
|
|
|
Asset
Deployments
to date
(in $ millions)
|
|
|
Fee Structure
(Management/
Performance)(1)
|
|
|
Waterfall(2)
|
|
|
Investment
Period (End)(3)
|
|
|
BCIM Partners I LP
(“Partners I”)
|
|
|
Litigation Finance
|
|
|
|
|
45.50
|
|
|
|
|
|
42.26
|
|
|
|
|
|
30.94
|
|
|
|
2%/15%
|
|
|
European
|
|
|
3/1/2015
|
|
|
BCIM Partners II LP
(“Partners II”)
|
|
|
Litigation Finance
|
|
|
|
|
259.83
|
|
|
|
|
|
252.62
|
|
|
|
|
|
174.86
|
|
|
|
Class A:
2%/20%
|
|
|
European
|
|
|
12/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B:
0%/50%
|
|
|
|
|
|
|
|
|
BCIM Partners III LP
(“Partners III”)
|
|
|
Litigation Finance
|
|
|
|
|
412.00
|
|
|
|
|
|
443.99
|
|
|
|
|
|
277.02
|
|
|
|
2%/20%
|
|
|
European
|
|
|
1/1/2020 (Ceased new
commitments in Q4
2018 due to
capacity)
|
|
|
Burford Opportunity Fund
LP & Burford Opportunity Fund B LP (“BOF”)
|
|
|
Litigation Finance
|
|
|
|
|
299.99
|
|
|
|
|
|
306.93
|
|
|
|
|
|
167.68
|
|
|
|
2%/20%
|
|
|
European
|
|
|
12/31/2021
|
|
|
BCIM Credit Opportunities LP (“COLP”)
|
|
|
Post-Settlement
|
|
|
|
|
488.23
|
|
|
|
|
|
699.12
|
|
|
|
|
|
694.57
|
|
|
|
1% on unfunded/
2% on funded
and 20%
incentive
|
|
|
European
|
|
|
9/30/2019
(Stopped in Q4
2018 due to
capacity/BAIF)
|
|
|
Burford Alternative Income Fund LP (“BAIF)
|
|
|
Post-Settlement
|
|
|
|
|
297.25
|
|
|
|
|
|
401.72
|
|
|
|
|
|
337.03
|
|
|
|
1.5%/10%
|
|
|
European
|
|
|
4/4/2022
|
|
|
BCIM Strategic Value Master
Fund LP & BCIM Strategic Value
SMA I, LLC (“Strategic Value
Fund”)
|
|
|
Complex Strategies
|
|
|
|
|
500.00
|
|
|
|
|
|
1,163.65
|
|
|
|
|
|
1,163.65
|
|
|
|
2%/20%
|
|
|
American
|
|
|
Evergreen
|
|
|
Burford Opportunity Fund C LP (“BOF C”)
|
|
|
Litigation Finance
|
|
|
|
|
667.00
|
|
|
|
|
|
248.84
|
|
|
|
|
|
96.51
|
|
|
|
Expense
reimbursement +
profit split
|
|
|
Hybrid
|
|
|
12/31/2022
|
|
|
Totals
|
|
|
|
|
|
|
|
2,969.80
|
|
|
|
|
|
3,559.13
|
|
|
|
|
|
2,942.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
BOF, BAIF and Strategic Value Fund each have “hurdles” that we must meet before we are entitled to any performance fee. A hurdle requires us to return to the limited partners of each fund their invested capital plus a specified return — the hurdle — on such capital, before we are entitled to receive any performance fees. The hurdle rates for BOF, BAIF and Strategic Value Fund are 8%, 5% and 5%, respectively. Each such hurdle includes a “full catch-up”, which means that once we return the specified hurdle, we will be entitled to a performance fee on that hurdle that we returned, allowing us to “catch up” on our performance fee.
(2)
One common feature across the current funds other than Strategic Value Fund and BOF-C is the use of a “European” structure for the payment of performance fees, in that the manager is not paid any performance fees until fund investors have had their entire capital investment repaid, as opposed to performance fees being paid on profitable resolutions as they occur (referred to as an “American” structure). The impact of this European structure is to delay the receipt of performance fees, and thus while many fund assets have already successfully and profitably concluded, leading to a steadily growing expectation of performance fees, few of those performance fees have yet been paid. Performance fees are recognized when a reliable estimate of the fee can be made and it is highly probable that a significant revenue reversal will not occur.
(3)
An “evergreen” investment fund has an indefinite investment period.
Our asset management business continued to grow in 2019, with total AUM of $2.9 billion at December 31, 2019 compared to $2.5 billion at December 31, 2018. This growth occurred across the range of strategies we employ in our managed funds. In part because of the growth in assets under management, Burford-only asset management income grew by 65% in 2019. Asset management income is reported as income is earned; management fees are generally paid quarterly.
Seasonality
Historically, we have closed a disproportionate amount of our new business in the second and fourth quarters, and particularly in June and December, given the focus on period-end numbers for our clients. However, our revenue and cash flows are not subject to any seasonality.
COVID-19
On January 30, 2020, the World Health Organization declared that the recent coronavirus COVID-19 outbreak which emanated from China was a global health emergency, and on March 11, 2020, declared it to be a pandemic. The pandemic has adversely affected the global economy, disrupted global supply chains and created significant volatility in the financial markets. In addition, the pandemic has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities.
At this time, courts and arbitral tribunals remain in operation and continue to render decisions. In general, (i) courts are open to receive new filings in new and existing cases; (ii) courts are continuing to hold hearings and non-jury trials, usually using video conferencing technology; (iii) while courts are continuing to issue decisions, jury trials have been suspended; and (iv) pre-trial discovery requiring travel or in-person attendance (such as witness depositions) is being postponed. The net result of this is that some cases will proceed in the ordinary course, especially those that are less dependent on witness testimony and do not require a jury trial, whereas other cases will inevitably experience some delay and disruption. We do not expect the delays to have a permanent negative impact on our business; delay for us is simply deferral, as opposed to loss, of income, and indeed in many instances, the risk of delay lies on our counterparty and not on us, with our terms often increasing as time passes. However, it is reasonable to expect that cash proceeds from litigation resolutions will be lower in the near term as the courts work through these issues. We also do not expect the delays to have an impact on asset valuation as we only adjust values based on objective events in the underlying litigation, not based on time.
In addition, in a period of constrained liquidity, defendants may be less willing to settle litigation matters, extending duration and increasing risk. While settlement is a normal part of litigation, we do not assume that any of our matters will settle, both when we evaluate their risk and when we plan for their capital outlay and returns. We also generate significantly higher profits when matters do not settle and proceed to adjudication. However, defendants may become insolvent, which could impact the timing and quantum litigation recoveries. The ultimate payor in much of our litigation is either (i) a government or a state-owned entity, (ii) an insurer or (iii) a large company in an industry less likely to be rendered insolvent by this economic disruption. For example, we do not have material cases against defendants in the travel and hospitality industries; please see “Item 5. Operating and Financial Review and Prospects — D. Trend Information — Details on the Portfolio” for a breakdown of the industries relevant to our litigation matters. As a result, we do not presently believe that our existing portfolio is likely to be materially negatively affected by defendant insolvency, although the full impact of the COVID-19 economic disruption is not yet known.
To the extent that defendants in our matters do become insolvent, the impact of a defendant’s insolvency on pending litigation is very difficult to predict and is not only case specific, but dependent on the insolvency process in the country in issue. For example, in the United States, entry into a corporate restructuring via Chapter 11 of the Bankruptcy Code does not eliminate litigation claims but is likely to delay them, whereas in countries that proceed directly to liquidation, a pending claim is more likely to be settled at a lower value than might have been the case had the defendant remained solvent. In general, however, other than in insolvencies where there is no recovery for anyone but secured creditors, Burford would still expect to see a recovery, but that recovery is likely to be delayed and could well be reduced in size during the restructuring or liquidation process.
As our portfolio has evolved, a much larger portion of our assets are related to large companies or law firms with low insolvency risk or in asset purchases where counterparty risk is not a factor. In a significant number of our assets, we are a secured creditor with respect to the litigation we are financing, and the litigation is a valuable contingent asset the recovery of which is in the best interest of the counterparty’s stakeholders. As a result, it is unlikely that the financial distress or insolvency of one of our counterparties would interfere with the continued progress of the litigation matter.
E.
Off-Balance Sheet Arrangements
As of December 31, 2019, we had off-balance sheet arrangements relating to legal finance assets with structured entities that aggregate claims from multiple parties in the amount of $10.7 million. See Note 24 to our consolidated financial statements.
F.
Tabular Disclosure of Contractual Obligations
The table below sets forth our contractual obligations as of December 31, 2019. Neither our consolidated financial statements nor the table below include our unfunded financing commitments, which we enter into during the course of providing funding to our clients. At December 31, 2019, these unfunded financing commitments amounted to $1.1 billion, of which $342.5 million were definitive commitments and $89.3 million related to our legal risk management activities. See Note 30 to our consolidated financial statements.
Contractual Obligations
(in U.S. dollar thousands)
|
|
|
Less than
1 year
|
|
|
1 to 3 years
|
|
|
3 to 5 years
|
|
|
More than
5 years
|
|
|
No maturity
|
|
|
Total
|
|
|
|
|
|
(unaudited)
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
91,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
91,493
|
|
|
|
Due to brokers
|
|
|
|
|
51,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
51,401
|
|
|
|
Loan interest payable
|
|
|
|
|
38,402
|
|
|
|
|
|
76,805
|
|
|
|
|
|
61,349
|
|
|
|
|
|
34,143
|
|
|
|
|
|
—
|
|
|
|
|
|
210,699
|
|
|
|
Other liabilities
|
|
|
|
|
30,450
|
|
|
|
|
|
6,495
|
|
|
|
|
|
5,961
|
|
|
|
|
|
10,029
|
|
|
|
|
|
—
|
|
|
|
|
|
52,935
|
|
|
|
Loan capital
|
|
|
|
|
—
|
|
|
|
|
|
118,890
|
|
|
|
|
|
132,100
|
|
|
|
|
|
411,175
|
|
|
|
|
|
—
|
|
|
|
|
|
662,165
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
13,944
|
|
|
|
|
|
13,944
|
|
|
|
Third-Party Interests in Consolidated Entities(1)
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
235,720
|
|
|
|
|
|
235,720
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
9,662
|
|
|
|
|
|
9,662
|
|
|
|
Total
|
|
|
|
|
211,746
|
|
|
|
|
|
202,190
|
|
|
|
|
|
199,410
|
|
|
|
|
|
455,347
|
|
|
|
|
|
259,326
|
|
|
|
|
|
1,328,019
|
|
|
(1)
Third-party interests in consolidated entities meet the definition of a financial liability under IFRS as each contains some form of contractual obligation to pay cash to the holders. Such contractual obligations generally arise through redemption rights or the underlying entity having a limited life.
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors and Senior Management
Directors
We are managed by our Board, which consists of six directors. The following table lists the names, positions and ages of our directors:
|
Name
|
|
|
Age
|
|
|
Position
|
|
|
Sir Peter Middleton GCB
|
|
|
86
|
|
|
Chairman
|
|
|
Hugh Steven Wilson
|
|
|
72
|
|
|
Deputy Chairman
|
|
|
Christopher Bogart*
|
|
|
54
|
|
|
Chief Executive Officer
|
|
|
Robert Gillespie*
|
|
|
65
|
|
|
Non-executive Director
|
|
|
Charles Nigel Kennedy Parkinson
|
|
|
66
|
|
|
Non-executive Director
|
|
|
John Sievwright*
|
|
|
65
|
|
|
Non-executive Director
|
|
*
Elected to the Board at the May 13, 2020 Annual General Meeting (the “2020 AGM”).
Sir Peter Middleton GCB, Chairman
Sir Peter Middleton, 86, was previously U.K. Chairman of Marsh & McLennan Companies, Chairman of Marsh Ltd, Chairman of Mercer Ltd, Chairman of the Centre for Effective Dispute Resolution, Chairman of Camelot Group PLC and Group Chairman of Barclays Bank PLC; a Director, Chairman and Deputy Chairman of United Utilities; and a board member of OJSC Mobile Telesystems, Bass PLC and General Accident (later CGU). Sir Peter also spent nearly 30 years at HM Treasury, working closely with nine Chancellors, and was Permanent Secretary from 1983 to 1991. He was also President of the British Bankers Association and a member of the National Institute for Economic Research. Sir Peter holds an economics degree from the University of Sheffield.
Hugh Steven Wilson, Deputy Chairman
Mr. Wilson, 72, spent more than thirty years at Latham & Watkins, one of the world’s largest law firms, where he was Global Co-Chair of the Mergers and Acquisitions Practice Group and chairman of both the National Litigation Department and the National Mergers and Acquisitions Litigation Practice Group. He then joined Tennenbaum Capital Partners, a U.S.-based private investment business, as Managing Partner and also served as the Chief Executive Officer of multiple registered investment companies within the Tennenbaum Capital Group. After his retirement, Mr. Wilson continued to serve as a Senior Adviser to Tennenbaum through its acquisition by BlackRock. Mr. Wilson has served as Chairman and a director of numerous public and private companies. Mr. Wilson holds a BA from Indiana University, a JD from the University of Chicago Law School and a Master of Laws degree from Harvard Law School.
Christopher Bogart, Chief Executive Officer (“CEO”)
Before co-founding Burford, Mr. Bogart held numerous senior executive positions with Time Warner. As Executive Vice President & General Counsel of Time Warner Inc., he managed one of the largest legal functions in the world. He also served as Chief Executive Officer of Time Warner Cable Ventures and one of four senior executives operating Time Warner Cable, with $9 billion in revenue and 30,000 employees, and as Chief Executive Officer of Time Warner Entertainment Ventures. Mr. Bogart came to Time Warner from Cravath Swaine & Moore LLP, where he was a litigator representing companies such as IBM, GE and Time Warner. He has also served as Chief Executive Officer of Glenavy Capital LLC, an international investment firm whose projects included Churchill Ventures, a publicly traded media and technology investment vehicle of which he also served as Chief Executive Officer, as well as the Glenavy Arbitration Investment Fund, a pioneering litigation finance vehicle. He began his professional career as an investment banker with what is now JPMorgan Chase. Mr. Bogart earned his law degree with distinction from the Faculty
of Law of the University of Western Ontario, where he was the gold medalist. He clerked for the Chief Justice of Ontario. Mr. Bogart has been married to Elizabeth O’Connell, Burford’s Chief Strategy Officer, since 1992.
Robert Gillespie, Non-executive Director
Robert Gillespie, 65, was most recently the Director General of the U.K. Takeover Panel. He had a lengthy career as an investment banker, spending more than 25 years at UBS and its predecessors in a range of senior positions including Vice Chairman; Chief Executive Officer, EMEA; and Joint Global Head of Investment Banking, while also serving on the Group Managing Board and the Management Committee for many years. Mr. Gillespie started his career as a Chartered Accountant at PwC. He is currently a director of Royal Bank of Scotland plc, NatWest Holdings Ltd and Ulster Bank Ltd and is the Chairman of Boat Race Company Ltd. He has previously served as a director of Citizens Financial Group, Ashurst LLP, the law firm, and as chairman of Somerset House Trust and the Council of Durham University, from which he graduated with a degree in economics.
Charles Nigel Kennedy Parkinson, Non-executive Director
Mr. Parkinson, 66, is a director of two private Guernsey investment companies, Mapeley Limited (owned by the Fortress Investment Group) and Aqua Resources Fund Limited. Mr. Parkinson is currently a Deputy, and the president of the Committee for Economic Development, in the States of Guernsey and was previously president of the States Trading Supervisory Board. Mr. Parkinson was also a director of Bailiwick Investments Limited, which is quoted on The International Stock Exchange. Mr. Parkinson is a past partner and director of PKF (Guernsey) Limited, accountants and fiduciaries. Mr. Parkinson is also a qualified barrister and a member of the Institute of Chartered Accountants in England and Wales. Mr. Parkinson holds a Master’s degree in Law from Cambridge University. Mr. Parkinson has been called to the Bar in London and is a Fellow of the Institute of Chartered Accountants in England and Wales.
John Sievwright, Non-executive Director
John Sievwright, 66, is the former Chief Operating Officer — International of Merrill Lynch. Mr. Sievwright had a 20-year career with Merrill Lynch with a range of global leadership positions, including Chief Operating Officer — Global Markets and Investment Banking, President and Chief Operating Officer, Merrill Lynch Japan, and Head of Global Futures and Options (during which time he also served as the President of the Futures Industry Association). Prior to Merrill Lynch, Mr. Sievwright held finance and accounting functions at Bankers Trust and the Bank of Tokyo. He began his career as an auditor at Ernst & Young and qualified as a Chartered Accountant. He has an MA in accountancy and economics from the University of Aberdeen. Mr. Sievwright also serves as a trustee and chairman of the audit committee for a number of Aberdeen Standard Investments funds, and has previously served as the senior independent director and chairman of the audit and risk committee at ICAP plc (now NEX Group plc) and the senior independent director and chairman of the audit committee of FirstGroup plc.
Sir Peter Middleton plans to resign from the Board at the 2021 annual general meeting. At that time, Deputy Chairman Hugh Steven Wilson, assuming his reelection, will be appointed Chairman. Mr. Wilson would serve as Chairman for three years and then retire from the Board at the 2024 annual general meeting.
Christopher Bogart, our Chief Executive Officer, and two new independent directors, Robert Gillespie and John Sievwright, were elected to the Board at our 2020 AGM. As set forth under “— C. Board Practices”, we now assess director independence under applicable SEC and NYSE rules.
Senior Management
The following table lists the names, positions and ages of the members of our Management Committee (which also includes Mr. Bogart as Chief Executive Officer):
|
Name
|
|
|
Age
|
|
|
Position
|
|
|
Craig Arnott
|
|
|
53
|
|
|
Deputy Chief Investment Officer
|
|
|
Jim Kilman
|
|
|
59
|
|
|
Chief Financial Officer
|
|
|
Mark N. Klein
|
|
|
52
|
|
|
Chief Administrative Officer and General Counsel
|
|
|
Jonathan Molot
|
|
|
54
|
|
|
Chief Investment Officer
|
|
|
Elizabeth O’Connell
|
|
|
54
|
|
|
Chief Strategy Officer
|
|
|
David Perla
|
|
|
50
|
|
|
Co-Chief Operating Officer
|
|
|
Aviva Will
|
|
|
51
|
|
|
Co-Chief Operating Officer
|
|
Craig Arnott, Deputy Chief Investment Officer
Prior to joining Burford in 2016, Mr. Arnott, 53, was a barrister at Sixth Floor Selborne and Wentworth Chambers in Sydney. Previously, he was a Partner and Head of Competition/Antitrust Law in London at the international law firm Fried Frank. During his time at Fried Frank, Mr. Arnott oversaw many significant transactions, serving as counsel to the pharmaceuticals company Merck in its acquisition of Schering-Plough and as European Counsel to Delta & Pine Land during its acquisition by The Monsanto Company. Before his time at Fried Frank, Mr. Arnott worked at Cravath Swaine & Moore in New York, Gilbert + Tobin in Sydney and Ashurst in London. Mr. Arnott earned his BCL and DPhil from the University of Oxford, where he is an alumnus of Balliol College and a Rhodes Scholar. He graduated at the University of Queensland with First Class Honours in both his Law and Arts degrees, with the University Medals in both. He clerked for the Honorable W. Pincus of the Federal Court of Australia.
Jim Kilman, Chief Financial Officer
Mr. Kilman was appointed Chief Financial Officer in August 2019, having previously served as Senior Advisor since 2017. Prior to joining Burford, Mr. Kilman, 59, was Vice Chairman of Investment Banking at Morgan Stanley, where he served as Burford’s investment banker. He spent 32 years in the investment banking business, including senior roles at Goldman Sachs, ABN AMRO and PaineWebber. Following his retirement from Morgan Stanley in 2016, he founded and became Chief Executive Officer of KielStrand Capital, a family office. Mr. Kilman currently serves as a Trustee of the MFS Mutual Funds, Boston, MA, and has served on several other public and private corporate boards previously. Mr. Kilman earned his MA and a BA in Economics from Yale University.
Mark N. Klein, Chief Administrative Officer and General Counsel
Prior to joining Burford in 2017, Mr. Klein, 52, spent 13 years at UBS in a wide range of corporate roles, including as Managing Director and General Counsel of its infrastructure and private equity business. Most recently, he was a General Counsel and Chief Compliance Officer at Marketfield Asset Management, a large US-registered investment adviser. Prior to that, Mr. Klein was General Counsel and Chief Compliance Officer at NewGlobe Capital, a registered investment adviser. Mr. Klein began his career at Weil, Gotshal & Manges. Mr. Klein earned his JD from New York University School of Law.
Jonathan Molot, Chief Investment Officer (“CIO”)
Prior to co-founding Burford, Mr. Molot, 54, founded Litigation Risk Solutions, a business that assisted hedge funds, private equity funds, investment banks, insurance companies and insurance brokers to develop litigation risk transfers where lawsuits threaten to interfere with M&A and private equity deals. In addition to his role at Burford, Mr. Molot is a Professor of Law at Georgetown University. Mr. Molot has taught on litigation risk management and finance at Harvard Law School, Georgetown University Law Center and George Washington University Law School. Mr. Molot served as counsel to the economic policy team on the Obama-Biden Presidential Transition Team and as a senior advisor in the Treasury Department at the start of the Obama Administration. He practiced law at Cleary Gottlieb in New York and at Kellogg
Hansen in Washington, DC. Mr. Molot earned his BA magna cum laude from Yale College and his JD magna cum laude from Harvard Law School, where he was Articles Co-Chair of the Harvard Law Review and won the Sears Prize, awarded to the two top-performing students in a class of over 500. He clerked for US Supreme Court Justice Stephen Breyer.
Elizabeth O’Connell CFA, Chief Strategy Officer
One of Burford’s founders, Ms. O’Connell assumed the role of Chief Strategy Officer in August 2019, having previously served as its Chief Financial Officer and as a Managing Director responsible for overseeing the company’s finance function and investor relations. Prior to Burford’s founding, Ms. O’Connell, 54, was a Managing Director and Chief Financial Officer of Glenavy Capital, an international investment firm and a founding shareholder of Burford. Ms. O’Connell was also the Chief Financial Officer of Churchill Ventures Limited, a technology and media company listed on the American Stock Exchange. Earlier in her career, Ms. O’Connell was a senior Equity Syndicate Director at Credit Suisse. Before that, she spent the bulk of her investment banking career at Salomon Brothers (later Citigroup). She began her finance career in foreign exchange sales at Bank of America. Ms. O’Connell is a Chartered Financial Analyst. Ms. O’Connell earned her MBA in finance from The University of Western Ontario Richard Ivey School of Business and her BA from The University of Western Ontario. Ms. O’Connell has been married to Christopher Bogart, Burford’s Chief Executive Officer, since 1992.
David Perla, Co-Chief Operating Officer
Prior to joining Burford in 2018, Mr. Perla, 50, served as President of Bloomberg BNA Legal Division/ Bloomberg Law, where he oversaw Bloomberg BNA’s legal and related products, including its flagship Bloomberg Law enterprise legal news, information and tools platform. Previously, Mr. Perla co-founded and was co-CEO and a director of Pangea3, the top-ranked global legal process outsourcing provider. Pangea3 was acquired by Thomson Reuters in 2010 and grew to over 1,000 employees globally under Mr. Perla’s leadership. Before launching Pangea3, he was Vice President of Business & Legal Affairs for Monster.com. Mr. Perla began his career in the New York office of Katten Muchin. Mr. Perla earned both his BA and JD from the University of Pennsylvania.
Aviva Will, Co-Chief Operating Officer
Prior to joining Burford in 2010, Ms. Will, 51, was a senior litigation manager and Assistant General Counsel at Time Warner Inc., where she managed a portfolio of significant antitrust, intellectual property and complex commercial litigation. She was also the company’s Chief Antitrust and Regulatory Counsel, advising senior management on antitrust risk and overseeing all government antitrust investigations and merger clearances worldwide. Ms. Will also served as the Assistant Secretary for the company, managing corporate compliance and governance for the company and Board. Prior to joining Time Warner, Ms. Will was a senior litigator at Cravath, Swaine & Moore LLP. Ms. Will earned her JD cum laude from Fordham University School of Law, where she was the Writing & Research Editor of the Fordham Law Review and a member of the Order of the Coif. She earned her BA from Columbia University. She clerked for the Honorable Stewart G. Pollock on the New Jersey Supreme Court.
Additional Information
The business address of Craig Arnott is Brettenham House, 2-19 Lancaster Place, London WC2E 7EN and the telephone number at the address is +44 20 2530 2000. The business address of Jonathan Molot is 1750 K St. NW, Suite 300, Washington DC 20006 and the telephone number at that address is +1 202 788 0888. The business address of each of our members of senior management listed above, as well as Christopher Bogart, is 350 Madison Avenue, New York, NY 10017 and the telephone number at that address is +1 212 235 6820. The business address of each of our other directors is Regency Court, Glategny Esplanade, St. Peter Port GY1 1WW, Guernsey and the telephone number at that address is +44 1481 723 450.
B.
Compensation of Directors and Senior Management
Director Compensation
Our independent non-executive directors receive cash fees for their Board and committee service and for board service to our affiliates. During the year ended December 31, 2019, the fees received by our directors were (excluding Christopher Bogart, Robert Gillespie and John Sievwright, who were elected to the Board at the 2020 AGM):
|
Directors
|
|
|
Fees
(in U.S. dollar thousands)
|
|
|
Sir Peter Middleton GCB
|
|
|
|
|
189
|
|
|
|
Hugh Steven Wilson
|
|
|
|
|
125
|
|
|
|
David Charles Lowe OBE*
|
|
|
|
|
85
|
|
|
|
Charles Nigel Kennedy Parkinson
|
|
|
|
|
85
|
|
|
|
Total:
|
|
|
|
|
484
|
|
|
*
Retired from the Board at the 2020 AGM.
Other Compensation
Our compensation programs are designed to incentivize performance and retention. For many of our employees, the primary forms of compensation are base salaries and performance-based annual bonuses; the more senior an employee, the more his or her compensation reflects corporate performance. This compensation mix in part reflects the origins of our team members, who typically hail from law firms and financial firms that also use this compensation approach. A number of our employees also participate in our LTIP and Retirement Plan, as discussed below. In addition, we offer the opportunity to select employees to participate in the Carry Pools Plan and to all eligible employees to invest in our private investment funds on a fee-less basis.
2016 Long-Term Incentive Plan
In 2016, shareholders approved a Long-Term Incentive Plan (“LTIP”), which was amended and extended by shareholder approval on May 13, 2020. The LTIP added grants under that plan to our compensation mix, which creates additional alignment between participants in the plan and public shareholders given that it requires attainment of various corporate performance targets. It also creates a long-term retention vehicle. All of our employees may be granted awards under the LTIP.
The LTIP is managed by the Remuneration Committee. The Remuneration Committee has discretion to select plan participants, determine the type and the number of awards, set the performance targets or adjust them in certain circumstances; provided that, in the period from 2016 to 2030, we may not grant awards under the LTIP if such grant would cause the number of shares that could be issued under the LTlP or any other share plan adopted by us to exceed 10% of our issued ordinary share capital at the proposed date of grant. The satisfaction of awards with treasury shares will be treated as an issue of ordinary shares for the purposes of the above limit for so long as institutional shareholder guidelines recommend this. If awards are satisfied by a transfer of existing ordinary shares, the percentage limit stated above will not apply.
Awards under the LTIP are typically conditional share awards, which entitle participants to the right to acquire or receive shares for no or only a nominal payment or as phantom awards for tax and legal purposes. Vesting of awards is subject to satisfaction of stretching performance conditions, set by the Remuneration Committee at the time of grant or service-based conditions, provided that no more than 50% of the award granted to the employees who are part of our senior management may be service-based awards. Awards generally cliff vest over three or more years and each performance condition is measured over the three financial years beginning with the financial year in which the award is granted, or such longer period as determined by the Remuneration Committee.
The LTIP provides that annual awards will be made with a maximum grant date value of 200% of an employee’s base salary, provided that the Remuneration Committee may grant an annual award with a value of up to 300% of an employee’s base salary in exceptional circumstances.
In the event of a participant’s termination of employment for any reason, other than death, disability or in certain circumstances at the discretion of the Remuneration Committee (e.g., good leavers), prior to vesting, all outstanding awards will be forfeited. In the event of the participant’s death, disability or at the discretion of the Remuneration Committee, outstanding awards will continue to vest until the end of the performance period and will be prorated based on the number of full months the participant was employed during the performance period. In special circumstances, the Remuneration Committee has the discretion to accelerate vesting of the awards or alter proration or performance targets for outstanding awards.
Awards granted under the LTIP are subject to clawback provisions for up to five years from the vesting date in the following circumstances: (i) a material financial misstatement or miscalculation of our audited financial accounts; (ii) the assessment of any performance condition on vesting which was based on error, misleading information or inaccurate assumptions; or (iii) the gross misconduct of a participant.
In the event of a change of control or in the event of certain other extraordinary corporate transactions, outstanding awards will vest pro rata to the extent that any applicable performance conditions are deemed satisfied by such date and based on the number of full months the participant was employed during the performance period. The Remuneration Committee has the discretion, in relation to the performance conditions, to adjust the vesting level if it considers that the performance conditions would have been met to a greater or lesser extent at the end of the full performance period. The Remuneration Committee also has the discretion to modify award proration if it considers that the contribution of the management team to the creation of shareholder value during the applicable performance or vesting period would not otherwise be properly recognized.
We made an initial LTIP grant to every employee in the business at the time of the LTIP’s inception, and we make grants to nearly all new employees as they join. All members of senior management participate in the LTIP. We also use annual LTIP grants as a further compensation vehicle for certain of our employees. All LTIP grants made to date are subject to performance criteria, three-year cliff vesting and clawback provisions. During the period since the LTIP’s inception, we have issued awards in respect of less than 1% of our issued ordinary share captial. At December 31, 2019, awards had been granted with respect to 1,347,526 shares under the LTIP. At that date, 402,266 shares subject to LTIP awards were scheduled to vest in full (assuming performance and service measures are met) and be distributed to participants in 2020, which was the first vesting date under the LTIP. An award granted under the LTIP may be satisfied with new issue shares, a transfer of treasury shares or shares purchased in the market. We had previously announced an intention to purchase on the open market shares to satisfy the 2020 LTIP vesting. However, given a desire to preserve our liquidity for deployment in the business, we issued new shares to satisfy this vesting.
Carry Pools Plan
In 2018, we began operating a phantom carry or “Carry Pools” plan arrangement where a small portion (10% or less) of certain pools of assets (including nearly all capital provision–direct matters, except for assetrecovery investments, and excluding investments in capital provision–indirect matters) originated in a calendar year are included in separate legal entities, the Carry Pools. The Carry Pools provide employees with direct alignment to the cash performance of our assets. Employees, including lawyers who work directly on concluding investments in legal finance assets and most members of Senior Management, may be invited to participate in a profits interest arrangement under which a significant portion of the cash profits in the Carry Pools are available for allocation to those employees. Those employees who participate in such arrangements pay full market value for the interests at the time of acquisition with (other than in the case of our senior management, to whom we do not extend loans) funds that we loaned to them. The profits interest is not remuneration for services provided to us or our subsidiaries.
Retirement Savings
We offer a defined contribution retirement plan (“Retirement Plan”) to our U.S. employees where employees make pre-tax or Roth contributions to a retirement savings account and we make a corresponding contribution to their accounts. A similar arrangement is in effect for U.K. employees.
As of December 31, 2019, we contributed a total of $0.53 million for U.S. employees and $0.29 million for U.K. employees to provide retirement savings for our employees.
Senior Management Compensation
Aggregate compensation paid or accrued during the year ended December 31, 2019 (including cash bonus and other incentive compensation for 2019 that was paid in 2020) for our senior management as a group is set forth below:
|
Compensation Type
|
|
|
Amount
(in U.S. dollar thousands)
|
|
|
Salary
|
|
|
|
|
4,666
|
|
|
|
Cash bonus
|
|
|
|
|
9,150
|
|
|
|
LTIP granted
|
|
|
|
|
7,550
|
|
|
|
Company contribution to 401(k) plan
|
|
|
|
|
106
|
|
|
|
Total:
|
|
|
|
|
21,472
|
|
|
Executive Compensation
Mr. Bogart, our CEO, and Mr. Molot, our CIO, are employed under identical employment agreements that expire on December 31, 2021, which renew automatically for successive one-year periods thereafter if neither we nor the relevant executive provides notice of an intent to terminate the agreement. Mr. Bogart and Mr. Molot receive identical compensation reflecting their roles as joint founders and leaders of our business, and both report directly to our Board. Each of those agreements provides for a base salary of $950,000 and an annual bonus tied to our income, excluding the impact of any fair value adjustments. For 2019, $2,250,000 was paid to each executive as the cash portion of the annual bonus and $750,000 was granted in LTIP awards when we made our annual LTIP grants on May 5, 2020.
Mr. Bogart and Mr. Molot have committed to use their entire 2019 bonuses, after tax, to purchase our securities in the market.
Mr. Bogart and Mr. Molot are also participants in the Retirement Plan and the Carry Pool Plan. In 2019, each executive contributed to the Retirement Plan and we made a matching contribution of $11,200 for each of them. They each received a payment of $2,782 in 2019 from the Carry Pools Plan.
Mr. Bogart and Mr. Molot also take advantage of the opportunity offered to all eligible employees to invest in our private investment funds on a fee-less basis. As of December 31, 2019, each executive’s total commitments to such funds is $2,000,000.
Holdings of Directors and Senior Management (as of December 31, 2019)
|
|
|
|
Shares
Owned
|
|
|
Bonds Owned
(Principal
Amount)
|
|
|
% of Shares
Outstanding
|
|
|
Commitments to
Managed Funds
|
|
|
Sir Peter Middleton GCB
|
|
|
|
|
100,000
|
|
|
|
|
|
—
|
|
|
|
|
|
*
|
|
|
|
|
|
—
|
|
|
|
Hugh Steven Wilson
|
|
|
|
|
254,410
|
|
|
|
|
$
|
280,000
|
|
|
|
|
|
0.1
|
|
|
|
|
$
|
1,500,000
|
|
|
|
David Charles Lowe OBE**
|
|
|
|
|
200,000
|
|
|
|
|
£
|
300,000
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
Charles Nigel Kennedy Parkinson
|
|
|
|
|
8,000
|
|
|
|
|
|
—
|
|
|
|
|
|
*
|
|
|
|
|
$
|
50,000
|
|
|
|
Robert Gillespie***
|
|
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
John Sievwright***
|
|
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
Directors – total
|
|
|
|
|
562,410
|
|
|
|
|
$
|
677,710
|
|
|
|
|
|
0.3
|
|
|
|
|
$
|
1,550,000
|
|
|
*
Represents less than less than 0.1%.
**
Retired from the Board at the 2020 AGM.
***
Elected to the Board at the 2020 AGM.
|
|
|
|
Shares
Owned
|
|
|
Bonds Owned
(Principal
Amount)
|
|
|
% of Shares
Outstanding
|
|
|
Commitments to
Managed Funds
|
|
|
Christopher Bogart*
|
|
|
|
|
8,910,037
|
|
|
|
|
|
—
|
|
|
|
|
|
4.1
|
|
|
|
|
$
|
2,000,000
|
|
|
|
Jonathan Molot
|
|
|
|
|
9,500,000
|
|
|
|
|
|
—
|
|
|
|
|
|
4.3
|
|
|
|
|
$
|
2,000,000
|
|
|
|
Senior Management as a group(1)**
|
|
|
|
|
19,278,897
|
|
|
|
|
|
—
|
|
|
|
|
|
8.8
|
|
|
|
|
$
|
4,975,000
|
|
|
*
Elected to the Board at the 2020 AGM.
**
Includes Christopher Bogart and Jonathan Molot.
(1)
Includes shares owned directly and through the LTIP.
C.
Board Practices
We have six members on our Board. Unless otherwise determined by ordinary resolution, there is no minimum or maximum number of members allowed on the Board. Any person may be appointed or removed as director by an ordinary resolution.
At each annual general meeting, beginning at the annual general meeting in 2021, all of the directors shall retire. Retiring directors may be reappointed at such meeting. A director who retires at an annual general meeting may, if willing to act, be reappointed. If he is not reappointed, he shall retain office until the meeting appoints someone in his place, or if it does not do so, until the end of the meeting. There is no age limit at which a director is to retire.
The following directors or nominees for director have been determined by our Board to be independent under the standards of the NYSE and the rules and regulations of the SEC: Sir Peter Middleton, Hugh Steven Wilson, Charles Parkinson, Robert Gillespie and John Sievwright. No director other than Christopher Bogart has an employment agreement or is entitled to any retirement benefits.
Corporate Governance
Policies
We have adopted the Guernsey Finance Sector Code of Corporate Governance (the “Finance Sector Code”), and our compliance has been the subject of regular reporting to, and oversight by, our Board.
Our Board holds an in-person meeting every quarter during which it reviews thoroughly all aspects of the businesses’ strategy and performance; the directors spend at least one evening and one full day together for each meeting, and every director currently on the Board attended all such meetings held in 2019. Our Chief Executive Officer and Chief Investment Officer participated in the entirety of each board meeting (other than the closed session discussed below), joined as appropriate by other senior members of management. Our Board reviews its performance and director compensation annually and regularly discusses succession planning and management oversight. Our Board meets in closed session without management present at each of its meetings.
Our Board also operates through three committees composed entirely of independent directors, Audit, Remuneration and Nomination, all of which meet throughout the year as required. The Remuneration Committee reviews and approves compensation and LTIP awards for all staff. The Audit Committee plays an active role, not only in overseeing the audit process and managing non-audit services to ensure the continued independence of the auditors, but also in addressing investment valuations, an area of key judgement for the business. The Nomination Committee reviews, and makes recommendations to the Board regarding, the composition of the Board and its committees. Sir Peter Middleton also chairs the Board of Burford Capital Holdings (UK) Limited, a significant Burford subsidiary, to ensure non-executive oversight.
Our directors are experienced and collectively well-versed in the legislative and regulatory environment in which we operate. They are provided with relevant information in a timely manner (including a daily business update) and kept abreast of relevant information so that they can discharge their duties. Our Board has overall responsibility for our governance, strategy, risk management and key policies and engages in
robust scrutiny of the business and its investment portfolios. Our Board regularly evaluates its own performance and discusses improvements to its structure and processes.
Our Board is subject to our various integrity policies, including with regard to conflicts of interest, self-dealing and fiduciary duties.
At its in-person quarterly meetings, our Board is presented with materials so it can meaningfully assess our performance, measure the impact of the businesses’ strategy and evaluate its position. We have a significant professional finance function that provides detailed management reporting and also prepares financial statements pursuant to International Financial Reporting Standards. Our Board is in regular contact with Ernst & Young, our auditors. Our Board has ultimate responsibility for our objectives and business plans.
Our Board maintains oversight of risk by way of a comprehensive risk presentation at every quarterly Board meeting. We have a robust management team focused on risk, including a Chief Compliance Officer, a General Counsel and a number of other in-house lawyers. In addition dozens of the businesses’ professional staff are lawyers, including many of the businesses’ most senior managers.
Our Board ensures appropriate and timely reporting pursuant to all applicable obligations.
The Remuneration Committee of our Board reviews and approves compensation for all employees and appointees. The Remuneration Committee is responsible for setting our remuneration policy which is consistent with effective risk management.
Our Board’s general practice is to disclose publicly adequate materials relevant to our performance whenever necessary or practical. Our Board provides the annual general meeting as a forum for shareholders to exercise their rights as well as supervises a robust investor relations program.
Our adoption of the Finance Sector Code is current as of June 30, 2020 and is reviewed as part of our annual reporting process. There are no material departures from our obligations under the Finance Sector Code.
Performance
Our Board is responsible for our corporate governance. In order to progress our objectives, our Board meets regularly and is responsible for organizing and directing us in a way that promotes our success. Our Board is provided with full and timely access to all relevant information.
The principal matters considered by our Board in 2019 included:
•
Burford’s strategy, related key performance measures and annual budget
•
Regular reports from the Chief Executive Officer
•
Reviews and updates on Burford’s businesses and functions
•
Reports and updates on the investment portfolio and specific investments
•
Regular reports from the Board’s committees
•
Remuneration and pension matters including reward
•
Philosophy and strategy
•
Recommendations of the Audit Committee on the fair value of investments
•
The Annual Report & Accounts, the Interim Report and other ad hoc updates
•
Capital management strategy, dividend policy and dividends
•
Enterprise capability and individual succession plans
In addition, the Board undertook steps in the year to evolve governance of Burford. These included discussing, analyzing and approving Burford’s plan to procure a secondary listing on a U.S. exchange; detailing succession plans for David Lowe, who retired, and did not seek reappointment, at the 2020 AGM,
and Sir Peter Middleton, who will retire, and not seek reappointment, at the 2021 annual general meeting; and appointing Jim Kilman to succeed Elizabeth O’Connell in the role of Chief Financial Officer.
We have an established organizational structure with clearly defined lines of responsibility to and delegation of authority by our Board.
We have adopted a number of key documents related to our corporate governance, including:
•
Audit Committee Charter;
•
Remuneration Committee Charter; and
•
Nominating Committee Charter.
These documents and other important information on our governance are posted on our website and may be viewed at https://www.burfordcapital.com. Shareholders may direct their requests to the attention of our Investor Relations team at IR@burfordcapital.com. The information on, or that can be accessed through, our website is not incorporated by reference into this registration statement.
Committees of the Board
Audit Committee
Our Board has determined that each member of the Audit Committee meets the definition of “independent director” for purposes of serving on an audit committee under applicable SEC and NYSE rules. Each member of the Audit Committee is financially literate and our Board has determined that each member of the Audit Committee qualifies as an “audit committee financial expert,” as defined in applicable SEC regulations.
The Audit Committee is comprised of Charles Parkinson (chair), Robert Gillespie and John Sievwright. The Audit Committee is responsible for:
•
monitoring the integrity of our financial statements;
•
reviewing the effectiveness of our internal controls and risk management systems;
•
reviewing our arrangements for concerns to be raised, in confidence, about possible wrongdoing in financial reporting or other matters;
•
reviewing and advising the Board on the need for an internal audit function as we develop;
•
overseeing the external audit process, including making recommendations relating to their appointment, approval of their remuneration and terms of engagement and assessing their independence and qualifications;
•
developing and implementing a policy on the supply of non-audit services by the external auditor;
•
meeting regularly with the external auditor, including at least once without management, and review the findings of the audit; and
•
handling such other matters that are specifically delegated to the Audit Committee by the Board.
Remuneration Committee
The Remuneration Committee is comprised of Hugh Steven Wilson (chair), Sir Peter Middleton and John Sievwright. Our Board has determined that each member is “independent” as that term is defined in the applicable SEC and NYSE rules. The Remuneration Committee is responsible for:
•
determining and agreeing with the full Board on the remuneration for the Company’s Chief Executive Officer and Chief Investment Officer and the renumeration policy for other senior employees;
•
within the terms of the remuneration policy and on consultation with the Chief Executive officer, determining the total individual remuneration package of each designated senior executive;
•
approving the design of, and determining targets for, and performance-related pay structures;
•
reviewing the design of all share incentive plans; and
•
determine the policy for, and scope of, any pension arrangements.
Nomination Committee
The Nomination Committee is comprised of Sir Peter Middleton (chair), Robert Gillespie and Hugh Steven Wilson. Our Board has determined that each member is “independent” as that term is defined in the applicable SEC and NYSE rules. The Nomination Committee is responsible for:
•
reviewing the structure, size and composition of the Board and making recommendations with respect to any changes;
•
identifying and nominating candidates for the approval of the full Board to fill vacancies on the Board as and when they arise;
•
formulating plans for succession for directors and senior management; and
•
reviewing the leadership needs of the Company.
Exemptions from NYSE Corporate Governance Rules
We are a “foreign private issuer” under the securities laws of the United States and the rules of the NYSE. Under the securities laws of the United States, “foreign private issuers” are subject to different disclosure requirements than U.S. domiciled registrants, as well as different financial reporting requirements. Subject to certain exceptions, the rules of the NYSE permit a “foreign private issuer” to follow its home country practice in lieu of the corporate governance requirements of the NYSE. We are not required to and do not meet the following NYSE corporate governance requirements (i) the requirement of an annual performance evaluation of the compensation committee, (ii) the requirement to adopt and disclose corporate governance guidelines and (iii) the requirement to have an internal audit function.
D.
Employees
As of December 31, 2019 we had a total of 129 full-time employees located in the U.S., the U.K., Singapore and Australia, which includes 57 lawyers qualified in the U.S., England, Australia, Germany, Switzerland, Hong Kong and Israel.
E.
Share Ownership
The number of ordinary shares beneficially owned by our directors and senior management is set forth in “Item 7. Major Shareholders and Related Party Transactions — A. Major Shareholders” below.
Equity Compensation Plans
Information regarding employee equity arrangements is set forth in “Item 6. Directors, Senior Management and Employees — B. Compensation of Directors and Senior Management”.
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major Shareholders
The following table and the footnotes below set forth certain information regarding the beneficial ownership of our outstanding ordinary shares as of August 31, 2020 held by:
•
each person or entity that we know beneficially owns 5% or more of our ordinary shares;
•
our CEO and CIO and each of our directors; and
•
all of our directors and CIO as a group.
Beneficial ownership does not necessarily imply that the named person has the economic or other benefits of ownership. For purposes of this table, in accordance with applicable SEC rules regarding the determination of beneficial ownership, shares subject to options, warrants or rights or shares exercisable
within 60 days of August 31, 2020 are considered as beneficially owned by the person holding those options, warrants or rights. The applicable percentage of ownership of each shareholder is based on 219,049,877 shares of ordinary shares outstanding as of August 31, 2020. Information for our 5% holders is based on information delivered to us by shareholders via TR-1 disclosures. A TR-1 is a disclosure form our shareholders are required to complete under the rules of the FCA if their ownership of our ordinary shares reaches, exceeds or falls below a certain percentage, beginning with 3%. A TR-1 may not include all beneficial ownership information required to be provided by shareholders of domestic issuers under SEC rules.
|
|
|
|
Number of Ordinary Shares
Beneficially Held
|
|
|
Identity of Person or Group
|
|
|
Number
of Shares(1)
|
|
|
% of Shares
Outstanding
|
|
|
Directors and our CIO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan Molot
|
|
|
|
|
9,650,000
|
|
|
|
|
|
4.41%
|
|
|
|
Christopher Bogart
|
|
|
|
|
9,060,037
|
|
|
|
|
|
4.14%
|
|
|
|
Sir Peter Middleton GCB
|
|
|
|
|
100,000
|
|
|
|
|
|
*
|
|
|
|
Steve Wilson
|
|
|
|
|
254,410
|
|
|
|
|
|
*
|
|
|
|
David Charles Lowe OBE**
|
|
|
|
|
200,000
|
|
|
|
|
|
*
|
|
|
|
Charles Parkinson
|
|
|
|
|
8,000
|
|
|
|
|
|
*
|
|
|
|
Robert Gillespie
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
John Sievwright
|
|
|
|
|
10,000
|
|
|
|
|
|
*
|
|
|
|
All directors and our CIO as a group (7 persons)
|
|
|
|
|
19,282,447
|
|
|
|
|
|
8.80%
|
|
|
|
5% Beneficial Owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mithaq Capital
|
|
|
|
|
23,021,070
|
|
|
|
|
|
10.51%
|
|
|
|
Invesco Ltd.
|
|
|
|
|
20,793,302
|
|
|
|
|
|
9.49%
|
|
|
|
Conifer Management LLC
|
|
|
|
|
14,000,000
|
|
|
|
|
|
6.39%
|
|
|
(1)
For directors and our CEO and CIO, excludes shares granted pursuant to the LTIP to Jonathan Molot (125,447 shares) and Christopher Bogart (125,447 shares) that are subject to vesting.
*
Owns less than 1.00% of our issued and outstanding ordinary shares.
**
Retired at the 2020 AGM.
Based on the absence of any TR-1 disclosures, Mithaq Capital did not beneficially own a disclosable shareholding in the Company as of March 31, 2017 or March 31, 2018. As previously reported in a TR-1, as of March 31, 2019, Mithaq Capital beneficially owned 11,122,413 shares of the Company, constituting 5.10% of the then outstanding shares. The share amount in the table above was reported in a TR-1 on August 18, 2020.
As previously reported in a TR-1, as of March 31, 2017, Invesco Ltd. beneficially owned 51,985,955 shares of the Company, constituting 24.96% of the then outstanding shares. As previously reported in a TR-1, as of March 31, 2018, Invesco Ltd. beneficially owned 41,223,189 shares of the Company, constituting 19.79% of the then outstanding shares. As reported in a TR-1, as of March 31, 2019, Invesco Ltd. beneficially owned 30,399,798 shares of the Company, constituting 13.90% of the then outstanding shares. The share amount in the table above was reported in a TR-1 on February 24, 2020.
Based on the absence of any TR-1 disclosures, Conifer Management LLC did not beneficially own a disclosable shareholding in the Company as of March 31, 2017 or March 31, 2018. As previously reported in a TR-1, as of March 31, 2019, Conifer Management LLC beneficially owned 14,000,000 shares of the Company, constituting 6.40% of the then outstanding shares. The share amount in the table above was reported in a TR-1 on March 12, 2020.
We have a single class of ordinary shares and, accordingly, our major shareholders have the same voting rights as our other shareholders.
As of March 31, 2020, based on our share register, approximately 32% of our outstanding ordinary shares were held of record by residents of the U.S.
B.
Related Party Transactions
As of December 31, 2019, (i) Hugh Steven Wilson had a $1,500,000 commitment to certain of our managed funds and held $280,000 principal amount of our bonds; (ii) David Charles Lowe held £300,000 principal amount of our bonds; (iii) Charles Nigel Kennedy Parkinson had a $50,000 commitment to certain of our managed funds; and (iv) Christopher Bogart and Jonathan Molot each had a $2,000,000 commitment to certain of our managed funds.
Certain capital provision assets held by Burford are held in the form of interests in associate or joint ventures and are related parties of the company. The nature of these investments and associated transaction details are disclosed in Notes 25 and 31 to our consolidated financial statements.
C.
Interests of Experts and Counsel
Not Applicable.
ITEM 8.
FINANCIAL INFORMATION
A.
Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements” below.
Legal Proceedings
See “Item 4. Information on the Company — B. Business Overview — Legal Proceedings”.
Dividend Policy
See “Item 10. Additional Information — B. Memorandum and Articles of Incorporation — Shares — Dividends”.
B.
Significant Changes
See Note 32 to our consolidated financial statements.
ITEM 9.
THE OFFER AND LISTING
In October 2009, our ordinary shares commenced trading on the London Stock Exchange’s AIM under the symbol “BUR”. We intend to apply for our ordinary shares to be listed on the NYSE under the trading symbol “BUR”. Such a listing is dependent upon this registration statement being declared effective, as well as our meeting all the necessary listing requirements of the NYSE.
Our only issued and outstanding shares are our ordinary shares of no par value. We have no other outstanding class of equity securities. Our issued and outstanding ordinary shares are fully paid. Our ordinary shares are in certificated and uncertificated form.
In connection with our proposed listing on the NYSE, we intend to transfer the maintenance of our share register to the United States. The share register, while maintained in the United States, will be kept and remain electronically accessible in Guernsey, with a hard copy available upon request, in accordance with the requirements under our articles of incorporation and Guernsey law. Computershare Trust Company, N.A. will act as our U.S. transfer agent.
Our ordinary shares are currently traded on the London Stock Exchange’s AIM and such trades are settled through the CREST system in the United Kingdom. Upon a listing of our ordinary shares on the NYSE, our ordinary shares will also be eligible to be traded on the NYSE and such trades will be settled through the DTC system in the United States.
To satisfy the requirements for trading on a U.S. stock exchange, other than shares held by shareholders who do not make an election as described below, entitlements to our ordinary shares will be held in book-entry form within the DTC system with the underlying ordinary shares recorded on the register of members in the name of DTC’s nominee, Cede & Co.
Any current holders of our ordinary shares in uncertificated form (being within the CREST system) who wish to continue to hold electronically in the United Kingdom and/or trade ordinary shares on the AIM and settle those trades through the CREST system will be required to make an election to transfer their ordinary shares to Cede & Co. in return for depositary interests to be issued by Computershare Investor Services PLC, under appointment by us. Existing holders of our ordinary shares in certificated form will also be provided with the option to make an election to transfer their ordinary shares in return for depositary interests. Any shareholders (regardless of whether they hold in certificated or uncertificated form) who do not elect to be issued with depositary interests will hold their ordinary shares in registered form.
Electing shareholders will, together with the election referred to above, provide an authorization or power of attorney to us to transfer their ordinary shares to Cede & Co which will be reflected on our share register. Upon such transfer becoming effective, DTC will, on their customary terms, issue and credit book-entry interests to an account for Computershare Investor Services PLC, or its appointed custodian, where after Computershare Investor Services PLC will issue the relevant number of depositary interests to the CREST accounts of such electing shareholders. Following the completion of this process, these shareholders will be in a position to trade their ordinary shares on the AIM, with such trades being electronically settled through the CREST system using depositary interests.
For additional details regarding our ordinary shares, see “Item 10 — Additional Information — A. Share Capital”.
ITEM 10.
ADDITIONAL INFORMATION
A.
Share Capital
Issued and Authorized Capitalization
Under our articles of incorporation, we have the authority to issue an unlimited number of shares of any par value, no par value or a combination of both. As of December 31, 2019 and 2018, 218,649,877 ordinary shares were issued and outstanding. All of our issued and outstanding ordinary shares are fully paid and in registered form.
In connection with the GKC acquisition, 2,461,682 ordinary shares will be issued if GKC’s investment funds contribute more than $100 million in performance fee income (and, in certain instances, fee income from new funds or other capital provision income) to Burford. If the $100 million income target is not achieved, no contingent consideration is payable.
We have no other outstanding class of equity securities.
History of Share Capital
On October 2, 2018 our Board authorized the issuance of 10,411,898 ordinary shares for 18.50 pounds sterling per share. The issuance was completed on October 4, 2018 resulting in net proceeds of approximately $245.2 million. No other ordinary share issuances occurred during the years ended December 31, 2019, 2018 and 2017. We did not repurchase any ordinary shares during the years ended December 31, 2019, 2018 and 2017. See “— B. Memorandum and Articles of Association — Shares” and Note 26 to our consolidated financial statements for additional information on our ordinary shares.
B.
Memorandum and Articles of Incorporation
We are incorporated in Guernsey as a company limited by shares under registration number 50877. We are governed by our articles of incorporation, memorandum of incorporation and the Companies Law.
Objects and Purposes
The objects of our business are unrestricted, as stated in paragraph 4 of our memorandum of incorporation.
Directors
Number
The number of directors is not subject to any maximum but a minimum of one director is required.
Appointment and Removal
Any person may be appointed or removed as director by an ordinary resolution. A person may not be appointed as a director if it would result in (a) a majority of the directors being resident in the U.K. for tax purposes or (b) all of the directors being resident in the U.S. for tax purposes.
At each annual general meeting, beginning at the annual general meeting in 2021, all of the directors shall retire. Retiring directors may be reappointed at such meeting. The Board has the power to appoint any person to be a director to fill a vacancy; provided that any director so appointed shall only hold office until the first annual general meeting after such appointment, at which meeting the director may be reappointed by ordinary resolution.
Directors’ Interests
In accordance with the Companies Law, a director must disclose any interest that such director may have in connection with any existing or proposed transaction by the Company. Subject to the provisions of the Companies Law, and provided that the director has disclosed the nature and extent of any interest, such director:
•
may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of director on such terms as to the tenure of office and otherwise as the directors may determine;
•
may be party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested;
•
may be a director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any company promoted by the Company or in which the Company is otherwise interested;
•
shall not, by reason of his office, be accountable to the Company for any remuneration or benefit which he derives from any such office or employment or from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit;
•
may (and such director’s firm, if any, may) act in a professional capacity for the Company (other than as auditor) and he or his firm shall be entitled to remuneration for professional services as though he were not a director of the Company; and
•
may be counted in the quorum at any meeting where such director or any other director is appointed to hold any office or place of profit under the Company or where the terms of appointment are arranged, and such director may vote on any such appointment or arrangement other than such director’s own appointment or the terms thereof.
Borrowing Powers
The Board may exercise all of the powers of the Company to borrow money and to give guarantees, mortgage, hypothecate, pledge or charge all or part of the Company’s undertaking, property or assets or uncalled capital and to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
Remuneration
The Board shall be remunerated for their services at such rate as the Board determines.
Share Qualification of Directors
A director is not required to hold any qualification shares.
Retirement
There is no age limit at which a director is required to retire.
Shares
General
All of our issued and outstanding ordinary shares are fully paid. Holders of ordinary shares do not have conversion or redemption rights. There are no provisions in our memorandum of incorporation or articles of incorporation discriminating against a shareholder as a result of such shareholder’s ownership of a particular number of shares.
Preferred Shares
The Board may provide for other classes of shares, including series of preferred shares. If any preferred shares are issued, the rights, preferences and privileges of our ordinary shares will be subject to, and may be adversely affected by, the rights of holders of such preferred shares.
Voting Rights
Each holder of ordinary shares who is present in person (including any corporation by its duly authorized representative) or by proxy at a general meeting will have one vote on a show of hands and, on a poll, if present in person or by proxy will have one vote for every share held by such holder. Ordinary resolutions require approval by a simple majority of the votes at a general meeting at which a quorum is present.
Dividends
Each year, once the prior year’s results are known, the Board will review our profits, cash generation and cash needs, and will recommend a dividend level to shareholders for consideration at our annual general meeting.
We may declare dividends by ordinary resolution at a general meeting in accordance with the respective rights of any class of shares. No dividend shall exceed the amount recommended by the Board. Subject to the provisions of the Companies Law, the Board may, if it thinks fit, from time to time pay interim dividends if it appears to the Board they are justified by the assets of the Company. Subject to rights which may attach to any other class of shares, holders of ordinary shares are entitled to receive ratably all dividends, if any, that are declared. Dividends may be paid in any currency that the Board determines.
Any dividend that has not been claimed after a period of 12 years from the date it became due for payment will, if the Board so resolves, be forfeited.
Pre-emption Rights
We may not allot equity securities to a person, other than a holder of ordinary shares, on any terms unless the following conditions are satisfied:
(i) we have made an offer to each person who holds ordinary shares to allot to them on the same or more favorable terms a proportion of those securities that is as nearly as practicable equal to the proportion in number held by them of all the issued ordinary shares; and
(ii) the period, which shall not be less than 14 days, during which any offer may be accepted has expired or the Company has received notice of the acceptance or refusal of every offer so made.
For these purposes, “equity securities” means shares or a right to subscribe for or to convert securities into shares. “Ordinary shares” means shares other than shares that, with respect to dividends and/or capital, carry a right to participate only up to a specified amount in a distribution.
These pre-emption rights are subject to certain exceptions, including allotments for non-cash consideration, allotments made under a power conferred on the directors by special resolution of the Company or allotments in respect of which the Company has resolved by special resolution that the pre-emption rights do not apply.
Liens, Calls on Shares and Forfeiture
In respect of any shares we issue that are not fully paid, we will have a first and paramount lien on every share (not being a fully paid share) for all moneys payable at a fixed time or called in respect of such share. Our Board may make calls upon shareholders for any amounts unpaid in respect of their shares, subject to the terms of allotment (whether in respect of nominal value or premium). If a call remains unpaid after it has become due and payable, then, following notice by the Board requiring payment of the unpaid amount together with any accrued interest and expenses incurred, such share may be forfeited by a resolution of the Board. A shareholder whose shares have been forfeited will cease to be a shareholder in respect of such share, but will, notwithstanding the forfeiture, remain liable to us for all moneys which at the date of forfeiture were presently payable together with interest. A forfeited share may be sold, re-allotted or otherwise disposed of as the Board sees fit.
Variation of Rights
The rights attached to any class of shares may be varied only with the consent in writing of the holders of a majority of the shares of that class or with the sanction of an ordinary resolution passed by a majority of the votes cast at a separate meeting of the holders of the shares of that class.
Winding Up
If we are wound up, the liquidator may, with the authority of a special resolution, divide among the shareholders, in the form specified, the whole or any part of our assets. The liquidator may for such purpose set the value of any assets and determine how the division shall be carried out between the shareholders or different classes of shareholders.
Meetings of Shareholders
Under Guernsey law, we are required to convene at least one general meeting each calendar year. A majority of the Board may call a general meeting and must call a general meeting if we receive requests to do so from shareholders of more than 10% of our share capital. At least 10 days’ notice must be provided to call any general meeting. The notice shall specify the day, time and place of the meeting, general nature of the business to be transacted and the terms of any resolution to be proposed, at the meeting. The notice may also specify a time, which must not be more than 48 hours before the time fixed for the general meeting, by which a person must be entered on the register of members in order to have the right to attend or vote at the general meeting.
Limitations on the Rights to Own Our Securities
We are not aware of any limitations on the rights to own our securities, including rights of non-resident or foreign shareholders to hold or exercise voting rights on our securities, imposed by foreign law or by our articles of incorporation or memorandum of incorporation.
Provisions that Would Delay, Defer or Prevent a Change of Control
There are no provisions in our memorandum of incorporation or articles of incorporation that would have the effect of delaying, deferring or preventing a change in control of us and that would operate only with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries.
Ownership Threshold Above Which Shareholder Ownership Must be Disclosed
Article 3.15 of our articles of incorporation provides that we may send notice to any person who we know or have reasonable cause to believe is, or at any time during the preceding three years was, interested in our shares requiring that person to confirm such interest and provide additional details with respect to that interest. In addition, Article 3.19 of our articles of incorporation provides that a shareholder must notify us if the percentage of voting rights it holds require notification under Rule 5 of the Disclosure and Transparency Rules of the United Kingdom Financial Conduct Authority. The Disclosure and Transparency Rules impose an obligation on persons to notify the Company of the percentage of voting rights held as a shareholder, or through the direct or indirect holding of financial instruments, if the percentage of voting rights held in the Company reaches, exceeds or falls below 3% or any 1% threshold above 3%.
The U.K. City Code on Takeovers and Mergers also imposes strict disclosure requirements with regard to dealings in the securities of an offeror or offeree company on all parties to a takeover and also on their respective associates during the course of an offer period.
Article 19 of the EU Market Abuse Regulation (2014/596) further requires persons discharging managerial responsibilities within the Company (and their persons closely associated) to notify the Company of transactions conducted on their own account in Company shares or derivatives or certain financial instruments relating to Company shares.
Exclusive Forum; Fees
Article 40 of our articles of incorporation provides that subject to Burford’s consent in writing to the selection of an alternative forum, the Courts of Guernsey shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any shareholder complaint asserting a cause of action arising under the Companies Law or the articles of incorporation. Our forum selection provision is not intended to apply to claims arising under the Securities Act or the Exchange Act.
In addition, Article 40 of our articles of incorporation provides that Burford is entitled to security for costs in connection with any proceedings brought against it by a shareholder (which may include proceedings in jurisdictions outside of Guernsey). This provision applies to any proceeding brought against Burford by a shareholder in its capacity as a shareholder. Article 40 of our articles of incorporation does not apply to any proceeding brought against a director, officer or affiliate of Burford.
If a shareholder were to bring an action against Burford in the Royal Court of Guernsey, the prevailing party may recover from the other party certain fees, costs and expenses incurred in connection with the prosecution or defense of such action subject to the discretion of the Royal Court of Guernsey which considers each application for a costs order on its merits. Such recoverable fees, costs and expenses typically include reasonable Guernsey legal fees and may, in exceptional circumstances, include fees of non-Guernsey legal advisers and other costs on an indemnity basis.
Article 40 of our articles of incorporation is intended to protect Burford from the possibility that it prevails in a lawsuit brought by a shareholder in the Royal Court of Guernsey (or another jurisdiction where a prevailing party may be entitled to be reimbursed for its costs) but the losing party is unable or unwilling to honor its reimbursement obligation by requiring such shareholder to provide security in respect of the potential reimbursement obligation. Any demand by the Company to enforce the provisions of Article 40 for security in respect of an action brought in the Royal Court of Guernsey would be subject to the determination of the Royal Court. It is uncertain whether the provisions of Article 40 of our articles of incorporation would apply in respect of actions brought in courts other than the Royal Court of Guernsey.
Compliance with AIM Rules
For as long as our ordinary shares are listed on the AIM, we will comply with the rules set forth in the AIM Rules for Companies.
Differences Between Rights of Our Shareholders and Rights of Shareholders of Delaware Corporations
As a company incorporated in Guernsey, we are governed by the Companies Law. The Companies Law differs in certain material respects from laws applicable to U.S. companies incorporated in the State of
Delaware. The following table provides a summary of some significant differences between the provisions of the Companies Law applicable to us and our shareholders and the provisions of the Delaware General Corporation Law applicable to U.S. companies incorporated in Delaware and their shareholders.
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Delaware Law
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Guernsey Law
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Shareholder Meetings
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Shareholders generally do not have the right to call meetings of shareholders unless that right is granted in the certificate of incorporation or bylaws.
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May be held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the board of directors
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May be held inside or outside Delaware
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Notice:
— Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any.
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Unless a company’s memorandum or articles of incorporation state otherwise, the directors are required to call a general meeting once the company receives requests to do so from shareholders who hold more than 10% of the capital of the company that carries the right of voting at general meetings (excluding any capital held as treasury shares).
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Unless the shareholders pass a resolution exempting the company from holding an annual general meeting, a company must hold a general meeting of its members within a period of 18 months beginning on the date on which it was incorporated and thereafter at least once every calendar year (with no more than 15 months elapsing between one annual general meeting and the next).
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— Written notice shall be given not less than 10 nor more than 60 days before the meeting.
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The board of directors may fix a record date, which shall not be less than 10 nor more than 60 days before the meeting.
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Subject to the articles of incorporation, a meeting may be held at any place in Guernsey or elsewhere.
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Notice:
— A meeting must be called by at least 10 days’ notice or such longer period as provided by the articles of incorporation.
— A meeting may be called by shorter notice if all shareholders entitled to attend and vote so agree.
— The notice shall specify the date, time and place of the meeting, the information of any resolutions to be passed at the meeting and such other information as is required by the articles of incorporation.
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Shareholders’ Voting Rights
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With limited exceptions, and unless the certificate of incorporation provides otherwise, shareholders may act by written consent to elect directors.
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Each stockholder entitled to vote may authorize another person or persons to act for such shareholder
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Unless the memorandum or articles of incorporation provide otherwise, directors are appointed by ordinary resolution of the shareholders.
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Any shareholder may appoint another person or persons to be their proxy to exercise all or any of their rights to attend, speak and vote at a
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Delaware Law
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Guernsey Law
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by proxy.
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The certificate of incorporation or bylaws may specify the number to constitute a quorum, but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote, present in person or represented by proxy, shall constitute a quorum.
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The certificate of incorporation may provide for cumulative voting.
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meeting.
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Subject to the articles of incorporation, the quorum shall be two shareholders holding 5% of the total voting rights of the company between them.
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Subject to certain limited exceptions, a provision of the articles of incorporation is void to the extent that it would have the effect of excluding or making ineffective a demand for a poll at general meeting.
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Directors
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The board of directors must consist of at least one director and is not subject to a maximum number of directors.
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The number of directors shall be fixed by the bylaws, unless the certificate of incorporation fixes such number, in which case a change in the number shall be made only by amendment of the certificate of incorporation.
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Subject to the articles of incorporation, the board of directors must consist of at least one director and is not subject to a maximum number of directors.
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Subject to the articles of incorporation, the board of directors may determine the remuneration or other benefits given to a director.
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A classified board is permitted.
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The board of directors has the authority to fix the compensation of directors, unless otherwise restricted by the certificate of incorporation or bylaws.
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Removal
– Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote unless the certificate of incorporation provides otherwise.
– In the case of a classified board, shareholders may effect removal only for cause.
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A person will cease to be a director if such person:
— provides written notice of his or her resignation to the company;
— is removed in accordance with the memorandum and articles of incorporation;
— becomes ineligible to be a director under the laws of Guernsey;
— dies; or
— otherwise vacates office in accordance with the memorandum and articles of incorporation.
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Interested Shareholders’ Transactions
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The Delaware General Corporation Law contains a business combination statute applicable to corporations whereby, unless the corporation has specifically elected not to be governed by such statute, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such shareholder becomes an interested shareholder. An interested
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The Companies Law does not contain any specific prohibition on interested shareholder transactions.
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Corporate Law Issue
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Delaware Law
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Guernsey Law
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shareholder generally is a person or a group that owns at least 15% of the corporation’s outstanding voting stock.
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Interested Director Transactions
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Interested director transactions are permissible and may not be legally voided if:
— the material facts of the director’s interest are disclosed and a majority of the disinterested directors approve the transaction;
— the material facts of the director’s interest are disclosed and a majority of the shareholders entitled to vote approve the transaction; or
— the transaction is determined to have been fair to the corporation at the time it is authorized, approved or ratified by the board of directors, a committee thereof or the shareholders.
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A director must, immediately after becoming aware of the fact that such director is interested in a transaction or proposed transaction with the company, disclose to the board the nature and extent of such director’s interest.
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Subject to the memorandum and articles of incorporation, a director who is interested in a transaction may vote, attend board meetings, sign documents and do any other thing in such director’s capacity as a director in relation to a transaction in which such director is interested as if such director was not interested in the transaction provided that such director has made the necessary declarations.
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A transaction in which a director is interested is voidable by the company at any time within 3 months of the date after which the transaction is disclosed to the board unless:
— the director’s interest was disclosed at the time the transaction was entered into or a disclosure was not required (for example, if the transaction is entered into in the ordinary course of business and on usual terms and conditions);
— the transaction is ratified by the shareholders; or
— the company received fair value for the transaction.
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Dividends
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The board of directors may declare and pay dividends, subject to any restrictions contained in the certificate of incorporation, upon the shares of the corporation’s capital stock either: out of its surplus or, in case there is no surplus, out of its net profits for the fiscal year in which the dividend is declared or the preceding fiscal year.
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A company may pay a dividend if the board of directors is satisfied on reasonable grounds that the company will, immediately after payment of the dividend, satisfy the statutory solvency test contained in the Companies Law as well as any other requirement of the memorandum or articles of incorporation.
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A dividend may be of such amount, be paid at such time and be paid to such members as the board of
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Delaware Law
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Guernsey Law
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directors thinks fit; provided that the directors must not authorize a dividend in respect of some but not all of the shares in a class or that is of a greater value per share in respect of some shares of a class than in respect of other shares of that class.
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Subject to the articles of incorporation, there is no requirement for dividends to be paid out of a particular account or source.
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Variation of Rights of Class of Shares
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A corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.
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A company may only vary the rights of a class of shareholders in accordance with the provisions of the articles of incorporation or, in the absence of such provisions, with the consent in writing from the holders of at least 75% in value of the issued shares of that class or by means of a special resolution passed by at least 75% in value of the issued shares of that class at a separate meeting of shareholders of that class.
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Mergers and Similar Arrangements
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Under the Delaware General Corporation Law, with certain exceptions, a merger, consolidation, sale, lease or transfer of all or substantially all of the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon.
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The Delaware General Corporation Law also provides that a parent corporation may, by resolution of its board of directors, merge with any subsidiary of which it owns at least 90% of each class of capital stock without a vote by the shareholders of such subsidiary.
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Subject to the articles of incorporation, a merger, consolidation, sale, lease or transfer of all or substantially all of the assets of a company may be negotiated and approved by the board of directors. Depending on the structure of such a transaction, a separate shareholder approval may be required.
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If, within a period of four months after the date of an offer being made in respect of a transfer of shares, the offer is approved or accepted by the shareholders comprising not less than 90% in value of the shares affected, the offeree may give notice to any dissenting shareholders of its desire to acquire the remaining shares. On the expiration of one month from the date of the notice to acquire, the offeror will be entitled to acquire the shares of the dissenting shareholder(s) by sending them a copy of the notice to acquire and by paying or transferring to them the consideration that such shareholder(s) are entitled to in respect of those shares, at which point the offeror shall be registered as the holder of those shares.
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Corporate Law Issue
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Delaware Law
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Guernsey Law
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Appraisal Rights
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A shareholder of a corporation participating in certain major transactions may, under certain circumstances, be entitled to appraisal rights under which the shareholder may receive cash in the amount of the fair value of the shares held by such shareholder in lieu of the transaction consideration.
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The Companies Law does not specifically provide for any appraisal rights of shareholders. The Companies Law does, however, give the Royal Court of Guernsey broad authority in respect of orders made pursuant to successful unfair prejudice claims under the Companies Law.
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Shareholder Suits
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Class actions and derivative actions generally are available to shareholders for, among other things, breach of fiduciary duty, corporate waste, and actions not taken in accordance with applicable law. In such actions, the court has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action.
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A shareholder may commence or continue a claim as a representative of those with the same interests in the claim. Unless the court directs otherwise, any judgment in which a party is acting as a representative will be binding on all persons represented.
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Derivative actions are also available to shareholders in respect of a cause of action arising from an actual or proposed act or omission involving: negligence, default, breach of duty and/or breach of trust by a director of the company.
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Costs are awarded by the court at its discretion. The normal order is for the winning party to recover its costs incurred in connection the action.
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Limitations on Directors’ Liability and Indemnification of Directors and Officers
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A corporation may include in its certificate of incorporation provisions limiting the personal liability of its directors to the corporation or its shareholders for monetary damages for certain breaches of fiduciary duty. However, such provisions may not limit liability for any breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, the authorization of unlawful dividends, stock purchases, or redemptions, or any transaction from which a director derived an improper personal benefit.
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A corporation may indemnify a director or officer of the corporation against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of any action, suit or proceeding by reason of such person’s position if (i) the person acted in good faith and in a manner
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A company may include in its articles of incorporation provisions limiting the liability of its directors (and officers or other persons); however, any provision that purports to exempt a director from any liability in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.
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Any provision by which a company directly or indirectly provides an indemnity for a director of the company, or any associated company, against any liability in connection with any negligence, default, breach of duty or breach of trust is void, except that:
— a company is not prevented from purchasing and maintaining for a director of the company, or any associated company, insurance against any such liability; and
— such restriction does not apply to a qualifying third-party indemnity
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Delaware Law
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Guernsey Law
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the person reasonably believed to be in or not opposed to the best interests of the corporation and (ii) with respect to any criminal action or proceeding, the person had no reasonable cause to believe the conduct was unlawful.
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provision, which is a provision for indemnity against liability incurred by a director to a person other than the company or an associated company that does not provide any indemnity against a prescribed list of liabilities, including certain fines and penalties and liabilities incurred in defending certain proceedings.
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Directors’ Fiduciary Duties
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Directors of a Delaware corporation have a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty.
— The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself or herself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction.
— The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally.
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In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, such director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
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The duties of directors in Guernsey are generally owed to the company and its shareholders as a whole rather than to any other person or particular shareholders (subject to certain exceptions) and arise from customary laws, statutory laws and contractual obligations.
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Customary law duties of directors include:
— a duty to act in good faith, in the best interests of the company, and not for any collateral purpose;
— a duty to exercise powers for a proper purpose. Even if a director is acting in good faith and in the best interests of the company, such director must nevertheless use his or her powers for the proper purpose for which they were conferred;
— a duty to avoid and mitigate conflicts of interest; and
— a duty to account for profits. As a fiduciary, a director may not take a personal profit from opportunities arising from such director’s office, even if the director is acting honestly and in the best interests of the company. Any such profit must be paid to the company. A director’s entitlement to remuneration and payment of expenses will be governed by the company’s articles of incorporation.
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Statutory duties of directors include:
— a general duty to manage the business and affairs of the company; and
— the directors are responsible for considering a solvency test in various circumstances, including in authorizing distributions by the
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Delaware Law
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Guernsey Law
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company to its shareholders.
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Inspection of Books and Records
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All shareholders have the right, upon written demand, to inspect or obtain copies of the corporation’s shares ledger and its other books and records for any purpose reasonably related to such person’s interest as a shareholder.
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The register and index of members, register of directors, register of secretaries and copies of all resolutions of shareholders passed other than at general meetings and minutes of the proceedings of general meetings, in each case, in the last six years, must be open for the inspection by any shareholder of the company without charge during ordinary business hours. They must also be open to inspection by any other person upon payment of such fee as may be prescribed by the Guernsey Committee for Economic Development or such lesser fee as the company may request.
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When a company receives a request to inspect its records, the company must comply with that request or apply to the Guernsey courts for a direction not to comply.
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Amendments of Governing Documents
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Amendments to the certificate of incorporation require the affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon, unless the certificate of incorporation provides otherwise. Bylaws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if provided in the certificate of incorporation, also be amended by the board of directors.
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Subject to certain exceptions, such as the alteration of the statement of the company’s name, a company may only make or alter a provision of its memorandum of incorporation in accordance with the terms of the memorandum of incorporation or by unanimous resolution of all of its shareholders.
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A company may alter its articles of incorporation by means of a special resolution passed by at least 75% of the shareholders.
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Dissolution and Winding Up
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Unless the board of directors approves the proposal to dissolve, dissolution must be approved by all of the shareholders. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares.
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A company may be dissolved by means of a compulsory or voluntary winding up or a compulsory or voluntary striking off.
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An application for voluntary winding up requires a special resolution of the members passed by a majority of at least 75%.
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An application for the voluntary striking off of a company must be made by the board of directors and be accompanied by a declaration of compliance confirming that all requirements of Guernsey law with respect to the striking off have been complied with.
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C.
Material Contracts
The following is a summary of each material contract outside the ordinary course of business to which we are a party, for the two years immediately preceding the date of this registration statement. Such summaries are not intended to be complete and reference is made to the contracts themselves, which are exhibits to this registration statement.
(a) Trust Deed dated as of February 12, 2018 among Burford Capital Finance LLC as issuer, Burford Capital Limited and Burford Capital PLC as guarantors and U.S. Bank Trustees Limited as trustee.
On February 12, 2018, Burford Capital Finance LLC issued $180 million aggregate principal amount of 6.125% notes due 2025 (the “2025 Notes”) under a trust deed among Burford Capital Limited and Burford Capital PLC, as guarantors, U.S. Bank Trustees Limited, as trustee, and Burford Capital Finance LLC. The 2025 Notes (i) are unsecured, unsubordinated obligations of Burford Capital Finance LLC; (ii) rank equally in right of payment with all other existing and future unsecured, unsubordinated indebtedness of Burford Capital Finance LLC; and (iii) are unconditionally guaranteed by Burford Capital Limited and Burford Capital PLC. If any subsidiary, other than certain excluded subsidiaries, of Burford Capital Limited has certain indebtedness which amounts to more than £2 million, such subsidiary shall provide a guarantee in respect of the 2025 Notes.
The 2025 Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on February 12 and August 12 of each year. Burford Capital Finance LLC may redeem the 2025 Notes for certain tax reasons, in whole, but not in part, at any time at the principal amount, plus accrued and unpaid interest.
The trust deed relating to the 2025 Notes contains certain covenants, including: (i) a restriction on the creation of any security interest by Burford Capital Finance LLC, Burford Capital Limited and Burford Capital PLC respect to their respective business, undertaking, assets or revenues to secure certain financial indebtedness unless the 2025 Notes are secured equally, subject to certain exemptions; and (ii) a requirement that Burford Capital Limited maintains a level of consolidated net debt that is less than 50% of the level of its tangible assets. The 2025 Notes are governed by English law.
(b) Trust Deed dated as of June 1, 2017 among Burford Capital PLC as issuer, Burford Capital Limited and Burford Capital Finance LLC, as guarantors, and U.S. Bank Trustees Limited as trustee.
On June 1, 2017, Burford Capital PLC issued £175 million aggregate principal amount of 5.000% notes due 2026 (the “2026 Notes”) under a trust deed among Burford Capital Limited and Burford Capital Finance LLC, as guarantors, and U.S. Bank Trustees Limited, as trustee, and Burford Capital PLC. The 2026 Notes (i) are unsecured, unsubordinated obligations of Burford Capital PLC; (ii) rank equally in right of payment with all other existing and future unsecured, unsubordinated indebtedness of Burford Capital PLC; and (iii) are unconditionally guaranteed by Burford Capital Limited and Burford Capital Finance LLC. If any subsidiary, other than certain excluded subsidiaries, of Burford Capital Limited has certain indebtedness which amounts to more than £2 million, such subsidiary shall provide a guarantee in respect of the 2026 Notes.
The 2026 Notes bear interest at a rate of 5.000% per annum, payable semiannually in arrears on December 1 and June 1 of each year. Burford Capital PLC may redeem the 2026 Notes, in whole, but not in part, at any time at the greater of (x) the principal amount and (y) an amount calculated by reference to the then-current yield of the U.K. 1.5% Treasury Gilt 2026 plus 1.0%, in each case, plus accrued and unpaid interest. Burford Capital PLC may redeem the 2026 Notes for certain tax reasons, in whole, but not in part, at any time at the principal amount, plus accrued and unpaid interest.
The trust deed relating to the 2026 Notes contains certain covenants, including: (i) a restriction on the creation of any security interest by Burford Capital PLC, Burford Capital Finance LLC and Burford Capital Limited with respect to their respective business, undertaking, assets or revenues to secure certain financial indebtedness unless the 2026 Notes are secured equally, subject to certain exemptions; and (ii) a requirement that Burford Capital Limited maintains a level of consolidated net debt that is less than 50% of the level of its tangible assets. The 2026 Notes are governed by English law.
(c) Trust Deed dated as of April 26, 2016 among Burford Capital PLC as issuer, Burford Capital Finance LLC and Burford Capital Limited, as guarantors, and U.S. Bank Trustees Limited as trustee.
On April 26, 2016, Burford Capital PLC issued £100 million aggregate principal amount of 6.125% notes due 2024 (the “2024 Notes”) under a trust deed among Burford Capital Limited and Burford Capital Finance LLC, as guarantors, U.S. Bank Trustees Limited, as trustee, and Burford Capital PLC. The 2024 Notes (i) are unsecured, unsubordinated obligations of Burford Capital PLC; (ii) rank equally in right of payment with all other existing and future unsecured, unsubordinated indebtedness of Burford Capital PLC; and (iii) are unconditionally guaranteed by Burford Capital Limited and Burford Capital Finance LLC. If any subsidiary, other than certain excluded subsidiaries, of Burford Capital Limited has certain indebtedness which amounts to more than £2 million, such subsidiary shall provide a guarantee in respect of the 2024 Notes.
The 2024 Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 26 and October 26 of each year. Burford Capital PLC may redeem the 2024 Notes, in whole, but not in part, at any time at the greater of (x) the principal amount and (y) an amount calculated by reference to the then-current yield of the U.K. 2.75% Treasury Gilt 2024 plus 1.0%, in each case, plus accrued and unpaid interest. Burford Capital PLC may redeem the 2024 Notes for certain tax reasons, in whole, but not in part, at any time at the principal amount, plus accrued and unpaid interest.
The trust deed relating to the 2024 Notes contains certain covenants, including: (i) a restriction on the creation of any security interest by Burford Capital PLC, Burford Capital Finance LLC and Burford Capital Limited with respect to their respective business, undertaking, assets or revenues to secure certain financial indebtedness unless the 2024 Notes are secured equally, subject to certain exemptions; and (ii) a requirement that Burford Capital Limited maintains a level of consolidated net debt that is less than 50% of the level of its tangible assets. The 2024 Notes are governed by English law.
(d) Trust Deed dated as of August 19, 2014 among Burford Capital PLC as issuer, Burford Capital Finance LLC and Burford Capital Limited, as guarantors, and U.S. Bank Trustees Limited as trustee.
On August 19, 2014, Burford Capital PLC issued £90 million aggregate principal amount of 6.500% notes due 2022 (the “2022 Notes”) under a trust deed among Burford Capital Limited, as guarantor, U.S. Bank Trustees Limited, as trustee, and Burford Capital PLC. The 2022 Notes (i) are unsecured, unsubordinated obligations of Burford Capital PLC; (ii) rank equally in right of payment with all other existing and future unsecured, unsubordinated indebtedness of Burford Capital PLC; and (iii) are unconditionally guaranteed by Burford Capital Limited and Burford Capital Finance LLC. If any subsidiary, other than certain excluded subsidiaries, of Burford Capital Limited has certain indebtedness which amounts to more than £2 million, such subsidiary shall provide a guarantee in respect of the 2022 Notes.
The 2022 Notes bear interest at a rate of 6.500% per annum, payable semiannually in arrears on February 19 and August 19 of each year. Burford Capital PLC may redeem the 2022 Notes, in whole, but not in part, at any time at the greater of (x) the principal amount and (y) an amount calculated by reference to the then-current yield of the U.K. 4.00% Treasury Gilt 2022 plus 1.0%, in each case, plus accrued and unpaid interest. Burford Capital PLC may redeem the 2022 Notes for certain tax reasons, in whole, but not in part, at any time at the principal amount, plus accrued and unpaid interest.
The trust deed relating to the 2022 Notes contains certain covenants, including: (i) a restriction on the creation of any security interest by Burford Capital PLC, Burford Capital Finance LLC and Burford Capital Limited with respect to their respective business, undertaking, assets or revenues to secure certain financial indebtedness unless the 2022 Notes are secured equally, subject to certain exemptions; and (ii) a requirement that Burford Capital Limited maintains a level of consolidated net debt that is less than 50% of the level of its tangible assets. The 2022 Notes are governed by English law.
D.
Exchange Controls and Other Limitations Affecting Security Holders
Under Guernsey law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresidents holders of our ordinary shares.
E.
Tax Considerations
Guernsey Tax Considerations
The summary below is based on current Guernsey law and published practice in Guernsey as of the date hereof, both of which are subject to change, possibly with retrospective effect. This summary is intended as a general guide of certain Guernsey tax matters related to the holders of ordinary shares of the Company (“Shareholders”) only and is not, is not intended to be nor should it be construed to be, legal or tax advice or a summary of all tax matters in Guernsey.
Shareholders, whether corporations or individuals, that are not residents of Guernsey for tax purposes and who do not carry on business in Guernsey through a permanent establishment situated in Guernsey, will not be subject to Guernsey income or Guernsey withholding tax. Any distributions made by the Company to non-Guernsey tax resident Shareholders will not be subject to Guernsey income or Guernsey withholding tax.
Individual Shareholders who are residents of Guernsey for tax purposes will generally be subject to Guernsey income tax at the individual standard rate of 20% on distributions received from the Company.
Corporate Shareholders that are residents of Guernsey for tax purposes (and which do not have exempt company status under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989, as amended) will generally be subject to Guernsey income tax at the company standard rate, which is currently 0%, on distributions received from the Company.
Guernsey does not currently levy capital gains tax (with the exception of a dwellings profit tax) and, therefore, Shareholders will not suffer capital gains tax in Guernsey.
No stamp duty is chargeable in Guernsey on the issue, acquisition, transfer, conversion or redemption or other disposition of ordinary shares of the Company (provided that it does not hold Guernsey real property).
Guernsey has implemented through domestic legislation matters related to (i) the Foreign Account Tax Compliance Act (“FATCA”) contained in the United States Internal Revenue Code of 1986 and the Treasury Regulations promulgated thereunder and (ii) the Organisation for Economic Co-operation and Development’s regime known as the Common Reporting Standard (“CRS”). Pursuant to FATCA and CRS, disclosure and reporting of information may be required, including disclosure of certain information about Shareholders, their ultimate beneficial owners and/or controllers and their investment in the Company. You should consult your tax advisers regarding the possible implications of FATCA, CRS and other similar regimes that may be relevant to your ownership and disposition of ordinary shares of the Company.
Material U.S. Federal Income Tax Considerations
General
The following is a discussion of the material U.S. federal income tax considerations that may be relevant to U.S. Holders (as defined below). This discussion is based upon provisions of the Code, Treasury Regulations and current administrative rulings and court decisions, all as in effect or existence on the date of this annual report and all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences of ownership of ordinary shares to vary substantially from the consequences described below. Unless the context otherwise requires, references in this section to “we”, “our” or “us” are references to Burford Capital Limited.
The following discussion applies only to beneficial owners of ordinary shares that own ordinary shares as “capital assets” within the meaning of Section 1221 of the Code (i.e., generally, for investment purposes) and is not intended to be applicable to all categories of investors, such as investors subject to special tax rules (e.g., banks or financial institutions, regulated investment companies, insurance companies, broker-dealers or traders in stocks and securities or currencies, tax-exempt organizations, real estate investment trusts, retirement plans or individual retirement accounts, U.S. expatriates, persons who hold ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income
tax purposes, traders in securities that have elected the mark-to-market method of accounting for their securities, persons liable for alternative minimum tax, persons who are investors in pass-through entities, persons that own (actually or constructively) 10.0% or more of our equity (by vote or value), persons who elect to receive dividends in a currency other than the U.S. dollar or persons that have a functional currency other than the U.S. dollar), each of whom may be subject to tax rules that differ significantly from those summarized below. If a partnership or other entity classified as a partnership for U.S. federal income tax purposes holds ordinary shares, the tax treatment of its partners generally will depend upon the status of the partner and the activities of the partnership. If you are a partner in a partnership holding ordinary shares, you should consult your own tax advisor regarding the tax consequences to you of the partnership’s ownership of ordinary shares.
No ruling has been or will be requested from the Internal Revenue Service (the “IRS”) in connection with any matter affecting us or prospective investors. The statements made herein may be challenged by the IRS and, if so challenged, may not be sustained upon review in a court. This discussion does not contain information regarding any U.S. state, U.S. local or U.S. estate or gift tax considerations concerning the ownership or disposition of ordinary shares. This discussion does not comment on all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances, and each prospective investor is encouraged to consult its own tax advisor regarding the U.S. federal, state, local and other tax consequences of the ownership or disposition of ordinary shares.
As used herein, the term “U.S. Holder” means a beneficial owner of ordinary shares that is:
•
an individual citizen or resident of the United States;
•
a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
•
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
•
a trust if (i) its administration is subject to the primary supervision of a court within the United States and one or more U.S. persons, within the meaning of Section 7701(a)(30) of the Code, have the authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes.
Distributions
Subject to the discussion below of the rules applicable to PFICs, any distributions to a U.S. Holder made by us with respect to ordinary shares generally will constitute dividends to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in its ordinary shares and thereafter as capital gain. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, U.S. Holders should expect that distributions generally will be treated as dividends for U.S. federal income tax purposes. U.S. Holders that are corporations generally will not be entitled to claim a dividends received deduction with respect to distributions they receive from us. Distributions on ordinary shares to certain non-corporate U.S. Holders that satisfy a minimum holding period and other generally applicable requirements should generally be eligible for taxation at preferential rates. However, non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. Investors should consult their own tax advisors regarding the application of these rules to their particular circumstances. Dividends received with respect to ordinary shares generally will be treated as foreign source “passive category income” for purposes of computing allowable foreign tax credits for U.S. federal income tax purposes. The U.S. foreign tax credit rules are complex, and U.S. Holders are urged to consult their own
tax advisors regarding the availability of the U.S. foreign tax credits and the application of the U.S. foreign tax credit rules to their particular situation.
Sale, Exchange or Other Disposition of Ordinary Shares
Subject to the discussion below of the rules applicable to PFICs, a U.S. Holder generally will recognize gain or loss upon a sale, exchange or other disposition of ordinary shares in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s adjusted tax basis in such ordinary shares. The U.S. Holder’s tax basis in its ordinary shares generally will be the U.S. Holder’s purchase price for ordinary shares reduced by the amount of any distributions on ordinary shares that are treated as non-taxable returns of capital (as discussed above under “Distributions”). Such gain or loss will be treated as capital gain or loss and will be long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Certain U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. A U.S. Holder’s ability to deduct capital losses is subject to limitations. Such capital gain or loss generally will be treated as U.S. source income or loss, as applicable, for U.S. foreign tax credit purposes.
Passive Foreign Investment Company
Significant adverse U.S. federal income tax rules apply to a U.S. Holder that owns an equity interest in a non-U.S. corporation that is classified as a PFIC for U.S. federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any tax year in which the holder held ordinary shares, either:
•
at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, rents, royalties and capital gains from the sale or exchange of investment property, other than certain rents and royalties derived in the active conduct of a trade or business); or
•
at least 50% of the average value of the assets held by us during such taxable year produce, or are held for the production of, passive income.
There is substantial uncertainty regarding the tax treatment of our investments as well as the application of the PFIC rules to such investments, and in particular, whether all or some of our investments are passive assets or otherwise produce passive income under the applicable PFIC rules. As a result, although we do not believe we are currently a PFIC, and we do not expect to be treated as a PFIC in the foreseeable future, there can be no assurance the IRS will not successfully assert that we are or were a PFIC, that all or some of our investments are passive assets or otherwise produce passive income or that a change in law or interpretation of current law, possibly with retroactive effect, could cause us to be treated as a PFIC in a current, future or prior taxable year. If we were a PFIC for any year during which a U.S. Holder holds ordinary shares, we generally would continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which the U.S. Holder holds ordinary shares, even if we otherwise ceased to meet the requirements for PFIC status in that year.
If a U.S. Holder is treated as owning PFIC stock, the U.S. Holder would be subject to additional taxes and interest charges on (1) any “excess distribution” and (2) any gain realized on the sale, exchange or other disposition (including, under certain circumstances, a pledge), of ordinary shares as follows:
•
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for ordinary shares;
•
the amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and to any year before we became a PFIC would be taxed as ordinary income; and
•
the amount allocated to each other taxable year would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such taxable year.
An excess distribution is the portion of all distributions received by the Non-Electing Holder on its ordinary shares in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the portion of the Non-Electing Holder’s holding period for ordinary shares before the taxable year.
If we were to be treated as a PFIC for any taxable year, a U.S. Holder may mitigate certain of these adverse consequences by making a timely “mark-to-market” election with respect to ordinary shares. If such election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the U.S. Holder’s ordinary shares at the end of the taxable year over such holder’s adjusted tax basis in ordinary shares. The U.S. Holder also would be allowed an ordinary loss equal to the excess, if any, of the U.S. Holder’s adjusted tax basis in ordinary shares over the fair market value thereof at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Gain or loss recognized on the sale, exchange or other disposition of ordinary shares would be treated as ordinary income or loss (but only to the extent that such loss does not exceed the net gains previously included in income by the U.S. Holder as a result of the mark-to-market election), as applicable.
In addition, if we were treated as a PFIC for any year during which a U.S. Holder holds ordinary shares, U.S. Holders may be subject to tax on (i) certain distributions by our subsidiaries or distributions made with respect to our interests in other entities and (ii) dispositions of shares of our subsidiaries or interests in other entities, in each case, if such subsidiaries or entities were classified as PFICs and as if the U.S. Holder held such shares directly, even though the U.S. Holder would have not received the proceeds of those distributions or dispositions directly. In addition, the “mark-to-market” election generally will not be available with respect to our subsidiaries or interests in other entities. The U.S. federal income tax treatment of transactions involving subsidiaries or entities classified as PFICs are complex and uncertain, and U.S. Holders are strongly encouraged to consult their own tax advisors regarding these rules.
Note that we do not expect to make available information necessary to permit a U.S. Holder to make a “QEF” election with respect to ordinary shares or shares of any subsidiary or other entity in which we have interests. In addition, if the total value of all PFIC stock that a U.S. Holder directly or indirectly owns exceeds certain thresholds, such holder must file IRS Form 8621 with their U.S. federal income tax return to report their ownership of ordinary shares.
The U.S. federal income tax rules relating to PFICs are very complex. You are strongly encouraged to consult your own tax advisor with respect to the impact of our PFIC status on the purchase, ownership and disposition of ordinary shares, the consequences to them of an investment in a PFIC, any elections available with respect to ordinary shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of ordinary shares.
Specified Foreign Financial Assets
Individual U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of: (1) $50,000 on the last day of the tax year or (2) $75,000 at any time during the tax year are generally required to report information relating to such assets. “Specified foreign financial assets” include any financial accounts held at a foreign financial institution, as well as securities issued by a foreign issuer (which would include ordinary shares) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain married individuals. U.S. Treasury Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. You are encouraged to consult your own tax advisor concerning regarding their reporting obligations, if any, that would result from their purchase, ownership or disposition of ordinary shares.
Backup Withholding and Information Reporting
In general, U.S. Holders will be subject to information reporting requirements on dividends received with respect to ordinary shares and the proceeds of a disposition of ordinary shares, unless the U.S. Holders is an exempt recipient (such as a corporation). Backup withholding may apply to such amounts if the U.S.
Holder fails to provide an accurate taxpayer identification number (generally on an IRS Form W-9) or is otherwise subject to backup withholding. Backup withholding is not an additional tax. A U.S. Holder generally may obtain a credit for any amount withheld against its liability for U.S. federal income tax (and obtain a refund of any amounts withheld in excess of such liability), provided that certain required information is timely furnished to the IRS.
F.
Dividends and Paying Agents
For a discussion of the declaration and payment of dividends on our ordinary shares, see “Item 10. Additional Information — B. Memorandum and Articles of Incorporation — Share — Dividends”. We have not appointed any paying agent.
G.
Statement by Experts
The consolidated financial statements of Burford Capital Limited at December 31, 2019 and 2018, and for each of the three years in the period ended December 31, 2019, appearing in this registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
H.
Documents on Display
Upon effectiveness of this registration statement, we will be subject to the informational requirements of the Exchange Act. In accordance with these requirements, we file reports and other information as a foreign private issuer with the SEC. You may inspect reports and other information regarding registrants, such as us, that file electronically with the SEC without charge at a website maintained by the SEC at http://www.sec.gov. These documents and other important information on our governance are posted on our website and may be viewed at http://www.burfordcapital.com. The information on, or that can be accessed through, our website is not incorporated by reference into this registration statement.
I.
Subsidiary Information
Not Applicable.
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market and Asset Risk
We are exposed to market and asset risk with respect to our cash management assets, capital provision assets, financial liabilities at fair value through profit and loss and derivative financial assets and liabilities. The maximum risk equals the fair value of all such financial instruments. With respect to our cash management assets, consisting of corporate bonds and investment funds, market risk is the risk that the fair value of financial instruments will fluctuate due to changes in market variables such as interest rates, credit risk, security and bond prices and foreign exchange rates. At December 31, 2019, should the prices of the investments in corporate bonds and investment funds have been 10% higher or lower while all other variables remained constant, our income and net assets would have increased and decreased, respectively, by $3.8 million (2018: $4.1 million).
With respect to our financial liabilities at fair value through profit and loss and derivative financial assets the market risk is negligible as the positions are held exclusively as economic hedges against gains and losses arising on offsetting long positions included in our capital provision assets. The fair value of our offsetting long positions is approximately $91.5 million at December 31, 2019 (2018: $112.8 million).
We only fund capital provision assets following a due diligence process. However, such assets involve high risk and there can be no assurance of any particular recovery in any individual asset. Certain of our capital provision assets are comprised of a portfolio of assets thereby mitigating the impact of the outcome of any single asset. While the claims underlying the Group’s capital provision assets are generally diverse, the Group monitors and manages the portfolio for related exposures that finance different clients relative to the same or very similar claims, such that the outcomes on those related exposures are likely to be correlated.
Liquidity Risk
We are exposed to liquidity risk. Our financing of capital provision assets requires funds to meet commitments (see Note 30 to our consolidated financial statements) and for settlement of operating liabilities. Our capital provision assets (as described in Note 2 to our consolidated financial statements) typically require significant capital contributions with little or no immediate return and no guarantee of return or repayment. In order to manage liquidity risk, we finance assets with a range of anticipated lives and hold cash management assets which can be readily realized to meet those liabilities and commitments.
Cash management assets include listed fixed income instruments and investment funds that can be redeemed on short notice or can be sold on an active trading market.
In 2014, 2016, 2017 and 2018, the total issues of $699.0 million (based on the prevailing pound sterling to U.S. dollar exchange rates at the applicable issue dates) in retail bonds raised sufficient extra capital to help mitigate liquidity risk. As of December 31, 2019, interest payments on the bonds will total approximately $211.0 million over the remaining three-year, five-year, six-year and seven-year periods until maturity in August 2022, October 2024, August 2025 and December 2026, respectively, at which point the principal amounts are required to be repaid.
Credit Risk
We are exposed to credit risk in various asset structures (see Note 2 to our consolidated financial statements), most of which involve financing sums recoverable only out of successful capital provision assets with a concomitant risk of loss of invested cost. On becoming contractually entitled to proceeds, depending on the structure of the particular asset, we could be a creditor of, and subject to direct or indirect credit risk from, a claimant, a defendant, both or other parties. Moreover, we may be indirectly subject to credit risk to the extent a defendant does not pay a claimant immediately notwithstanding successful adjudication of a claim in the claimant’s favor. Our credit risk is uncertain given that our entitlement pursuant to our assets is generally not established until a successful resolution of claims and our potential credit risk is mitigated by the diversity of our counterparties and indirect creditors.
We are also exposed to credit risk in respect of the cash management assets, due from broker and cash and cash equivalents. The credit risk of the due from broker and cash and cash equivalents is mitigated as all cash is placed with reputable banks with a sound credit rating (A-2 or higher by S&P; P-2 or higher by Moody’s). Cash management assets are held in a listed fund investing in senior short duration floating rate corporate debt and investment grade corporate bonds.
We are also exposed to credit risk from opponents in litigation insurance. The underwriting process includes an assessment of counterparty credit risk and there is a diversification of counterparties and therefore no concentration of risk in BWIL’s ongoing business.
The maximum credit risk exposure represented by cash, cash equivalents, due from broker and capital provision assets is as stated on the consolidated statement of financial position.
We are exposed to credit risk on financial assets held at amortized cost, including amounts due from settlement of capital provision assets and receivables. The maximum credit exposure for amounts due from settlement of capital provision assets and receivables is the carrying value at December 31, 2019 of $62.7 million (2018: $51.2 million). We apply the simplified approach to recognize impairment on settlement and receivable balances based on the lifetime expected credit loss. We review the lifetime expected credit loss based on historical collection performance, the specific provisions of any settlement agreement and a forward-looking assessment of macro-economic factors. Based on this review, we have not identified any material expected credit loss relating to the financial assets held at amortized cost except for the recognition of $4.1 million of impairment against two specific financial assets during the year ended December 31, 2019 (2018: nil), as set out in Note 6 to our consolidated financial statements.
Financial assets are generally considered to be in default when amounts are more than 90 days past due or if sufficient indicators exist that the debtor is unlikely to pay. Amounts are written off as uncollectable when all reasonably collectable amounts have been recovered and following the completion or cessation of enforcement activity.
Currency Risk
We hold assets denominated in currencies other than U.S. dollars, the functional currency of the Company, including the British pound sterling, the functional currency of Burford entities in the United Kingdom. Further, we issued British pound sterling loan capital during 2014, 2016 and 2017. We are therefore exposed to currency risk, as values of the assets and liabilities denominated in other currencies will fluctuate due to changes in exchange rates. We may use forward exchange contracts from time to time to mitigate currency risk.
At December 31, 2019, should the British pound sterling, Euro, Australian dollar and Swiss Franc have strengthened or weakened by 10% against the U.S. dollar and all other variables held constant, our net profit and net assets would have would have (decreased)/increased and increased/(decreased), respectively, as noted in the table below:
|
Increase or (decrease) in net profit and net assets (in U.S. dollar thousands)
|
|
|
2019
|
|
|
2018
|
|
|
British pound sterling
|
|
|
|
|
(41,562)
|
|
|
|
|
|
(39,680)
|
|
|
|
Euro
|
|
|
|
|
13,942
|
|
|
|
|
|
10,785
|
|
|
|
Australian Dollar
|
|
|
|
|
269
|
|
|
|
|
|
267
|
|
|
|
Swiss Franc
|
|
|
|
|
18
|
|
|
|
|
|
—
|
|
|
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to market risk for changes in floating interest rates relates primarily to our cash, certain cash management assets and capital provision assets. All cash bears interest at floating rates. There are certain capital provision assets, due from settlement of assets and cash management assets that earn interest based on fixed rates; however, those assets do not have interest rate risk as they are not exposed to changes in market interest rates. Our loan capital incurs interest at a fixed rate and so is not exposed to changes in market interest rates.
The interest-bearing floating rate assets and liabilities are denominated in both U.S. dollars and British pound sterling. If interest rates increased/decreased by 25 basis points while all other variables remained constant, the profit for the year and net assets would increase/decrease by $0.9 million (2018: $1.3 million). For fixed rate assets and liabilities, it is estimated that there would be no material profit or net assets impact. Fixed rate liabilities include the loan capital as disclosed in Note 17 to our Consolidated Financial Statements.
Capital Management Risk
Our approach to capital management is intended to ensure adequate liquidity to meet our funding commitments and ongoing expenses while also ensuring that adequate resources are available to finance new assets as opportunities arise.
Our assets generate a significant amount of cash proceeds as assets are realized into due from settlement receivables, which are in turn, resolved into cash. We use the cash from these realizations as well as fee income as our primary sources of liquidity for funding assets and expenses. Because the timing of cash realizations from our capital provision assets is uncertain, we normally maintain a substantial balance of cash and cash management assets to provide liquidity during periods when cash realizations are less than funding and expense needs.
To the degree that we intend to grow our capital provision assets portfolio beyond recycled capital, we require external financing beyond our cash realizations from assets. Over the past several years, we have grown our portfolio beyond our cash realizations. We have financed that growth through:
•
Third-party fund vehicles, which we manage, including BOF and BOF-C raised in 2018 and BAIF raised in 2019.
•
Loan capital in the form of bond issuances totaling approximately $699.0 million (based on the prevailing pound sterling to U.S. dollar exchange rates at the applicable issue dates) issued in 2014, 2016, 2017 and 2018.
•
Share issuance of approximately $245.0 million in 2018.
We manage our balance sheet with relatively low levels of leverage. Our debt issues contain one significant financial covenant, which is a leverage ratio requirement that we maintain a consolidated level of net debt (debt less cash) less than 50% of the level of tangible assets (total assets less intangibles). At December 31, 2019, the leverage ratio on this basis was 17% (2018: 15%). We expect from time to time to issue additional debt, depending on our liquidity needs, capital deployment prospects and market conditions.
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not Applicable.
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not Applicable.
ITEM 15.
CONTROLS AND PROCEDURES
Not Applicable.
ITEM 16.
RESERVED
ITEM 16.A.
AUDIT COMMITTEE FINANCIAL EXPERT
Not Applicable.
ITEM 16.B.
CODE OF ETHICS
Not Applicable.
ITEM 16.C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not Applicable.
ITEM 16.D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable.
ITEM 16.E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 16.F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not Applicable.
ITEM 16.G.
CORPORATE GOVERNANCE
Not Applicable.
ITEM 16.H.
MINE SAFETY DISCLOSURE
Not Applicable.
PART III
ITEM 17.
FINANCIAL STATEMENTS
See “Item 18. Financial Statements”.
ITEM 18.
FINANCIAL STATEMENTS
Reference is made to pages F-1 through F-63 included herein by reference.
ITEM 19.
EXHIBITS
|
|
Exhibit
No.
|
|
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Description
|
|
|
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1.1
|
|
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Articles of Incorporation
|
|
|
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1.2
|
|
|
Memorandum of Incorporation
|
|
|
|
4.1
|
|
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Trust Deed dated as of February 12, 2018 among Burford Capital Finance LLC as issuer, Burford Capital Limited and Burford Capital PLC as guarantors and U.S. Bank Trustees Limited as trustee
|
|
|
|
4.2
|
|
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Trust Deed dated as of June 1, 2017 among Burford Capital PLC as issuer, Burford Capital Finance LLC and Burford Capital Limited, as guarantors, and U.S. Bank Trustees Limited as trustee
|
|
|
|
4.3
|
|
|
Trust Deed dated as of April 26, 2016 among Burford Capital PLC as issuer, Burford Capital Finance LLC and Burford Capital Limited, as guarantors, and U.S. Bank Trustees Limited as trustee
|
|
|
|
4.4
|
|
|
Trust Deed dated as of August 19, 2014 among Burford Capital PLC as issuer, Burford Capital Finance LLC and Burford Capital Limited, as guarantors, and U.S. Bank Trustees Limited as trustee
|
|
|
|
4.5
|
|
|
Long-Term Incentive Plan, amended and renewed as of May 13, 2020
|
|
|
|
8.1
|
|
|
List of Subsidiaries of Burford Capital Limited
|
|
|
|
15.1
|
|
|
Consent of Ernst & Young LLP
|
|
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.
BURFORD CAPITAL LIMITED,
By
/s/ Charles Parkinson
Name: Charles Parkinson
Title: Authorized Person
Dated: September 11, 2020
BURFORD CAPITAL LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
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F-2
|
|
|
|
|
|
|
|
|
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F-3
|
|
|
|
|
|
|
|
|
|
F-4
|
|
|
|
|
|
|
|
|
|
F-5
|
|
|
|
|
|
|
|
|
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F-7
|
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|
|
|
|
|
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|
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F-8
|
|
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Burford Capital Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Burford Capital Limited (the Company) as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2010.
London, United Kingdom
July 6, 2020, except for the section titled “Sensitivity of level 3 valuations” of Note 21, as to which the date is September 11, 2020
Consolidated statements of comprehensive income
for the years ended 31 December 2019, 2018 and 2017
|
|
|
|
Notes
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital provision income
|
|
|
|
|
6
|
|
|
|
|
|
351,828
|
|
|
|
|
|
404,230
|
|
|
|
|
|
315,280
|
|
|
|
Asset management income
|
|
|
|
|
10
|
|
|
|
|
|
15,160
|
|
|
|
|
|
11,691
|
|
|
|
|
|
14,458
|
|
|
|
Insurance income
|
|
|
|
|
11
|
|
|
|
|
|
3,545
|
|
|
|
|
|
10,406
|
|
|
|
|
|
7,613
|
|
|
|
Services income
|
|
|
|
|
|
|
|
|
|
|
2,133
|
|
|
|
|
|
1,650
|
|
|
|
|
|
1,837
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
13
|
|
|
|
|
|
6,703
|
|
|
|
|
|
1,801
|
|
|
|
|
|
2,650
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
|
|
|
|
|
|
1,992
|
|
|
|
|
|
(1,453)
|
|
|
|
|
|
1,639
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
|
|
|
|
|
|
(15,318)
|
|
|
|
|
|
(3,348)
|
|
|
|
|
|
(863)
|
|
|
|
Total income
|
|
|
|
|
|
|
|
|
|
|
366,043
|
|
|
|
|
|
424,977
|
|
|
|
|
|
342,614
|
|
|
|
Operating expenses
|
|
|
|
|
14
|
|
|
|
|
|
(91,402)
|
|
|
|
|
|
(71,831)
|
|
|
|
|
|
(57,479)
|
|
|
|
Amortisation of intangible asset
|
|
|
|
|
19
|
|
|
|
|
|
(9,495)
|
|
|
|
|
|
(9,494)
|
|
|
|
|
|
(11,703)
|
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
|
265,146
|
|
|
|
|
|
343,652
|
|
|
|
|
|
273,432
|
|
|
|
Finance costs
|
|
|
|
|
17
|
|
|
|
|
|
(39,622)
|
|
|
|
|
|
(38,538)
|
|
|
|
|
|
(24,251)
|
|
|
|
Profit for the year before taxation
|
|
|
|
|
|
|
|
|
|
|
225,524
|
|
|
|
|
|
305,114
|
|
|
|
|
|
249,181
|
|
|
|
Taxation (expense)/credit
|
|
|
|
|
4
|
|
|
|
|
|
(13,417)
|
|
|
|
|
|
12,463
|
|
|
|
|
|
123
|
|
|
|
Profit for the year after taxation
|
|
|
|
|
|
|
|
|
|
|
212,107
|
|
|
|
|
|
317,577
|
|
|
|
|
|
249,304
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations on consolidation
|
|
|
|
|
|
|
|
|
|
|
(17,525)
|
|
|
|
|
|
24,701
|
|
|
|
|
|
(28,206)
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
194,582
|
|
|
|
|
|
342,278
|
|
|
|
|
|
221,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cents
|
|
|
Cents
|
|
|
Cents
|
|
|
Basic profit per ordinary share
|
|
|
|
|
28
|
|
|
|
|
|
97.0
|
|
|
|
|
|
150.7
|
|
|
|
|
|
119.7
|
|
|
|
Diluted profit per ordinary share
|
|
|
|
|
28
|
|
|
|
|
|
96.6
|
|
|
|
|
|
150.3
|
|
|
|
|
|
119.6
|
|
|
|
Basic comprehensive income per ordinary share
|
|
|
|
|
28
|
|
|
|
|
|
89.0
|
|
|
|
|
|
162.4
|
|
|
|
|
|
106.2
|
|
|
|
Diluted comprehensive income per ordinary share
|
|
|
|
|
28
|
|
|
|
|
|
88.6
|
|
|
|
|
|
162.0
|
|
|
|
|
|
106.0
|
|
|
The notes on pages
F-8 to
F-65 form an integral part of these consolidated financial statements.
Consolidated statements of financial position
as at 31 December 2019 and 2018
|
|
|
|
Notes
|
|
|
2019
|
|
|
2018
|
|
|
1 January
2018
|
|
|
|
|
|
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
186,621
|
|
|
|
|
|
265,551
|
|
|
|
|
|
135,415
|
|
|
|
Cash management assets
|
|
|
|
|
13
|
|
|
|
|
|
37,966
|
|
|
|
|
|
41,449
|
|
|
|
|
|
39,933
|
|
|
|
Due from brokers
|
|
|
|
|
|
|
|
|
|
|
95,226
|
|
|
|
|
|
129,911
|
|
|
|
|
|
41,678
|
|
|
|
Other assets
|
|
|
|
|
15
|
|
|
|
|
|
13,263
|
|
|
|
|
|
16,313
|
|
|
|
|
|
8,650
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
8
|
|
|
|
|
|
54,358
|
|
|
|
|
|
37,109
|
|
|
|
|
|
3,248
|
|
|
|
Capital provision assets
|
|
|
|
|
6
|
|
|
|
|
|
2,045,329
|
|
|
|
|
|
1,641,035
|
|
|
|
|
|
1,089,395
|
|
|
|
Derivative financial asset
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
|
|
—
|
|
|
|
Equity securities
|
|
|
|
|
7
|
|
|
|
|
|
31,396
|
|
|
|
|
|
582
|
|
|
|
|
|
6,058
|
|
|
|
Tangible fixed assets
|
|
|
|
|
12
|
|
|
|
|
|
20,184
|
|
|
|
|
|
1,866
|
|
|
|
|
|
2,399
|
|
|
|
Intangible asset
|
|
|
|
|
19
|
|
|
|
|
|
8,703
|
|
|
|
|
|
18,198
|
|
|
|
|
|
27,692
|
|
|
|
Goodwill
|
|
|
|
|
20
|
|
|
|
|
|
133,999
|
|
|
|
|
|
133,966
|
|
|
|
|
|
134,022
|
|
|
|
Deferred tax asset
|
|
|
|
|
4
|
|
|
|
|
|
24,939
|
|
|
|
|
|
28,848
|
|
|
|
|
|
10,863
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
2,651,984
|
|
|
|
|
|
2,318,982
|
|
|
|
|
|
1,499,353
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
9
|
|
|
|
|
|
91,493
|
|
|
|
|
|
112,821
|
|
|
|
|
|
36,242
|
|
|
|
Due to brokers
|
|
|
|
|
|
|
|
|
|
|
51,401
|
|
|
|
|
|
12,667
|
|
|
|
|
|
—
|
|
|
|
Loan interest payable
|
|
|
|
|
17
|
|
|
|
|
|
9,462
|
|
|
|
|
|
9,327
|
|
|
|
|
|
5,397
|
|
|
|
Other liabilities
|
|
|
|
|
16
|
|
|
|
|
|
51,430
|
|
|
|
|
|
31,046
|
|
|
|
|
|
24,991
|
|
|
|
Loan capital
|
|
|
|
|
17
|
|
|
|
|
|
655,880
|
|
|
|
|
|
638,665
|
|
|
|
|
|
486,931
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
|
|
|
|
|
|
13,944
|
|
|
|
|
|
3,244
|
|
|
|
|
|
3,152
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
23
|
|
|
|
|
|
235,720
|
|
|
|
|
|
136,959
|
|
|
|
|
|
143,639
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
4
|
|
|
|
|
|
9,662
|
|
|
|
|
|
4,099
|
|
|
|
|
|
437
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
1,118,992
|
|
|
|
|
|
955,828
|
|
|
|
|
|
700,789
|
|
|
|
Total net assets
|
|
|
|
|
|
|
|
|
|
|
1,532,992
|
|
|
|
|
|
1,363,154
|
|
|
|
|
|
798,564
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
|
26
|
|
|
|
|
|
609,954
|
|
|
|
|
|
609,954
|
|
|
|
|
|
364,749
|
|
|
|
Reserves attributable to owners
|
|
|
|
|
|
|
|
|
|
|
923,038
|
|
|
|
|
|
753,200
|
|
|
|
|
|
433,815
|
|
|
|
Total shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
1,532,992
|
|
|
|
|
|
1,363,154
|
|
|
|
|
|
798,564
|
|
|
The notes on pages
F-8 to
F-65 form an integral part of these consolidated financial statements.
Consolidated statements of cash flows
for the years ended 31 December 2019, 2018 and 2017
|
|
|
|
Notes
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year before tax
|
|
|
|
|
|
|
|
|
|
|
225,524
|
|
|
|
|
|
305,114
|
|
|
|
|
|
249,181
|
|
|
|
Changes in working capital and non-cash items
|
|
|
|
|
3
|
|
|
|
|
|
(281,501)
|
|
|
|
|
|
(344,379)
|
|
|
|
|
|
(273,378)
|
|
|
|
Capital provision assets (note 3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds received
|
|
|
|
|
|
|
|
|
|
|
491,252
|
|
|
|
|
|
602,687
|
|
|
|
|
|
378,240
|
|
|
|
Net (funding) of/proceeds from financial liabilities at fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
(42,200)
|
|
|
|
|
|
73,569
|
|
|
|
|
|
36,510
|
|
|
|
Net proceeds from/(cash paid) to due from/to brokers
|
|
|
|
|
|
|
|
|
|
|
73,419
|
|
|
|
|
|
(75,566)
|
|
|
|
|
|
(41,678)
|
|
|
|
Funding of derivative financial asset
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
(7,616)
|
|
|
|
|
|
—
|
|
|
|
Proceeds from equity security
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
624
|
|
|
|
|
|
—
|
|
|
|
Proceeds from asset recovery services
|
|
|
|
|
|
|
|
|
|
|
1,123
|
|
|
|
|
|
1,619
|
|
|
|
|
|
1,876
|
|
|
|
Net proceeds from/(funding) of cash management assets
|
|
|
|
|
|
|
|
|
|
|
3,346
|
|
|
|
|
|
(5,655)
|
|
|
|
|
|
(27,973)
|
|
|
|
Taxation paid
|
|
|
|
|
|
|
|
|
|
|
(694)
|
|
|
|
|
|
(2,273)
|
|
|
|
|
|
(1,064)
|
|
|
|
Net proceeds from/(cash paid) to third-party interests in consolidated entities
|
|
|
|
|
|
|
|
|
|
|
83,443
|
|
|
|
|
|
(10,028)
|
|
|
|
|
|
142,776
|
|
|
|
Net cash inflow/(outflow) from operating activities before new funding of capital provision assets
|
|
|
|
|
|
|
|
|
|
|
553,712
|
|
|
|
|
|
538,096
|
|
|
|
|
|
464,490
|
|
|
|
Capital provision assets (note 3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New funding of capital provision assets
|
|
|
|
|
|
|
|
|
|
|
(562,018)
|
|
|
|
|
|
(771,409)
|
|
|
|
|
|
(566,813)
|
|
|
|
Net cash inflow/(outflow) from operating activities
|
|
|
|
|
|
|
|
|
|
|
(8,306)
|
|
|
|
|
|
(233,313)
|
|
|
|
|
|
(102,323)
|
|
|
|
|
|
|
Notes
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of share capital
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
249,983
|
|
|
|
|
|
—
|
|
|
|
Issue expenses – share capital
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,778)
|
|
|
|
|
|
—
|
|
|
|
Issue of loan capital and loan notes
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
180,000
|
|
|
|
|
|
225,803
|
|
|
|
Issue expenses – loan capital
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
(2,637)
|
|
|
|
|
|
(3,170)
|
|
|
|
Payments of lease liabilities
|
|
|
|
|
|
|
|
(1,433)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Interest paid on loan capital
|
|
|
|
|
|
|
|
(37,568)
|
|
|
|
|
|
(33,108)
|
|
|
|
|
|
(22,680)
|
|
|
|
Dividends paid on ordinary shares
|
|
|
|
|
|
|
|
(28,424)
|
|
|
|
|
|
(24,579)
|
|
|
|
|
|
(19,845)
|
|
|
|
Repayment of loan notes
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(43,750)
|
|
|
|
Net cash (outflow)/inflow from financing activities
|
|
|
|
|
|
|
|
(67,425)
|
|
|
|
|
|
364,881
|
|
|
|
|
|
136,358
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of tangible fixed assets
|
|
|
|
|
|
|
|
(3,398)
|
|
|
|
|
|
(104)
|
|
|
|
|
|
(650)
|
|
|
|
Settlement of outstanding creditor relating to prior year’s acquisition of subsidiary
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(57,863)
|
|
|
|
Net cash (outflow) from investing activities
|
|
|
|
|
|
|
|
(3,398)
|
|
|
|
|
|
(104)
|
|
|
|
|
|
(58,513)
|
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
|
|
|
|
|
|
(79,129)
|
|
|
|
|
|
131,464
|
|
|
|
|
|
(24,478)
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Reconciliation of net cash flow to movements in cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
|
|
|
|
|
265,551
|
|
|
|
|
|
135,415
|
|
|
|
|
|
158,371
|
|
|
|
(Decrease)/increase in cash and cash equivalents
|
|
|
|
|
|
|
|
(79,129)
|
|
|
|
|
|
131,464
|
|
|
|
|
|
(24,478)
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
|
|
|
199
|
|
|
|
|
|
(1,328)
|
|
|
|
|
|
1,522
|
|
|
|
Cash and cash equivalents at end of year
|
|
|
|
|
|
|
|
186,621
|
|
|
|
|
|
265,551
|
|
|
|
|
|
135,415
|
|
|
|
|
|
Supplemental disclosure
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Cash received from interest and dividend income
|
|
|
|
|
6,849
|
|
|
|
|
|
6,377
|
|
|
|
|
|
2,986
|
|
|
|
Asset received in kind
|
|
|
|
|
29,645
|
|
|
|
|
|
—
|
|
|
|
|
|
13,011
|
|
|
The notes on pages
F-8 to
F-65 form an integral part of these consolidated financial statements.
Consolidated statements of changes in equity
for the years ended 31 December 2019, 2018 and 2017
|
31 December 2019
|
|
|
Share capital
|
|
|
Contingent
share capital
|
|
|
Other capital
reserve
|
|
|
Revenue
reserve
|
|
|
Foreign
currency
consolidation
reserve
|
|
|
Capital
redemption
reserve
|
|
|
Total equity
shareholders’
funds
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Balance at 31 December 2018
|
|
|
|
|
596,454
|
|
|
|
|
|
13,500
|
|
|
|
|
|
2,838
|
|
|
|
|
|
716,218
|
|
|
|
|
|
34,282
|
|
|
|
|
|
(138)
|
|
|
|
|
|
1,363,154
|
|
|
|
Change in accounting policy – Leases
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(839)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(839)
|
|
|
|
Restated at 1 January 2019
|
|
|
|
|
596,454
|
|
|
|
|
|
13,500
|
|
|
|
|
|
2,838
|
|
|
|
|
|
715,379
|
|
|
|
|
|
34,282
|
|
|
|
|
|
(138)
|
|
|
|
|
|
1,362,315
|
|
|
|
Profit for the year
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
212,107
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
212,107
|
|
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(17,525)
|
|
|
|
|
|
—
|
|
|
|
|
|
(17,525)
|
|
|
|
Share-based payments (note 27)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,519
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,519
|
|
|
|
Dividends paid (note 29)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,424)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,424)
|
|
|
|
Balance at 31 December 2019
|
|
|
|
|
596,454
|
|
|
|
|
|
13,500
|
|
|
|
|
|
7,357
|
|
|
|
|
|
899,062
|
|
|
|
|
|
16,757
|
|
|
|
|
|
(138)
|
|
|
|
|
|
1,532,992
|
|
|
|
|
|
31 December 2018
|
|
|
Share capital
|
|
|
Contingent
share capital
|
|
|
Other capital
reserve
|
|
|
Revenue
reserve
|
|
|
Foreign
currency
consolidation
reserve
|
|
|
Capital
redemption
reserve
|
|
|
Total equity
shareholders’
funds
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
As at 1 January 2018
|
|
|
|
|
351,249
|
|
|
|
|
|
13,500
|
|
|
|
|
|
1,152
|
|
|
|
|
|
423,220
|
|
|
|
|
|
9,581
|
|
|
|
|
|
(138)
|
|
|
|
|
|
798,564
|
|
|
|
Profit for the year
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
317,577
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
317,577
|
|
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
24,701
|
|
|
|
|
|
—
|
|
|
|
|
|
24,701
|
|
|
|
Issue of share capital (note 26)
|
|
|
|
|
245,205
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
245,205
|
|
|
|
Share-based payments (note 27)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,686
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,686
|
|
|
|
Dividends paid (note 29)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(24,579)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(24,579)
|
|
|
|
Balance at 31 December 2018
|
|
|
|
|
596,454
|
|
|
|
|
|
13,500
|
|
|
|
|
|
2,838
|
|
|
|
|
|
716,218
|
|
|
|
|
|
34,282
|
|
|
|
|
|
(138)
|
|
|
|
|
|
1,363,154
|
|
|
|
|
|
31 December 2017
|
|
|
Share capital
|
|
|
Contingent
share capital
|
|
|
Other capital
reserve
|
|
|
Revenue
reserve
|
|
|
Foreign
currency
consolidation
reserve
|
|
|
Capital
redemption
reserve
|
|
|
Total equity
shareholders’
funds
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
As at 1 January 2017
|
|
|
|
|
351,249
|
|
|
|
|
|
13,500
|
|
|
|
|
|
—
|
|
|
|
|
|
193,761
|
|
|
|
|
|
37,787
|
|
|
|
|
|
(138)
|
|
|
|
|
|
596,159
|
|
|
|
Profit for the year
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
249,304
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
249,304
|
|
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,206)
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,206)
|
|
|
|
Share-based payments (note 27)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,152
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,152
|
|
|
|
Dividends paid (note 29)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(19,845)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(19,845)
|
|
|
|
Balance at 31 December 2017
|
|
|
|
|
351,249
|
|
|
|
|
|
13,500
|
|
|
|
|
|
1,152
|
|
|
|
|
|
423,220
|
|
|
|
|
|
9,581
|
|
|
|
|
|
(138)
|
|
|
|
|
|
798,564
|
|
|
The notes on pages
F-8 to
F-65 form an integral part of these consolidated financial statements.
Notes to the consolidated financial statements
for the year ended 31 December 2019
1. Legal form and principal activity
Burford Capital Limited (the “Company”) and its subsidiaries (the “Subsidiaries”) (together the “Group”) provide investment capital, asset management, financing and risk solutions with a focus on the legal sector.
The Company was incorporated under The Companies (Guernsey) Law, 2008 (the “Law”) on 11 September 2009. Shares in the Company were admitted to trading on AIM, a market operated by the London Stock Exchange, on 21 October 2009.
2. Basis of preparation and principal accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
Basis of accounting
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (IASB). IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets that are not apparent from other sources. Actual results may differ from these estimates. The consolidated financial statements are presented in United States Dollars and are rounded to the nearest $’000 unless otherwise indicated.
Significant estimates
The most significant estimates relate to the valuation of capital provision assets at fair value through profit or loss which are determined by the Group.
Fair values are determined on the specifics of each asset and will typically change upon an asset having a return entitlement or progressing in a manner that, in the Group’s judgement, would result in a third party being prepared to pay an amount different from the original sum invested for the Group’s rights in connection with the asset. Positive, material progression of an asset will give rise to an increase in fair value whilst adverse outcomes give rise to a reduction. The quantum of change depends on the potential future stages of asset progression. The consequent effect when an adjustment is made is that the fair value of an asset with few remaining stages is adjusted closer to its predicted final outcome than one with many remaining stages.
In litigation matters, before a judgment is entered following trial or other adjudication, the key stages of any matter and their impact on fair value is substantially case specific but may include the motion to dismiss and the summary judgment stages. Following adjudication, appeals proceedings provide further opportunities to re-assess the fair value of an asset.
The estimation of fair value is inherently uncertain. Awards and settlements are hard to predict and often have a wide range of possible outcomes. Furthermore, there is much unpredictability in the actions of courts, litigants and defendants because of the large number of variables involved and consequent difficulty of predictive analysis. In addition, there is little activity in transacting assets and hence little relevant data for benchmarking the effect of asset progression on fair value, although the existence of the Group’s secondary market sales is a valuation input. Refer to note 21 for further details on the sensitivities of fair value.
There is a significant estimate required to support the recoverability of the deferred tax asset as it includes an amount relating to carried-forward US tax losses that can be utilised against future taxable profits of the Group’s US business. The estimation of the future taxable profits is based on the business plans
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
and approved budgets for those entities that require the use of assumptions for expected returns on capital provision assets, the level of future business activity and the structuring of capital provision assets for tax efficiency. The tax losses can be carried forward indefinitely and have no expiry date.
There is a significant estimate required in testing goodwill for impairment. This includes the identification of independent cash- generating units (“CGU”) and the allocation of goodwill to these units based on which units are expected to benefit from the acquisition. Cash flow projections necessarily take into account changes in the market in which a business operates including the level of growth, competitive activity, and the impacts of regulatory change. Determining both the expected cash flows and the risk- adjusted interest rate appropriate to the CGUs requires the exercise of judgement. The estimation of cash flows is sensitive to the periods for which the projections are made and to assumptions regarding long-term sustainable cash flows. Refer to note 20 for further details on sensitivities of goodwill.
Significant judgements
In connection with investment funds and other related entities where the Group does not own 100% of the entity in question, the Group makes judgements about whether it is required to consolidate such entities by applying the factors set forth in the relevant accounting standards, including but not limited to the Group’s equity and economic ownership interest, the economic structures in use in the entity, the level of control the Group has over the entity through the entity’s structure or any relevant contractual agreements, and the rights of other investors.
Non-controlling interests where the Group does not own 100% of a consolidated entity are classified as financial liabilities and recorded as third-party interest in consolidated entities on the consolidated statement of financial position when they contain an obligation to transfer a financial asset to another entity. Accordingly, third-party share of gains or losses relating to interest in consolidated entities is treated as a reduction or increase, respectively, of income on the consolidated statement of comprehensive income.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Burford Capital Limited and its Subsidiaries. All the Subsidiaries are consolidated in full from the date of acquisition.
The Subsidiaries’ accounting policies and financial year end are consistent with those of the Company.
All intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated in full.
Basis of preparation
The financial statements have been prepared on a going concern basis under the historical cost convention adjusted to take account of the revaluation of certain of the Group’s financial assets and liabilities to fair value.
The full extent to which the COVID-19 pandemic may impact Group’s results, operations or liquidity is uncertain. At present the global economy is suffering considerable disruption due to the effects of the COVID-19 and Management has given serious consideration to the consequences of this for the litigation finance market in general and for the cashflows and asset values of the Group specifically over the next twelve months. In assessing the going concern basis of accounting Management has considered ongoing compliance with applicable loan capital covenants, and the year end cash balances and forecast cash flows, especially those relating to operating expenses, finance costs and commitments to capital provision assets.
The Group has certain covenants associated with its loan capital and at present the Group’s financial situation does not suggest that any of these covenants are close to being breached. The analysis performed
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
has considered the extraordinary nature of the current economic situation and included a number of stress tests to examine the possible circumstances which could result in the Group’s covenants being breached. Based on this analysis, it is Management’s opinion that the circumstances which would give rise to a covenant breach are highly unlikely. The first repayment on the Group’s loan capital is not due until August 2022.
In addition to the possible effect of the coronavirus pandemic on debt covenants, Management has performed a COVID-19 impact analysis on the Group’s liquidity position using information available as at the date of issue of these financial statements. This analysis has modelled a number of adverse scenarios to assess the potential impact that COVID-19 may have on Group’s liquidity as well as incorporating relevant reverse stress test scenarios and any mitigations available to assess the stresses the Group has to endure before there is a liquidity concern. The mitigations considered include deferring deployments on commitments to capital provision assets, liquidations or sales of an interest in one or more of the Group’s capital provision assets and reducing the level of new commitments to capital provision assets in the current year. Having considered the likelihood of the events which could cause a liquidity issue and the remedies available to the Group, Management is of the view that the Group is well placed to manage such an eventuality satisfactorily.
Based on this information, Management believe that the Group has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of the financial statements. Accordingly, the financial statements have been prepared on a going concern basis.
Statement of financial position
The consolidated statement of financial position is presented to show assets and liabilities in a decreasing order of liquidity. In accordance with IAS 1 Presentation of Financial Statements this presentational format has been adopted for the year ended 31 December 2019 as it is considered to provide more relevant information than a current/ non-current presentation because the Group does not supply goods or services within a clearly identifiable operating cycle. A maturity analysis of all the Group’s assets and liabilities is included at note 22.
In addition to presenting the assets and liabilities in a decreasing order of liquidity the Group has also adopted new segment information during the year ended 31 December 2019 as disclosed in note 5. The combination of these amendments has resulted in the following changes to individual line items in the statement of financial position:
•
Capital provision assets — this combines the previously reported ‘Investments’, ‘New initiatives investments’ and ‘Investment income receivables’ into a single line item. In addition, the single remaining financial asset held at amortised cost has been transferred to ‘Other assets’ and therefore all items within this category are classified at fair value through profit and loss.
•
Other assets — this combines the previously reported ‘Receivables and prepayments’ and ‘Tax receivable’ into a single line item including the asset transferred from ‘Investments’ above.
•
Due from settlement of capital provision assets — this combines the previously reported amount of ‘Due from settlement of investments’ split between non-current and current into a single line item.
•
Other liabilities — this combines the previously reported ‘Payables’ and ‘Due to limited partners’ into a single line item.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
The tables below presents a reconciliation of the above changes from the previously reported 2018 financial statements to these new classifications.
|
|
|
|
2018
|
|
|
1 January
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Capital provision assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
1,592,378
|
|
|
|
|
|
1,075,941
|
|
|
|
New initiative investments
|
|
|
|
|
42,856
|
|
|
|
|
|
10,189
|
|
|
|
Investment income receivables
|
|
|
|
|
7,301
|
|
|
|
|
|
4,765
|
|
|
|
Less: transfer to Other assets
|
|
|
|
|
(1,500)
|
|
|
|
|
|
(1,500)
|
|
|
|
|
|
|
|
|
1,641,035
|
|
|
|
|
|
1,089,395
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables and prepayments
|
|
|
|
|
12,990
|
|
|
|
|
|
5,474
|
|
|
|
Tax receivable
|
|
|
|
|
1,823
|
|
|
|
|
|
1,676
|
|
|
|
Plus: transfer from Investments
|
|
|
|
|
1,500
|
|
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
16,313
|
|
|
|
|
|
8,650
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from settlement of investments (non-current)
|
|
|
|
|
3,083
|
|
|
|
|
|
3,083
|
|
|
|
Due from settlement of investments (current)
|
|
|
|
|
34,026
|
|
|
|
|
|
165
|
|
|
|
|
|
|
|
|
37,109
|
|
|
|
|
|
3,248
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables
|
|
|
|
|
31,038
|
|
|
|
|
|
23,833
|
|
|
|
Due to limited partners
|
|
|
|
|
8
|
|
|
|
|
|
1,158
|
|
|
|
|
|
|
|
|
31,046
|
|
|
|
|
|
24,991
|
|
|
In addition, the shareholders’ equity section of the consolidated statement of financial position has been amended this year to present line items for ‘Share capital’ and ‘Reserves attributable to owners’ to avoid repetition of the detail already provided in the consolidated statement of changes in equity on page
F-7.
In order to assist in understanding these changes, a consolidated statement of financial position as at 1 January 2018 has been included on page
F-4.
IFRS 16 Leases
IFRS 16 Leases replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases- Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the consolidated statement of comprehensive income over the period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
The Group has adopted IFRS 16 retrospectively from 1 January 2019 but has not restated comparatives for the 2018 or 2017 reporting periods, as permitted under the specific transitional provisions in the standard. The reclassifications and adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019.
On adoption of IFRS 16, the Group recognised lease liabilities of $6,785,000 in relation to property leases which had previously been classified as operating leases in accordance with IAS 17. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 6.7%. Lease liabilities are included within other liabilities in the consolidated statement of financial position. The carrying amounts of the right-of-use assets were measured as if the new rules had always been applied but using the incremental borrowing rate at the date of initial application.
The Group has applied the relief options provided for leases of low-value assets and short-term leases (shorter than twelve months) and the transitional practical expedient to account for operating leases with a remaining term of less than 12 months as at 1 January 2019 as short-term leases. Right-of-use assets are included within tangible fixed assets in the consolidated statement of financial position.
New accounting pronouncement not yet effective
The following issued standard, which is not yet effective, has not been adopted in these financial statements.
|
|
|
|
|
|
|
Effective Date
|
|
|
IFRS 17
|
|
|
Insurance Contracts
|
|
|
1 Jan 2023
|
|
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e. life, non-life, direct insurance and reinsurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. In June 2019, the IASB published an exposure draft of amendments to IFRS 17 in response to feedback received. The IASB has confirmed further changes that will be made to the standard, with the implementation date extended to annual periods beginning on or after 1 January 2023. The Group intends to adopt IFRS 17 on the effective date and is currently assessing the expected impact of adopting this standard which is not expected to be material to the Group.
Insurance activities
The Group both (i) acts as an administrator in the sale of legal expenses insurance policies issued in the name of Great Lakes Reinsurance (UK) Plc, a subsidiary of MunichRe, under a binding authority agreement, and (ii) underwrites legal expenses insurance policies through its wholly owned subsidiary and Guernsey based insurer, Burford Worldwide Insurance Limited (“BWIL”).
(i)
Insurance administrator
Income earned from acting as an insurance administrator represents commissions receivable which are calculated based on the premium earned, net of reinsurance and Insurance Premium Tax, less an allowance for claims, sales commissions, fees and the other direct insurance related costs such as Financial Services Compensation Scheme Levy. The payment of premiums is often contingent on a case being won or settled and the Group recognises the associated income only at this point, whilst a deduction is made for claims estimated to be paid on all policies in force. This income is separately identified as “Insurance administrator commission” included in note 11.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
(ii)
Insurance underwriting
Insurance policies written by BWIL are subject to contractual reinsurance arrangements that transfer a significant portion of the insurance risk to the reinsurers with BWIL retaining a portion of the insurance risk of each contract. Contracts are typically written with an upfront premium payable and may also include a conditional premium. The payment of conditional premiums is often contingent on a case being won or settled and the Group recognises the associated conditional premium amount only at this point.
Gross premiums written
Premiums written relate to insurance business incepted during the year. Full account is taken of premiums receivable and reinsurance premiums payable during the year.
Unearned premiums
Unearned premiums represent the proportion of premiums written in the year that relate to unexpired terms of policies in force as at the statement of financial reporting date, calculated on a time apportionment basis.
Claims reserving
Provision is made for all outstanding loss reserves as notified by the insured. Provision is made for claims incurred but not reported based on previous claims experience. Neither provision is calculated on a discounted basis to take account of the period from incurring the loss to settlement thereof, as permitted by IFRS 4 Insurance Contracts.
Claims reserves comprise provision for the estimated cost of settling all claims incurred up to but not paid at the year end.
The level of the provision is set on the basis of the information available, including potential loss claims which have been intimated to the Group, experience of the development of similar claims and case law. While the directors consider that the provision for these claims is fairly stated on the basis on the information currently available to them, the ultimate liability may vary as a result of subsequent information and events and may result in significant adjustments to the amount provided. Adjustments to the amounts provided are reflected in the financial statements in the accounting period in which the adjustments are made.
Claims paid
Claims are recorded in the year in which they are incurred.
Asset management income
Asset management income is derived from the governing agreements in place with various investment funds under management. The rate or amount at which fees are charged, the basis on which such fees are calculated, and the timing of payment, vary across funds and, as to a particular fund, may also vary across investment options available to underlying investors in or members of the investment fund. Management fees are generally based on an agreed percentage of investor fund commitments, amounts committed or deployed depending on the fund agreements. Management fees are recognised over time as the services are provided. Performance fees are earned when contractually agreed performance levels are exceeded within specified performance measurement periods. They are recognised when a reliable estimate of the fee can be made and it is highly probable that a significant revenue reversal will not occur, which is generally at the end of the performance period.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
Segment reporting
Management considers that there are three operating business segments: (i) provision of capital to the legal industry or in connection with legal matters, both directly and through investment in the Company’s managed funds, (ii) asset management activities, (iii) the provision of services to the legal industry, including litigation insurance and asset recovery (judgment enforcement), and other corporate activities.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value. Acquisition-related costs are expensed as incurred and included in the consolidated statement of comprehensive income. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration classified as an asset or liability are reflected in the consolidated statement of comprehensive income. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the purchase consideration over the fair value of the Group’s share of the assets acquired and the liabilities assumed on the date of the acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s CGU’s that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Intangible asset
The intangible is recognised at fair value when acquired as part of a business combination. It represents the future cash flows of asset management income recognised in accordance with the Group’s policy for the recognition of asset management income. This intangible is amortised to the income statement on a straight line basis over the period revenue is expected to be earned.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses are recognised in the consolidated statement of comprehensive income.
Financial instruments
The Group classifies its financial instruments into the categories below in accordance with IFRS 9.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
1)
Capital provision assets
Capital provision assets relate to the provision of capital to the legal industry or in connection with legal matters. The Group takes positions in assets where legal and regulatory risk can affect asset value, either through direct litigation or through other dynamics relating to that risk. Capital provision assets are comprised of financial assets held at fair value through profit or loss as the contractual terms of the financial assets do not give rise on specified dates to cash flow that are solely payments of principal and interest on the principal amount outstanding. Capital provision assets are initially measured at fair value which is the sum of capital provided. Attributable due diligence and closing costs are expensed.
Recognition, derecognition and measurement
Purchases and sales of assets at fair value through profit or loss are generally recognised on the trade date, being the date on which the Group disburses funds in connection with the asset (or becomes contractually committed to pay a fixed amount on a certain date, if earlier). In some cases, multiple disbursements occur over time. Capital provision assets are initially measured at fair value which is the sum of capital provided. An asset that is renegotiated is derecognised if the existing agreement is cancelled and a new agreement made on substantially different terms, or if the terms of an existing agreement are modified, such that the renegotiated asset is substantially a different financial instrument.
Movements in fair value on investments are included within capital provision income in the consolidated statement of comprehensive income. Capital provision income can also consist of interest that is accrued or received on capital provision assets.
2)
Financial assets and liabilities at amortised cost
Financial assets and liabilities held at amortised cost include loan capital, other assets, other liabilities, due to/from broker, and amounts due from settlement of capital provision assets. The financial assets meet the contractual cash flow test as these cash flows comprise solely payments of principal and interest and are held in a business model to receive those contractual cash flows. Financial assets and liabilities are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment for non-recoverable amounts calculated using an expected credit loss model for financial assets.
3)
Cash management assets
Assets acquired for the purpose of cash management to generate returns on cash balances awaiting subsequent investment are managed and evaluated on a fair value basis at the time of acquisition. Their initial fair value is the cost incurred at their acquisition. Transaction costs incurred are expensed in the consolidated statement of comprehensive income.
Recognition, derecognition and measurement
Cash management assets through profit or loss are recorded on the trade date, and those held at the year end date are valued at bid price.
Listed interest-bearing debt securities are valued at their quoted bid price. Interest earned on these assets is recognised on an accrual basis. Listed corporate bond funds are valued at their quoted bid price. Unlisted managed funds are valued at the Net Asset Value per share published by the administrator of those funds as it is the price at which they could have been realised at the reporting date.
Movements in fair value and realised gains and losses on disposal or maturity of cash management assets, including interest income, are reflected in cash management income and bank interest in the consolidated statement of comprehensive income.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
4) Derivative financial assets and liabilities
Options are held for the purpose of hedging gains and losses attributable to long equity positions held within capital provision assets and one put option contract has been recognised relating to a sale of a capital provision asset (see note 6). Derivative assets and liabilities are classified as fair value through profit or loss, and movements in fair value are included within capital provision income in the consolidated statement of comprehensive income.
5)
Financial liabilities at fair value through profit and loss
Equity securities are held for the purpose of hedging offsetting gains and losses attributable to long equity positions held within capital provision assets and are classified as held for trading as they are generally held in the near-term to hedge that exposure. Movements in fair value on financial liabilities at fair value through profit and loss and transaction costs incurred are included within capital provision income in the consolidated statement of comprehensive income.
6)
Asset subparticipations
Asset subparticipations are classified as financial liabilities at fair value through profit and loss and are initially recorded at the fair value of proceeds received. They are subsequently measured at fair value with changes in fair value being recorded in capital provision income in the consolidated statement of comprehensive income.
7)
Third-party interests in consolidated entities
Third-party interests in consolidated entities are classified as financial liabilities at fair value through profit and loss as the underlying arrangements contain an obligation to transfer cash or other financial asset to the holder in certain circumstances. Amounts included in the consolidated statement of financial position represent the net asset value of the third-parties’ interest in each entity and the amounts included in the consolidated statement of comprehensive income represent the third-parties’ share of any gains or losses for the year.
Fair value hierarchy of financial instruments
The financial assets and liabilities measured at fair value are disclosed using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurements, as follows:
Level 1 —
Quoted prices in active markets for identical assets or liabilities;
Level 2 —
Those involving inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices);
Level 3 —
Those inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Valuation Methodology for Level 1 Investments
Level 1 assets and liabilities are comprised of listed instruments including equities, fixed income securities, investment funds and financial liabilities at fair value through profit and loss. All level 1 assets and liabilities are valued at the quoted market price as of the reporting date.
Valuation Methodology for Level 2 Investments
Level 2 assets are comprised of equity securities that are not actively traded and are valued at the last traded price as of the reporting date provided there is evidence the price is not assessed as significantly stale to warrant a level 3 classification.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
Valuation Processes for Level 3 Investments
The Group’s senior professionals are responsible for developing the policies and procedures for fair value measurement of assets and liabilities. At each reporting date, the movements in the values of assets and liabilities are required to be re-assessed as per the Group’s accounting policies. Following origination, each asset’s valuation is reviewed semi-annually. For this analysis, the reasonableness of material estimates and assumptions underlying the valuation are discussed and the major inputs applied are verified by agreeing the information in the valuation computation to contracts, asset status and progress information and other relevant documents.
The semi-annual reviews are presented to the Audit Committee and the Group’s independent auditors as part of the audit.
Valuation Methodology for Level 3 Investments
Fair value represents the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants as of the measurement date.
The methods and procedures to fair value assets and liabilities may include, but are not limited to: (i) obtaining information provided by third-parties when available; (ii) obtaining valuation-related information from the issuers or counterparties (or their advisors); (iii) performing comparisons of comparable or similar assets; (iv) calculating the present value of future cash flows; (v) assessing other analytical data and information relating to the asset that is an indication of value; (vi) reviewing the amounts funded in these assets; (vii) evaluating financial information provided by the asset counterparties and (viii) entering into a market transaction with an arm’s- length party.
The material estimates and assumptions used in the analyses of fair value include the status and risk profile of the risks underlying the asset, the timing and expected amount of cash flows based on the asset structure and agreement, the appropriateness of discount rates used, if any, and in some cases, the timing of, and estimated minimum proceeds from, a favourable outcome. Significant judgement and estimation goes into the assumptions which underlie the analyses, and the actual values realised with respect to assets could be materially different from values obtained based on the use of those estimates.
Valuation Policy on Capital Provision Assets
The Group operates under a valuation policy that emphasizes clarity and certainty and relies on objective events to drive valuation changes. For the vast majority of our legal finance assets, the objective events considered under the valuation policy relate to the litigation process. When the objective event in question is a court ruling, the Group discounts the potential impact of that ruling commensurate with the remaining litigation risk. The policy assigns valuation changes in fixed ranges based on, among other things:
•
a significant positive ruling or other objective event but where there is not yet a trial court judgment;
•
a favorable trial court judgment;
•
a favorable judgment on the first appeal;
•
the exhaustion of as-of-right appeals;
•
in arbitration cases, where there are limited opportunities for appeal, issuance of a tribunal award; and
•
an objective negative event at various stages in a litigation.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
In a small number of instances, the Group has the benefit of a secondary sale of a portion of an asset. When that occurs, the market evidence is factored into the valuation process; the more robust the market testing of value is, the more weight that is accorded to the market price.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The functional currency of the Company, as determined in accordance with IFRS, is the United States Dollar (“US Dollar”) because this is the currency that best reflects the economic substance of the underlying events and circumstances of the Company and its Subsidiaries. The consolidated financial statements are presented in US Dollars, the presentation currency.
Certain subsidiaries operate and prepare financial statements denominated in Sterling. For the purposes of preparing consolidated financial statements, those subsidiaries’ assets and liabilities are translated at exchange rates prevailing at each balance sheet date. Income and expense items are translated at average exchange rates for the year.
Exchange differences arising are recognised in other comprehensive income and accumulated in equity (foreign currency consolidation reserve).
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies including intragroup balances are recognised in the Consolidated Statement of Comprehensive Income as part of the profit or loss for the year.
Since April 2016, certain intragroup balances are now considered, in substance, to form part of a net investment in a foreign operation. Gains and losses on such balances are recognised in other comprehensive income, with a gain of $1,125,000 recognised in the current year (2018: loss of $1,888,000).
Bank interest income
Bank interest income is recognised on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis.
Finance costs
Finance costs represent loan capital interest and issue expenses in line with the effective interest rate method and lease liabilities interest which are recognised in the consolidated statement of comprehensive income.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits, and highly liquid investments readily convertible within three months or less to known amounts of cash and subject to insignificant risk
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
2. Basis of preparation and principal accounting policies (continued)
of changes in value. Cash and cash equivalents at the balance sheet date comprised amounts held on current or overnight deposit accounts.
Taxation
Current income tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted.
To the extent that any foreign withholding taxes or any form of profit taxes become payable these will be accrued on the basis of the event that creates the liability to taxation.
Deferred tax is provided on the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are measured at the rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Dividends
Dividends paid during the year are shown in the consolidated statement of changes in equity.
Tangible fixed assets
Fixed assets are recorded at cost less accumulated depreciation and provision for impairment. Depreciation is provided to write off the cost less estimated residual value in equal instalments over the estimated useful lives of the assets. The expected useful lives are as follows:
|
|
Right-of-use assets
|
|
|
Life of lease
|
|
|
|
Leasehold improvements
|
|
|
Life of lease
|
|
|
|
Fixtures, fittings and equipment
|
|
|
5 years
|
|
|
|
Computer hardware and software
|
|
|
3 years
|
|
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the net sales proceeds and the carrying amount of the asset and is recognised in income.
Prepayments and other payables
Prepayments and other payables are recognised at nominal value and are non-interest-bearing.
Capital and reserves
Ordinary shares are classified as equity in share capital. Contingent shares are classified as equity in share capital, where shares will be issued and converted to ordinary shares only after the specified terms have been met. Other capital reserve is the obligation for the long term incentive plan issuance of shares to the Group’s employees. Incremental costs directly attributable to the issue of new shares are deducted from equity in share capital.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
3. Supplemental cash flow information
|
Changes in working capital and non-cash items
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Income on capital provision assets
|
|
|
|
|
(370,898)
|
|
|
|
|
|
(411,612)
|
|
|
|
|
|
(320,403)
|
|
|
|
Interest and other income from capital provision assets
|
|
|
|
|
(1,870)
|
|
|
|
|
|
(1,692)
|
|
|
|
|
|
(999)
|
|
|
|
Increase in capital provision asset subparticipation
|
|
|
|
|
—
|
|
|
|
|
|
92
|
|
|
|
|
|
287
|
|
|
|
(Gain)/loss on equity securities
|
|
|
|
|
(1,169)
|
|
|
|
|
|
4,852
|
|
|
|
|
|
6,953
|
|
|
|
Asset recovery fee for services income
|
|
|
|
|
(2,133)
|
|
|
|
|
|
(1,650)
|
|
|
|
|
|
(1,837)
|
|
|
|
Loss on derivative financial asset
|
|
|
|
|
4,154
|
|
|
|
|
|
3,462
|
|
|
|
|
|
—
|
|
|
|
Realised gain on derivative financial liabilities
|
|
|
|
|
(7,000)
|
|
|
|
|
|
(2,250)
|
|
|
|
|
|
—
|
|
|
|
Income on cash management assets
|
|
|
|
|
137
|
|
|
|
|
|
4,139
|
|
|
|
|
|
(862)
|
|
|
|
Loss on financial liabilities at fair value through profit and loss
|
|
|
|
|
20,872
|
|
|
|
|
|
3,010
|
|
|
|
|
|
(268)
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
15,318
|
|
|
|
|
|
3,348
|
|
|
|
|
|
863
|
|
|
|
Decrease/(increase) in other assets and deferred tax asset
|
|
|
|
|
3,777
|
|
|
|
|
|
(26,080)
|
|
|
|
|
|
2,000
|
|
|
|
(Decrease)/increase in other liabilities and deferred tax liabilities
|
|
|
|
|
(3,488)
|
|
|
|
|
|
24,755
|
|
|
|
|
|
3,524
|
|
|
|
Increase in payable for capital provision assets
|
|
|
|
|
36
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Finance costs
|
|
|
|
|
39,622
|
|
|
|
|
|
38,538
|
|
|
|
|
|
24,251
|
|
|
|
Amortisation and depreciation of intangible assets and tangible fixed assets
|
|
|
|
|
12,017
|
|
|
|
|
|
10,111
|
|
|
|
|
|
12,147
|
|
|
|
Impairment
|
|
|
|
|
4,083
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Right-of-use assets and associated lease liability
|
|
|
|
|
970
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Other non-cash including exchange rate movements
|
|
|
|
|
4,071
|
|
|
|
|
|
6,598
|
|
|
|
|
|
966
|
|
|
|
Total changes in working capital and non-cash items
|
|
|
|
|
(281,501)
|
|
|
|
|
|
(344,379)
|
|
|
|
|
|
(273,378)
|
|
|
The following tables provide a supplemental breakout of the cash inflows and outflows for capital provision assets related line items between direct and indirect.
|
31 December 2019
|
|
|
Capital
provision-
direct assets
|
|
|
Capital
provision-
indirect assets
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Proceeds received
|
|
|
|
|
207,167
|
|
|
|
|
|
284,085
|
|
|
|
|
|
491,252
|
|
|
|
Increase in payable for capital provision assets
|
|
|
|
|
36
|
|
|
|
|
|
—
|
|
|
|
|
|
36
|
|
|
|
New funding
|
|
|
|
|
(337,862)
|
|
|
|
|
|
(224,156)
|
|
|
|
|
|
(562,018)
|
|
|
|
31 December 2018
|
|
|
Capital
provision-
direct assets
|
|
|
Capital
provision-
indirect assets
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Proceeds received
|
|
|
|
|
286,872
|
|
|
|
|
|
315,815
|
|
|
|
|
|
602,687
|
|
|
|
New funding
|
|
|
|
|
(419,615)
|
|
|
|
|
|
(351,794)
|
|
|
|
|
|
(771,409)
|
|
|
|
31 December 2017
|
|
|
Capital
provision-
direct assets
|
|
|
Capital
provision-
indirect assets
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Proceeds received
|
|
|
|
|
311,778
|
|
|
|
|
|
66,462
|
|
|
|
|
|
378,240
|
|
|
|
New funding
|
|
|
|
|
(255,893)
|
|
|
|
|
|
(310,920)
|
|
|
|
|
|
(566,813)
|
|
|
Capital provision-direct assets referenced above in this note are those in which Burford has provided financing directly to a client or to fund a principal position in a legal finance asset.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
3. Supplemental cash flow information (continued)
Capital provision-indirect assets represent those through which the Company’s capital is provided through a fund as a limited partner contribution instead of directly. At 31 December 2019 and 2018, capital provision-indirect assets consisted entirely of assets held through the Burford Strategic Value Fund. Burford does not invest capital in the BOF-C fund and accordingly it is included in direct and not capital provision-indirect assets. Refer to the statement of financial position section in note 2 for a detailed explanation of the presentational changes made this year.
4. Taxation
The Company obtained exempt company status in Guernsey. In certain cases, a subsidiary of the Company may elect to make use of financing structures that are subject to income tax in a country related to the investment. The Company’s subsidiaries in Ireland, Singapore, the UK and the US are subject to taxation in such jurisdictions as determined in accordance with relevant tax legislation.
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Profit on ordinary activities before tax
|
|
|
|
|
225,524
|
|
|
|
|
|
305,114
|
|
|
|
|
|
249,181
|
|
|
|
Corporation tax at country rates
|
|
|
|
|
(3,227)
|
|
|
|
|
|
(15,926)
|
|
|
|
|
|
(198)
|
|
|
|
Factors affecting charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment in respect of prior year
|
|
|
|
|
3,027
|
|
|
|
|
|
2,250
|
|
|
|
|
|
25
|
|
|
|
Tax losses not recognised
|
|
|
|
|
12,979
|
|
|
|
|
|
340
|
|
|
|
|
|
521
|
|
|
|
Costs not allowable for tax
|
|
|
|
|
74
|
|
|
|
|
|
82
|
|
|
|
|
|
30
|
|
|
|
Adjustment for US tax rate change
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,435
|
|
|
|
Other
|
|
|
|
|
564
|
|
|
|
|
|
791
|
|
|
|
|
|
(3,936)
|
|
|
|
Total taxation charge/(credit)
|
|
|
|
|
13,417
|
|
|
|
|
|
(12,463)
|
|
|
|
|
|
(123)
|
|
|
Corporation tax at country rates is influenced by taxable profits and losses arising in jurisdictions at different rates and non-taxable gains and losses arising on fair value adjustments. Cash taxes paid during the year ended 31 December 2019 amounted to $694,000 (2018: $2,273,000).
The taxation charge for the year comprises:
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
US subsidiaries taxation charge
|
|
|
|
|
340
|
|
|
|
|
|
1,790
|
|
|
|
|
|
(227)
|
|
|
|
Irish subsidiaries taxation charge/(credit)
|
|
|
|
|
3,272
|
|
|
|
|
|
(191)
|
|
|
|
|
|
1,188
|
|
|
|
UK subsidiaries taxation charge
|
|
|
|
|
290
|
|
|
|
|
|
79
|
|
|
|
|
|
—
|
|
|
|
Non-resident taxation charge
|
|
|
|
|
110
|
|
|
|
|
|
179
|
|
|
|
|
|
—
|
|
|
|
US deferred taxation charge/(credit)
|
|
|
|
|
9,476
|
|
|
|
|
|
(14,241)
|
|
|
|
|
|
(1,802)
|
|
|
|
Irish deferred taxation charge/(credit)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
718
|
|
|
|
UK deferred taxation (credit)
|
|
|
|
|
(71)
|
|
|
|
|
|
(79)
|
|
|
|
|
|
—
|
|
|
|
Total taxation charge/(credit)
|
|
|
|
|
13,417
|
|
|
|
|
|
(12,463)
|
|
|
|
|
|
(123)
|
|
|
Included in the deferred tax asset recognised at the balance sheet date are amounts relating to operating losses that the Group believes it will be able to utilise in the future. In December 2017, the US government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the US tax code including, but not limited to, the creation of a new limitation on deductible interest expense under Internal Revenue Code Section 163(j). During the year ended 31 December 2019, the Group has not recognised a deferred tax asset of $10,928,000
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
4. Taxation (continued)
(2018: $nil) relating to this interest expense limitation as the carryovers are not expected to be utilised in the foreseeable future under the current interpretation of the applicable statute.
|
Deferred tax asset
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Balance at 1 January
|
|
|
|
|
28,848
|
|
|
|
|
|
10,863
|
|
|
|
Movement on UK deferred tax – temporary differences
|
|
|
|
|
195
|
|
|
|
|
|
60
|
|
|
|
Movement on US deferred tax – temporary differences
|
|
|
|
|
(4,112)
|
|
|
|
|
|
17,925
|
|
|
|
Foreign exchange adjustment
|
|
|
|
|
8
|
|
|
|
|
|
—
|
|
|
|
Balance at 31 December
|
|
|
|
|
24,939
|
|
|
|
|
|
28,848
|
|
|
|
|
|
Deferred tax liability
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Balance at 1 January
|
|
|
|
|
4,099
|
|
|
|
|
|
437
|
|
|
|
Movement on UK deferred tax – temporary difference
|
|
|
|
|
193
|
|
|
|
|
|
(19)
|
|
|
|
Movement on US deferred tax – temporary differences
|
|
|
|
|
5,363
|
|
|
|
|
|
3,684
|
|
|
|
Foreign exchange adjustment
|
|
|
|
|
7
|
|
|
|
|
|
(3)
|
|
|
|
Balance at 31 December
|
|
|
|
|
9,662
|
|
|
|
|
|
4,099
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Net deferred tax asset
|
|
|
|
|
15,277
|
|
|
|
|
|
24,749
|
|
|
|
|
|
Analysis of net deferred tax asset by type
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Staff compensation and benefits
|
|
|
|
|
5,047
|
|
|
|
|
|
7,050
|
|
|
|
GKC acquisition costs
|
|
|
|
|
(3,323)
|
|
|
|
|
|
(1,767)
|
|
|
|
Capital provision asset fair value adjustments
|
|
|
|
|
(4,236)
|
|
|
|
|
|
7,040
|
|
|
|
Capital allowances
|
|
|
|
|
(332)
|
|
|
|
|
|
(91)
|
|
|
|
Other deduction limitations
|
|
|
|
|
1,257
|
|
|
|
|
|
—
|
|
|
|
Net operating loss carry forward
|
|
|
|
|
16,864
|
|
|
|
|
|
12,517
|
|
|
|
|
|
|
|
|
15,277
|
|
|
|
|
|
24,749
|
|
|
5. Segmental information
Management considers that there are three operating business segments: (i) provision of capital to the legal industry or in connection with legal matters, both directly and through investment in the Company’s managed funds, (ii) asset management activities, (iii) the provision of services to the legal industry, including litigation insurance and asset recovery (judgment enforcement), and other corporate activities.
The Group has reassessed its presentation of consolidated segment information during the year. The previously used segment for ‘New initiatives’ most recently contained two key activities; the provision of capital to asset recovery matters and fees earned for asset recovery services provided. This segment has historically been used for new business activity until such time that it becomes a core part of Burford’s business. The capital provision to asset recovery matters is now an established core activity for Burford which is operated and managed in the same way as the Group’s other capital provision to legal finance matters. Accordingly, this activity is now reported with the new ‘Capital provision’ segment along with the capital
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
5. Segmental information (continued)
provision to legal finance matters previously reported in the ‘Investments’ segment. Fee for service work and activity included in the old ‘Litigation insurance’ segment are not material to the Group and have been included in ‘Services and other corporate’. These presentational changes are as a result of the continuing evolution of Burford’s business and consistent with how management evaluates the Group.
Consolidated segment revenue and results
|
31 December 2019
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Income*
|
|
|
|
|
336,510
|
|
|
|
|
|
15,160
|
|
|
|
|
|
14,373
|
|
|
|
|
|
366,043
|
|
|
|
Operating expenses
|
|
|
|
|
(57,919)
|
|
|
|
|
|
(19,797)
|
|
|
|
|
|
(13,686)
|
|
|
|
|
|
(91,402)
|
|
|
|
Amortisation of intangible asset arising on acquisition
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,495)
|
|
|
|
|
|
(9,495)
|
|
|
|
Finance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(39,622)
|
|
|
|
|
|
(39,622)
|
|
|
|
Profit/(loss) for the year before taxation
|
|
|
|
|
278,591
|
|
|
|
|
|
(4,637)
|
|
|
|
|
|
(48,430)
|
|
|
|
|
|
225,524
|
|
|
|
Taxation
|
|
|
|
|
(10,826)
|
|
|
|
|
|
89
|
|
|
|
|
|
(2,680)
|
|
|
|
|
|
(13,417)
|
|
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(17,525)
|
|
|
|
|
|
(17,525)
|
|
|
|
Total comprehensive income
|
|
|
|
|
267,765
|
|
|
|
|
|
(4,548)
|
|
|
|
|
|
(68,635)
|
|
|
|
|
|
194,582
|
|
|
|
*Includes the following revenue from contracts with customers for services transferred over time
|
|
|
|
|
—
|
|
|
|
|
|
15,160
|
|
|
|
|
|
5,678
|
|
|
|
|
|
20,838
|
|
|
|
|
|
31 December 2018
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Income*
|
|
|
|
|
400,882
|
|
|
|
|
|
11,691
|
|
|
|
|
|
12,404
|
|
|
|
|
|
424,977
|
|
|
|
Operating expenses
|
|
|
|
|
(44,046)
|
|
|
|
|
|
(12,175)
|
|
|
|
|
|
(15,610)
|
|
|
|
|
|
(71,831)
|
|
|
|
Amortisation of intangible asset arising on acquisition
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,494)
|
|
|
|
|
|
(9,494)
|
|
|
|
Finance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(38,538)
|
|
|
|
|
|
(38,538)
|
|
|
|
Profit/(loss) before taxation
|
|
|
|
|
356,836
|
|
|
|
|
|
(484)
|
|
|
|
|
|
(51,238)
|
|
|
|
|
|
305,114
|
|
|
|
Taxation
|
|
|
|
|
15,193
|
|
|
|
|
|
(164)
|
|
|
|
|
|
(2,566)
|
|
|
|
|
|
12,463
|
|
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
24,701
|
|
|
|
|
|
24,701
|
|
|
|
Total comprehensive income
|
|
|
|
|
372,029
|
|
|
|
|
|
(648)
|
|
|
|
|
|
(29,103)
|
|
|
|
|
|
342,278
|
|
|
|
*Includes the following revenue from contracts with customers for services transferred over time
|
|
|
|
|
—
|
|
|
|
|
|
11,691
|
|
|
|
|
|
12,056
|
|
|
|
|
|
23,747
|
|
|
|
|
|
31 December 2017
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Income*
|
|
|
|
|
314,417
|
|
|
|
|
|
14,458
|
|
|
|
|
|
13,739
|
|
|
|
|
|
342,614
|
|
|
|
Operating expenses
|
|
|
|
|
(38,750)
|
|
|
|
|
|
(7,159)
|
|
|
|
|
|
(11,570)
|
|
|
|
|
|
(57,479)
|
|
|
|
Amortisation of intangible asset arising on acquisition
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(11,703)
|
|
|
|
|
|
(11,703)
|
|
|
|
Finance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(24,251)
|
|
|
|
|
|
(24,251)
|
|
|
|
Profit/(loss) before taxation
|
|
|
|
|
275,667
|
|
|
|
|
|
7,299
|
|
|
|
|
|
(33,785)
|
|
|
|
|
|
249,181
|
|
|
|
Taxation
|
|
|
|
|
2,413
|
|
|
|
|
|
(3,008)
|
|
|
|
|
|
718
|
|
|
|
|
|
123
|
|
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,206)
|
|
|
|
|
|
(28,206)
|
|
|
|
Total comprehensive income
|
|
|
|
|
278,080
|
|
|
|
|
|
4,291
|
|
|
|
|
|
(61,273)
|
|
|
|
|
|
221,098
|
|
|
|
*Includes the following revenue from contracts with customers for services transferred over time
|
|
|
|
|
—
|
|
|
|
|
|
14,458
|
|
|
|
|
|
9,450
|
|
|
|
|
|
23,908
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
5. Segmental information (continued)
Consolidated segment assets and liabilities
|
31 December 2019
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
122,909
|
|
|
|
|
|
248
|
|
|
|
|
|
63,464
|
|
|
|
|
|
186,621
|
|
|
|
Cash management assets
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
37,966
|
|
|
|
|
|
37,966
|
|
|
|
Due from brokers
|
|
|
|
|
95,226
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
95,226
|
|
|
|
Other assets
|
|
|
|
|
6,462
|
|
|
|
|
|
2,012
|
|
|
|
|
|
4,789
|
|
|
|
|
|
13,263
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
54,358
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
54,358
|
|
|
|
Capital provision assets
|
|
|
|
|
2,045,329
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,045,329
|
|
|
|
Equity securities
|
|
|
|
|
31,396
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31,396
|
|
|
|
Tangible fixed assets
|
|
|
|
|
15,380
|
|
|
|
|
|
—
|
|
|
|
|
|
4,804
|
|
|
|
|
|
20,184
|
|
|
|
Intangible asset
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,703
|
|
|
|
|
|
8,703
|
|
|
|
Goodwill
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133,999
|
|
|
|
|
|
133,999
|
|
|
|
Deferred tax asset
|
|
|
|
|
23,718
|
|
|
|
|
|
—
|
|
|
|
|
|
1,221
|
|
|
|
|
|
24,939
|
|
|
|
Total assets
|
|
|
|
|
2,394,778
|
|
|
|
|
|
2,260
|
|
|
|
|
|
254,946
|
|
|
|
|
|
2,651,984
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
91,493
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
91,493
|
|
|
|
Due to brokers
|
|
|
|
|
51,401
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
51,401
|
|
|
|
Loan interest payable
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,462
|
|
|
|
|
|
9,462
|
|
|
|
Other liabilities
|
|
|
|
|
220
|
|
|
|
|
|
467
|
|
|
|
|
|
50,743
|
|
|
|
|
|
51,430
|
|
|
|
Loan capital
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
655,880
|
|
|
|
|
|
655,880
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
13,944
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
13,944
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
235,720
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
235,720
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
5,400
|
|
|
|
|
|
—
|
|
|
|
|
|
4,262
|
|
|
|
|
|
9,662
|
|
|
|
Total liabilities
|
|
|
|
|
398,178
|
|
|
|
|
|
467
|
|
|
|
|
|
720,347
|
|
|
|
|
|
1,118,992
|
|
|
|
Total net assets
|
|
|
|
|
1,996,600
|
|
|
|
|
|
1,793
|
|
|
|
|
|
(465,401)
|
|
|
|
|
|
1,532,992
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
5. Segmental information (continued)
|
31 December 2018
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Services
and other
corporate
|
|
|
Total
|
|
|
|
|
|
|
$
|
’000
|
|
|
|
|
$
|
’000
|
|
|
|
|
$
|
’000
|
|
|
|
|
$
|
’000
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
97,847
|
|
|
|
|
|
648
|
|
|
|
|
|
167,056
|
|
|
|
|
|
265,551
|
|
|
|
Cash management assets
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
41,449
|
|
|
|
|
|
41,449
|
|
|
|
Due from brokers
|
|
|
|
|
129,911
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
129,911
|
|
|
|
Other assets
|
|
|
|
|
5,959
|
|
|
|
|
|
2,263
|
|
|
|
|
|
8,091
|
|
|
|
|
|
16,313
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
37,109
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
37,109
|
|
|
|
Capital provision assets
|
|
|
|
|
1,641,035
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,641,035
|
|
|
|
Derivative financial asset
|
|
|
|
|
4,154
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
Equity securities
|
|
|
|
|
582
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
582
|
|
|
|
Tangible fixed assets
|
|
|
|
|
1,353
|
|
|
|
|
|
191
|
|
|
|
|
|
322
|
|
|
|
|
|
1,866
|
|
|
|
Intangible asset
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,198
|
|
|
|
|
|
18,198
|
|
|
|
Goodwill
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133,966
|
|
|
|
|
|
133,966
|
|
|
|
Deferred tax asset
|
|
|
|
|
28,116
|
|
|
|
|
|
—
|
|
|
|
|
|
732
|
|
|
|
|
|
28,848
|
|
|
|
Total assets
|
|
|
|
|
1,946,066
|
|
|
|
|
|
3,102
|
|
|
|
|
|
369,814
|
|
|
|
|
|
2,318,982
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
112,821
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
112,821
|
|
|
|
Due to brokers
|
|
|
|
|
12,667
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
12,667
|
|
|
|
Loan interest payable
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,327
|
|
|
|
|
|
9,327
|
|
|
|
Other liabilities
|
|
|
|
|
26,675
|
|
|
|
|
|
361
|
|
|
|
|
|
4,010
|
|
|
|
|
|
31,046
|
|
|
|
Loan capital
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
638,665
|
|
|
|
|
|
638,665
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
3,244
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,244
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
136,959
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
136,959
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
1,639
|
|
|
|
|
|
—
|
|
|
|
|
|
2,460
|
|
|
|
|
|
4,099
|
|
|
|
Total liabilities
|
|
|
|
|
301,005
|
|
|
|
|
|
361
|
|
|
|
|
|
654,462
|
|
|
|
|
|
955,828
|
|
|
|
Total net assets
|
|
|
|
|
1,645,061
|
|
|
|
|
|
2,741
|
|
|
|
|
|
(284,648)
|
|
|
|
|
|
1,363,154
|
|
|
6. Capital Provision Assets
Capital provision assets are financial assets held at fair value through profit and loss that relate to the provision of capital to the legal industry in connection with legal matters.
Capital provision-direct assets referenced later in this note are those in which Burford has provided financing directly to a client or to fund a principal position in a legal finance asset. Capital provision-indirect assets represent those through which the Company’s capital is provided through a fund as a general partner contribution instead of directly. At 31 December 2019 and 2018, capital provision-indirect assets consisted entirely of assets held through the Burford Strategic Value Fund. Burford does not invest capital in the BOF-C fund and accordingly it is included in direct and not indirect capital provision assets. Refer to the statement of financial position section in note 2 for a detailed explanation of the presentational changes made this year.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
6. Capital Provision Assets (continued)
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January
|
|
|
|
|
1,641,035
|
|
|
|
|
|
1,089,395
|
|
|
|
Additions
|
|
|
|
|
562,018
|
|
|
|
|
|
771,409
|
|
|
|
Realisations
|
|
|
|
|
(539,359)
|
|
|
|
|
|
(634,856)
|
|
|
|
Income for the year
|
|
|
|
|
370,898
|
|
|
|
|
|
411,612
|
|
|
|
Transfer to derivative financial liabilities
|
|
|
|
|
—
|
|
|
|
|
|
9,250
|
|
|
|
Transfer to investment subparticipation
|
|
|
|
|
10,700
|
|
|
|
|
|
—
|
|
|
|
Foreign exchange (losses)
|
|
|
|
|
37
|
|
|
|
|
|
(5,775)
|
|
|
|
As at 31 December
|
|
|
|
|
2,045,329
|
|
|
|
|
|
1,641,035
|
|
|
|
|
|
Capital provision assets are comprised of:
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Capital provision-direct assets
|
|
|
|
|
1,787,193
|
|
|
|
|
|
1,321,985
|
|
|
|
Capital provision-indirect assets
|
|
|
|
|
258,136
|
|
|
|
|
|
319,050
|
|
|
|
Total capital provision assets
|
|
|
|
|
2,045,329
|
|
|
|
|
|
1,641,035
|
|
|
The capital provision income on the face of the consolidated statement of comprehensive income comprises:
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Realised gains relative to cost
|
|
|
|
|
151,886
|
|
|
|
|
|
169,901
|
|
|
|
|
|
122,712
|
|
|
|
Previous unrealised (gains) transferred to realised gains
|
|
|
|
|
(85,789)
|
|
|
|
|
|
(79,694)
|
|
|
|
|
|
(50,358)
|
|
|
|
Fair value adjustment in the year
|
|
|
|
|
289,795
|
|
|
|
|
|
310,405
|
|
|
|
|
|
243,283
|
|
|
|
Interest income on certain indirect capital provision assets
|
|
|
|
|
15,006
|
|
|
|
|
|
11,000
|
|
|
|
|
|
5,528
|
|
|
|
Income on capital provision assets
|
|
|
|
|
370,898
|
|
|
|
|
|
411,612
|
|
|
|
|
|
321,165
|
|
|
|
Interest and other income
|
|
|
|
|
1,870
|
|
|
|
|
|
1,692
|
|
|
|
|
|
800
|
|
|
|
Impairment
|
|
|
|
|
(4,083)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Realised gain on derivative financial liabilities
|
|
|
|
|
7,000
|
|
|
|
|
|
2,250
|
|
|
|
|
|
—
|
|
|
|
Loss on derivative financial assets
|
|
|
|
|
(4,154)
|
|
|
|
|
|
(3,462)
|
|
|
|
|
|
—
|
|
|
|
Loss on financial liabilities at fair value through profit and loss
|
|
|
|
|
(20,872)
|
|
|
|
|
|
(3,010)
|
|
|
|
|
|
268
|
|
|
|
Gain/(loss) on equity securities (note 7)
|
|
|
|
|
1,169
|
|
|
|
|
|
(4,852)
|
|
|
|
|
|
(6,953)
|
|
|
|
Total capital provision income as reported on the consolidated statement of comprehensive income
|
|
|
|
|
351,828
|
|
|
|
|
|
404,230
|
|
|
|
|
|
315,280
|
|
|
All financial assets at fair value through profit and loss and all financial liabilities at fair value through profit and loss are mandatorily measured as such.
Burford generally relies on legally protected information to arrive at its asset valuations and as a result is precluded from disclosing individual asset valuations publicly. However, Burford’s 2019 sale of part of its entitlement to proceeds in the Petersen matter was uniquely of such a size and breadth (including third-party sales organized by Burford’s financial adviser as part of the same transaction, resulting in the total sale of 15% of the entitlement to proceeds) that it was appropriate to use that sales price alone, without consideration of legally protected information, to set its 2019 valuation of its YPF-related assets. The carrying value of the Group’s YPF-related assets included in capital provision assets (both Petersen and Eton Park combined) was $773 million at 31 December 2019 including $734 million of unrealised gain.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
6. Capital Provision Assets (continued)
During 2019, the capital provision income from the YPF-related assets was $188 million, consisting of realised gains relative to cost of $98 million, previous unrealised gains transferred to realised gains of $(78) million and fair value adjustment in the period of $168 million. It is unlikely that future Burford sales, if any, will approach that size and breadth.
Impairment of receivables includes a full write off of a $3,083,000 promissory note received in settlement of a capital provision asset in a prior period. A further $1,000,000 of impairment has been recognised on the $1,500,000 financial asset held at amortised cost that was included in Investments and is now included within Other assets as part of the presentational changes made this year as set out in note 2.
Loss on financial liabilities at fair value through profit and loss reflects losses on assets and liabilities used to hedge certain capital provision-indirect assets. Gains that would correspond to the hedge losses are included in income on capital provision assets.
During the year, certain participating employees received payments of de minimis amounts with respect to profits interests sold to those employees by the Carry Pools. The Group is deemed to control the Carry Pools and they are included in the consolidated financial statements. The non-controlling interests held by employees in the Carry Pools meet the definition of a financial liability and are included within ‘Third party interests in consolidated entities’ in the Group’s consolidated statement of financial position.
The following table reflects the line-by-line impact of eliminating the interests of third-parties in the entities which Burford consolidates from the capital provision assets balance reported in the consolidated statement of financial position to arrive at Burford’s capital provision assets at 31 December 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burford-only
|
|
|
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
total
|
|
|
Capital
provision-
direct
|
|
|
Capital
provision-
indirect
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January 2019
|
|
|
|
|
1,641,035
|
|
|
|
|
|
(119,444)
|
|
|
|
|
|
1,521,591
|
|
|
|
|
|
1,289,548
|
|
|
|
|
|
232,043
|
|
|
|
Additions
|
|
|
|
|
562,018
|
|
|
|
|
|
(173,196)
|
|
|
|
|
|
388,822
|
|
|
|
|
|
272,016
|
|
|
|
|
|
116,806
|
|
|
|
Realisations
|
|
|
|
|
(539,359)
|
|
|
|
|
|
143,679
|
|
|
|
|
|
(395,680)
|
|
|
|
|
|
(218,807)
|
|
|
|
|
|
(176,873)
|
|
|
|
Income for the year
|
|
|
|
|
370,898
|
|
|
|
|
|
(56,198)
|
|
|
|
|
|
314,700
|
|
|
|
|
|
302,075
|
|
|
|
|
|
12,625
|
|
|
|
Transfer to capital provision asset subparticipation
|
|
|
|
|
10,700
|
|
|
|
|
|
(6,241)
|
|
|
|
|
|
4,459
|
|
|
|
|
|
4,459
|
|
|
|
|
|
—
|
|
|
|
Foreign exchange losses
|
|
|
|
|
37
|
|
|
|
|
|
61
|
|
|
|
|
|
98
|
|
|
|
|
|
98
|
|
|
|
|
|
—
|
|
|
|
At 31 December 2019
|
|
|
|
|
2,045,329
|
|
|
|
|
|
(211,339)
|
|
|
|
|
|
1,833,990
|
|
|
|
|
|
1,649,389
|
|
|
|
|
|
184,601
|
|
|
|
Unrealised fair value at 31 December 2019
|
|
|
|
|
808,320
|
|
|
|
|
|
(32,220)
|
|
|
|
|
|
776,100
|
|
|
|
|
|
772,083
|
|
|
|
|
|
4,017
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
6. Capital Provision Assets (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burford-only
|
|
|
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
total
|
|
|
Capital
provision-
direct
|
|
|
Capital provision-
indirect
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January 2018
|
|
|
|
|
1,089,395
|
|
|
|
|
|
(98,529)
|
|
|
|
|
|
990,866
|
|
|
|
|
|
834,993
|
|
|
|
|
|
155,873
|
|
|
|
Additions
|
|
|
|
|
771,409
|
|
|
|
|
|
(113,697)
|
|
|
|
|
|
657,712
|
|
|
|
|
|
387,171
|
|
|
|
|
|
270,541
|
|
|
|
Realisations
|
|
|
|
|
(634,856)
|
|
|
|
|
|
109,317
|
|
|
|
|
|
(525,539)
|
|
|
|
|
|
(320,733)
|
|
|
|
|
|
(204,806)
|
|
|
|
Income for the year
|
|
|
|
|
411,612
|
|
|
|
|
|
(16,535)
|
|
|
|
|
|
395,077
|
|
|
|
|
|
384,642
|
|
|
|
|
|
10,435
|
|
|
|
Transfer to derivative financial liabilities
|
|
|
|
|
9,250
|
|
|
|
|
|
—
|
|
|
|
|
|
9,250
|
|
|
|
|
|
9,250
|
|
|
|
|
|
—
|
|
|
|
Foreign exchange losses
|
|
|
|
|
(5,775)
|
|
|
|
|
|
—
|
|
|
|
|
|
(5,775)
|
|
|
|
|
|
(5,775)
|
|
|
|
|
|
—
|
|
|
|
At 31 December 2018
|
|
|
|
|
1,641,035
|
|
|
|
|
|
(119,444)
|
|
|
|
|
|
1,521,591
|
|
|
|
|
|
1,289,548
|
|
|
|
|
|
232,043
|
|
|
|
Unrealised fair value at 31 December 2018
|
|
|
|
|
598,712
|
|
|
|
|
|
(9,102)
|
|
|
|
|
|
589,610
|
|
|
|
|
|
590,317
|
|
|
|
|
|
(707)
|
|
|
On a consolidated basis the capital provision-indirect assets represent solely the equity securities and related claims in the Burford Strategic Value Fund. The fund’s investment activity also includes entering into financial liabilities at fair value through profit and loss to offset the market based gains and losses in the equity securities (refer to note 7). On a consolidated basis that activity is presented within financial liabilities at fair value through profit and loss in the liabilities section of the consolidated statement of financial position. On a Burford-only basis as presented in the table above, the amount included as capital provision-indirect assets represents the fair value of Burford’s entire interest held in the fund, including the respective share of any financial liabilities at fair value through profit and loss, and not just the Burford portion of the equity securities.
Included within the realisations amounts for Burford-only in 2019 and the additions amounts in 2018 is $20,735,000 relating to six assets that were warehoused by a subsidiary company under a forward purchase and sale agreement with BOF-C. Included within additions and realisation amounts for Burford-only during 2019 is $12,343,000 relating to an asset that was warehoused on behalf of and then transferred to a managed fund during the year.
The following table reflects the line-by-line impact of eliminating the income of third-parties in the entities which Burford consolidates from the capital provision income reported in the consolidated statement of comprehensive income to arrive at Burford’s investments income at 31 December 2019.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
6. Capital Provision Assets (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burford-only
|
|
|
31 December 2019
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
total
|
|
|
Capital
provision-
direct
|
|
|
Capital
provision-
indirect
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Realised gains/(losses) relative to cost
|
|
|
|
|
151,886
|
|
|
|
|
|
(23,462)
|
|
|
|
|
|
128,424
|
|
|
|
|
|
120,522
|
|
|
|
|
|
7,902
|
|
|
|
Previous unrealised (gains)/losses transferred to realised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gains/(losses)
|
|
|
|
|
(85,789)
|
|
|
|
|
|
6,504
|
|
|
|
|
|
(79,285)
|
|
|
|
|
|
(79,424)
|
|
|
|
|
|
139
|
|
|
|
Fair value adjustment in the year
|
|
|
|
|
289,795
|
|
|
|
|
|
(24,234)
|
|
|
|
|
|
265,561
|
|
|
|
|
|
260,977
|
|
|
|
|
|
4,584
|
|
|
|
Interest income on certain indirect capital provision assets
|
|
|
|
|
15,006
|
|
|
|
|
|
(15,006)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Income on capital provision assets
|
|
|
|
|
370,898
|
|
|
|
|
|
(56,198)
|
|
|
|
|
|
314,700
|
|
|
|
|
|
302,075
|
|
|
|
|
|
12,625
|
|
|
|
Interest and other income
|
|
|
|
|
1,870
|
|
|
|
|
|
(1,742)
|
|
|
|
|
|
128
|
|
|
|
|
|
128
|
|
|
|
|
|
—
|
|
|
|
Impairment
|
|
|
|
|
(4,083)
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,083)
|
|
|
|
|
|
(4,083)
|
|
|
|
|
|
—
|
|
|
|
Realised gain on derivative financial liabilities
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
Loss on derivative financial assets
|
|
|
|
|
(4,154)
|
|
|
|
|
|
4,154
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Loss on financial liabilities at fair value through profit and loss
|
|
|
|
|
(20,872)
|
|
|
|
|
|
20,467
|
|
|
|
|
|
(405)
|
|
|
|
|
|
(405)
|
|
|
|
|
|
—
|
|
|
|
Gain/(loss) on equity securities (note 7)
|
|
|
|
|
1,169
|
|
|
|
|
|
(1,722)
|
|
|
|
|
|
(553)
|
|
|
|
|
|
(553)
|
|
|
|
|
|
—
|
|
|
|
Loss on capital provision asset subparticipations
|
|
|
|
|
—
|
|
|
|
|
|
(7)
|
|
|
|
|
|
(7)
|
|
|
|
|
|
(7)
|
|
|
|
|
|
—
|
|
|
|
Total capital provision income
|
|
|
|
|
351,828
|
|
|
|
|
|
(35,048)
|
|
|
|
|
|
316,780
|
|
|
|
|
|
304,155
|
|
|
|
|
|
12,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burford-only
|
|
|
31 December 2018
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
total
|
|
|
Capital
provision-
direct
|
|
|
Capital
provision-
indirect
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Realised gains/(losses) relative to cost
|
|
|
|
|
169,901
|
|
|
|
|
|
(13,146)
|
|
|
|
|
|
156,755
|
|
|
|
|
|
142,044
|
|
|
|
|
|
14,711
|
|
|
|
Previous unrealised (gains)/losses transferred to realised gains/(losses)
|
|
|
|
|
(79,694)
|
|
|
|
|
|
3,168
|
|
|
|
|
|
(76,526)
|
|
|
|
|
|
(70,523)
|
|
|
|
|
|
(6,003)
|
|
|
|
Fair value adjustment in the year
|
|
|
|
|
310,405
|
|
|
|
|
|
4,443
|
|
|
|
|
|
314,848
|
|
|
|
|
|
313,121
|
|
|
|
|
|
1,727
|
|
|
|
Interest income on certain indirect capital provision assets
|
|
|
|
|
11,000
|
|
|
|
|
|
(11,000)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Income on capital provision assets
|
|
|
|
|
411,612
|
|
|
|
|
|
(16,535)
|
|
|
|
|
|
395,077
|
|
|
|
|
|
384,642
|
|
|
|
|
|
10,435
|
|
|
|
Interest and other income
|
|
|
|
|
1,692
|
|
|
|
|
|
(1,642)
|
|
|
|
|
|
50
|
|
|
|
|
|
50
|
|
|
|
|
|
—
|
|
|
|
Realised gain on derivative financial liabilities
|
|
|
|
|
2,250
|
|
|
|
|
|
—
|
|
|
|
|
|
2,250
|
|
|
|
|
|
2,250
|
|
|
|
|
|
—
|
|
|
|
Loss on derivative financial assets
|
|
|
|
|
(3,462)
|
|
|
|
|
|
3,462
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Loss on financial liabilities at fair value through profit and loss
|
|
|
|
|
(3,010)
|
|
|
|
|
|
3,010
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Gain/(loss) on equity securities (note 7)
|
|
|
|
|
(4,852)
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,852)
|
|
|
|
|
|
(4,852)
|
|
|
|
|
|
—
|
|
|
|
Total capital provision income
|
|
|
|
|
404,230
|
|
|
|
|
|
(11,705)
|
|
|
|
|
|
392,525
|
|
|
|
|
|
382,090
|
|
|
|
|
|
10,435
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
6. Capital Provision Assets (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burford-only
|
|
|
31 December 2017
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
total
|
|
|
Capital
provision-
direct
|
|
|
Capital
provision-
indirect
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Realised gains/(losses) relative to cost
|
|
|
|
|
122,712
|
|
|
|
|
|
12,960
|
|
|
|
|
|
135,672
|
|
|
|
|
|
134,242
|
|
|
|
|
|
1,430
|
|
|
|
Previous unrealised (gains)/losses transferred to realised gains/(losses)
|
|
|
|
|
(50,358)
|
|
|
|
|
|
—
|
|
|
|
|
|
(50,358)
|
|
|
|
|
|
(50,358)
|
|
|
|
|
|
—
|
|
|
|
Fair value adjustment in the year
|
|
|
|
|
243,283
|
|
|
|
|
|
(10,607)
|
|
|
|
|
|
232,676
|
|
|
|
|
|
229,107
|
|
|
|
|
|
3,569
|
|
|
|
Interest income on certain indirect capital provision assets
|
|
|
|
|
5,528
|
|
|
|
|
|
4,766
|
|
|
|
|
|
762
|
|
|
|
|
|
762
|
|
|
|
|
|
—
|
|
|
|
Income on capital provision assets
|
|
|
|
|
321,165
|
|
|
|
|
|
(2,413)
|
|
|
|
|
|
318,752
|
|
|
|
|
|
313,753
|
|
|
|
|
|
4,999
|
|
|
|
Interest and other income
|
|
|
|
|
800
|
|
|
|
|
|
(187)
|
|
|
|
|
|
613
|
|
|
|
|
|
613
|
|
|
|
|
|
—
|
|
|
|
Realised gain on derivative financial liabilities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Loss on derivative financial assets
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Loss on financial liabilities at fair value through profit and loss
|
|
|
|
|
268
|
|
|
|
|
|
(268)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Gain/(loss) on equity securities (note 7)
|
|
|
|
|
(6,953)
|
|
|
|
|
|
—
|
|
|
|
|
|
(6,953)
|
|
|
|
|
|
(6,953)
|
|
|
|
|
|
—
|
|
|
|
Total capital provision income
|
|
|
|
|
315,280
|
|
|
|
|
|
(2,868)
|
|
|
|
|
|
312,412
|
|
|
|
|
|
307,413
|
|
|
|
|
|
4,999
|
|
|
7. Equity securities
As at 31 December 2019, equity securities were held at fair value of $31,396,000 (2018: $582,000) and there is a gain on equity securities of $1,169,000 (2018: loss of $4,852,000) included in capital provision income on the face of the consolidated statement of comprehensive income (see note 6). At 31 December 2019, equity securities consisted of (a) $31,367,000 of equities received in settlement for an capital provision-indirect asset, which position was hedged and subsequently sold shortly after year end resulting in no material impact to profit and loss and (b) $29,000 of a security previously received as consideration in a settlement of a direct capital provision asset.
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
As at 1 January
|
|
|
|
|
582
|
|
|
|
|
|
6,058
|
|
|
|
Asset received in kind
|
|
|
|
|
29,645
|
|
|
|
|
|
—
|
|
|
|
Realisations
|
|
|
|
|
—
|
|
|
|
|
|
(624)
|
|
|
|
Realised gains/(losses) relative to cost
|
|
|
|
|
—
|
|
|
|
|
|
(924)
|
|
|
|
Previous unrealised (gains)/losses transferred to realised gains/(losses)
|
|
|
|
|
—
|
|
|
|
|
|
1,258
|
|
|
|
Fair value movement
|
|
|
|
|
1,169
|
|
|
|
|
|
(5,186)
|
|
|
|
As at 31 December
|
|
|
|
|
31,396
|
|
|
|
|
|
582
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
7. Equity securities (continued)
The following table presents the line-by-line impact of eliminating the interests of third-parties in the entities which Burford consolidates from the equity securities balance reported in the consolidated statement of financial position to arrive at Burford’s equity securities at 31 December 2019.
|
31 December 2019
|
|
|
Consolidated
Total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
As at 1 January
|
|
|
|
|
582
|
|
|
|
|
|
—
|
|
|
|
|
|
582
|
|
|
|
Asset received in kind
|
|
|
|
|
29,645
|
|
|
|
|
|
(29,645)
|
|
|
|
|
|
—
|
|
|
|
Fair value movement
|
|
|
|
|
1,169
|
|
|
|
|
|
(1,722)
|
|
|
|
|
|
(553)
|
|
|
|
As at 31 December
|
|
|
|
|
31,396
|
|
|
|
|
|
(31,367)
|
|
|
|
|
|
29
|
|
|
|
|
|
31 December 2018
|
|
|
Consolidated
Total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
As at 1 January
|
|
|
|
|
6,058
|
|
|
|
|
|
—
|
|
|
|
|
|
6,058
|
|
|
|
Realisations
|
|
|
|
|
(624)
|
|
|
|
|
|
—
|
|
|
|
|
|
(624)
|
|
|
|
Realised gains/(losses) relative to cost
|
|
|
|
|
(924)
|
|
|
|
|
|
—
|
|
|
|
|
|
(924)
|
|
|
|
Previous unrealised (gains)/losses transferred to realised gains/(losses)
|
|
|
|
|
1,258
|
|
|
|
|
|
—
|
|
|
|
|
|
1,258
|
|
|
|
Fair value movement
|
|
|
|
|
(5,186)
|
|
|
|
|
|
—
|
|
|
|
|
|
(5,186)
|
|
|
|
As at 31 December
|
|
|
|
|
582
|
|
|
|
|
|
—
|
|
|
|
|
|
582
|
|
|
8. Due from settlement of capital provision assets
Amounts due from settlement of assets relate to the recovery of capital provision assets that have successfully concluded and where there is no longer any litigation risk remaining. The settlement terms and duration vary by capital provision asset. The majority of settlement balances are received shortly after the period end and all are generally expected to be received within 12 months. The carrying value of these assets approximate the fair value of the assets at the balance sheet date.
Due from settlement of capital provision assets
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January
|
|
|
|
|
37,109
|
|
|
|
|
|
3,248
|
|
|
|
Transfer of realisations from capital provision assets
|
|
|
|
|
539,359
|
|
|
|
|
|
634,856
|
|
|
|
Interest and other income
|
|
|
|
|
1,870
|
|
|
|
|
|
1,692
|
|
|
|
Impairment of receivable (see note 6)
|
|
|
|
|
(3,083)
|
|
|
|
|
|
—
|
|
|
|
Proceeds received
|
|
|
|
|
(491,252)
|
|
|
|
|
|
(602,678)
|
|
|
|
Asset received in kind (see note 7)
|
|
|
|
|
(29,645)
|
|
|
|
|
|
—
|
|
|
|
Foreign exchange gains
|
|
|
|
|
—
|
|
|
|
|
|
(9)
|
|
|
|
At 31 December
|
|
|
|
|
54,358
|
|
|
|
|
|
37,109
|
|
|
|
Split:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
3,750
|
|
|
|
|
|
3,083
|
|
|
|
Current assets
|
|
|
|
|
50,608
|
|
|
|
|
|
34,026
|
|
|
|
Total due from settlement of capital provision assets
|
|
|
|
|
54,358
|
|
|
|
|
|
37,109
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
8. Due from settlement of capital provision assets (continued)
The following tables reflect the line-by-line impact of eliminating the interests of third-parties in the entities which Burford consolidates from the due from settlement of assets balance reported in the consolidated statement of financial position to arrive at Burford’s capital provision asset receivables at 31 December 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burford-only
|
|
|
Due from settlement of capital provision assets
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
total
|
|
|
Capital
provision-
direct
|
|
|
Capital
provision-
indirect
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January 2019
|
|
|
|
|
37,109
|
|
|
|
|
|
—
|
|
|
|
|
|
37,109
|
|
|
|
|
|
37,109
|
|
|
|
|
|
—
|
|
|
|
Transfer of realisations from capital provision assets
|
|
|
|
|
539,359
|
|
|
|
|
|
(143,679)
|
|
|
|
|
|
395,680
|
|
|
|
|
|
218,807
|
|
|
|
|
|
176,873
|
|
|
|
Interest and other income
|
|
|
|
|
1,870
|
|
|
|
|
|
(1,742)
|
|
|
|
|
|
128
|
|
|
|
|
|
128
|
|
|
|
|
|
—
|
|
|
|
Impairment of receivable
|
|
|
|
|
(3,083)
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,083)
|
|
|
|
|
|
(3,083)
|
|
|
|
|
|
—
|
|
|
|
Proceeds received
|
|
|
|
|
(491,252)
|
|
|
|
|
|
80,407
|
|
|
|
|
|
(410,845)
|
|
|
|
|
|
(233,972)
|
|
|
|
|
|
(176,873)
|
|
|
|
Asset received in kind
|
|
|
|
|
(29,645)
|
|
|
|
|
|
29,645
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
At 31 December 2019
|
|
|
|
|
54,358
|
|
|
|
|
|
(35,369)
|
|
|
|
|
|
18,989
|
|
|
|
|
|
18,989
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burford-only
|
|
|
Due from settlement of capital provision assets
|
|
|
Consolidated
Total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
total
|
|
|
Capital
provision-
direct
|
|
|
Capital
provision-
indirect
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January 2018
|
|
|
|
|
3,248
|
|
|
|
|
|
1,517
|
|
|
|
|
|
4,765
|
|
|
|
|
|
3,248
|
|
|
|
|
|
1,517
|
|
|
|
Transfer of realisations from capital provision assets
|
|
|
|
|
634,856
|
|
|
|
|
|
(109,317)
|
|
|
|
|
|
525,539
|
|
|
|
|
|
320,733
|
|
|
|
|
|
204,806
|
|
|
|
Interest and other income
|
|
|
|
|
1,692
|
|
|
|
|
|
(1,642)
|
|
|
|
|
|
50
|
|
|
|
|
|
50
|
|
|
|
|
|
—
|
|
|
|
Proceeds received
|
|
|
|
|
(602,678)
|
|
|
|
|
|
109,442
|
|
|
|
|
|
(493,236)
|
|
|
|
|
|
(286,913)
|
|
|
|
|
|
(206,323)
|
|
|
|
Foreign exchange gains
|
|
|
|
|
(9)
|
|
|
|
|
|
—
|
|
|
|
|
|
(9)
|
|
|
|
|
|
(9)
|
|
|
|
|
|
—
|
|
|
|
At 31 December 2018
|
|
|
|
|
37,109
|
|
|
|
|
|
—
|
|
|
|
|
|
37,109
|
|
|
|
|
|
37,109
|
|
|
|
|
|
—
|
|
|
9. Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss are sales of equity securities transacted to offset the market based gains and losses on equity positions held within capital provision assets as the underlying investment strategy is focused on earning an underlying litigation related return and not an outright position in a pure equity return. Proceeds from entering into sales of equity securities are held by brokers and are presented with due from brokers in the consolidated statement of financial position in addition to any margin held by the broker relating to the activity in buying and selling equities. While the positions are held to offset gains and losses on equity positions included within capital provision-indirect assets, the activity is required to be presented separately within liabilities in the consolidated statement of financial position. Gains and losses are included in the capital provision income in the consolidated statement of comprehensive income.
Amounts included in due to brokers relate to equity positions included in capital provision assets that have been purchased using available credit in the margin account with the respective broker.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
10. Asset management income
Burford receives regular management fees on its managed funds, calculated as a percentage of capital committed by the fund investors or as a percentage of capital committed by the fund, depending upon the status of the fund. In addition, Burford receives performance fees from the funds. Burford’s managed funds (other than the Strategic Value fund and the BOF-C fund) use a so-called “European” structure for the payment of performance fees, in that the manager is not paid any performance fees until fund investors have had their entire capital investment repaid, as opposed to performance fees being paid on profitable resolutions as they occur (referred to as an “American” structure). The impact of this European structure is to delay the receipt of performance fees, and thus while many fund assets have already successfully and profitably concluded, few of those performance fees have yet been paid. Performance fees are recognised when a reliable estimate of the fee can be made and it is highly probable that a significant revenue reversal will not occur.
The asset management income on the face of the consolidated statement of comprehensive income comprises:
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Management fee income
|
|
|
|
|
15,160
|
|
|
|
|
|
10,936
|
|
|
|
|
|
12,069
|
|
|
|
Performance fee income
|
|
|
|
|
—
|
|
|
|
|
|
755
|
|
|
|
|
|
2,389
|
|
|
|
Total asset management income
|
|
|
|
|
15,160
|
|
|
|
|
|
11,691
|
|
|
|
|
|
14,458
|
|
|
The following tables show the impact of consolidating the Strategic Value and BOF-C funds by adding back the elimination entries for consolidation purposes to arrive at Burford’s asset management income at 31 December 2019 and 2018.
|
For the year ended 31 December 2019
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Management fee income
|
|
|
|
|
15,160
|
|
|
|
|
|
3,239
|
|
|
|
|
|
18,399
|
|
|
|
Performance fee income
|
|
|
|
|
—
|
|
|
|
|
|
594
|
|
|
|
|
|
594
|
|
|
|
Income from BOF-C
|
|
|
|
|
—
|
|
|
|
|
|
7,137
|
|
|
|
|
|
7,137
|
|
|
|
Total asset management income
|
|
|
|
|
15,160
|
|
|
|
|
|
10,970
|
|
|
|
|
|
26,130
|
|
|
|
|
|
For the year ended 31 December 2018
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Management fee income
|
|
|
|
|
10,936
|
|
|
|
|
|
3,060
|
|
|
|
|
|
13,996
|
|
|
|
Performance fee income
|
|
|
|
|
755
|
|
|
|
|
|
1,048
|
|
|
|
|
|
1,803
|
|
|
|
Total asset management income
|
|
|
|
|
11,691
|
|
|
|
|
|
4,108
|
|
|
|
|
|
15,799
|
|
|
|
|
|
For the year ended 31 December 2017
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Management fee income
|
|
|
|
|
12,069
|
|
|
|
|
|
907
|
|
|
|
|
|
12,975
|
|
|
|
Performance fee income
|
|
|
|
|
2,389
|
|
|
|
|
|
262
|
|
|
|
|
|
2,651
|
|
|
|
Total asset management income
|
|
|
|
|
14,458
|
|
|
|
|
|
1,169
|
|
|
|
|
|
15,626
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
10. Asset management income (continued)
Under the co-investing arrangement with the SWF, Burford receives reimbursement of expenses from BOF-C up to a certain level before either party receives a return of capital. After the repayment of capital, Burford then receives a portion of the return generated from the assets held by BOF-C. Amounts received and due from BOF-C from both of these sources is included in Income from BOF-C in the Burford-only figures in the table above. On a consolidated basis, the amounts are included within capital provision income.
11. Liabilities arising from insurance contracts
|
|
|
|
2019
|
|
|
|
|
|
Gross
|
|
|
Reinsurance
|
|
|
Net
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Unearned premiums
|
|
|
|
|
4,445
|
|
|
|
|
|
(3,556)
|
|
|
|
|
|
889
|
|
|
|
Claims incurred but not reported reserve
|
|
|
|
|
82
|
|
|
|
|
|
—
|
|
|
|
|
|
82
|
|
|
|
Total
|
|
|
|
|
4,527
|
|
|
|
|
|
(3,556)
|
|
|
|
|
|
971
|
|
|
There were no claims reported during the year or outstanding loss reserve relating to reported claims as at 31 December 2019 (2018: $nil).
|
Income statement:
|
|
|
2019
|
|
|
|
|
|
$’000
|
|
|
Gross premiums written
|
|
|
|
|
4,707
|
|
|
|
Gross ceded reinsurance premiums
|
|
|
|
|
(3,766)
|
|
|
|
Movement in net unearned premium
|
|
|
|
|
(862)
|
|
|
|
Net premium earned
|
|
|
|
|
79
|
|
|
|
Change in insurance claims reserves
|
|
|
|
|
(79)
|
|
|
|
Net income on insurance contracts
|
|
|
|
|
—
|
|
|
|
Insurance underwriting commission
|
|
|
|
|
56
|
|
|
|
Insurance administrator commission
|
|
|
|
|
3,489
|
|
|
|
Total insurance income
|
|
|
|
|
3,545
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
12. Tangible fixed assets
|
|
|
|
Fixtures,
fittings and
equipment
|
|
|
Right-of-use
assets –
property
leases
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2018
|
|
|
|
|
3,202
|
|
|
|
|
|
—
|
|
|
|
|
|
3,202
|
|
|
|
Adoption of IFRS 16 – Leases (note 2)
|
|
|
|
|
—
|
|
|
|
|
|
5,552
|
|
|
|
|
|
5,552
|
|
|
|
As at 1 January 2019
|
|
|
|
|
3,202
|
|
|
|
|
|
5,552
|
|
|
|
|
|
8,754
|
|
|
|
Additions
|
|
|
|
|
3,398
|
|
|
|
|
|
13,115
|
|
|
|
|
|
16,513
|
|
|
|
Disposals
|
|
|
|
|
(1,370)
|
|
|
|
|
|
(295)
|
|
|
|
|
|
(1,665)
|
|
|
|
Exchange differences
|
|
|
|
|
21
|
|
|
|
|
|
57
|
|
|
|
|
|
68
|
|
|
|
At 31 December 2019
|
|
|
|
|
5,251
|
|
|
|
|
|
18,419
|
|
|
|
|
|
23,670
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2019
|
|
|
|
|
(1,336)
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,336)
|
|
|
|
Charge in period
|
|
|
|
|
(912)
|
|
|
|
|
|
(1,862)
|
|
|
|
|
|
(2,774)
|
|
|
|
Disposals
|
|
|
|
|
533
|
|
|
|
|
|
111
|
|
|
|
|
|
644
|
|
|
|
Exchange differences
|
|
|
|
|
(10)
|
|
|
|
|
|
(10)
|
|
|
|
|
|
(20)
|
|
|
|
At 31 December 2019
|
|
|
|
|
(1,725)
|
|
|
|
|
|
(1,761)
|
|
|
|
|
|
(3,486)
|
|
|
|
Net book value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2018
|
|
|
|
|
1,866
|
|
|
|
|
|
—
|
|
|
|
|
|
1,866
|
|
|
|
At 31 December 2019
|
|
|
|
|
3,526
|
|
|
|
|
|
16,658
|
|
|
|
|
|
20,184
|
|
|
13. Cash management assets
As at 31 December 2019, cash management assets were $37,966,000 (2018: $41,449,000).
|
Reconciliation of movements
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January
|
|
|
|
|
41,449
|
|
|
|
|
|
39,933
|
|
|
|
Purchases
|
|
|
|
|
6,410
|
|
|
|
|
|
17,376
|
|
|
|
Proceeds on disposal
|
|
|
|
|
(9,756)
|
|
|
|
|
|
(11,721)
|
|
|
|
Net realised gains on disposal
|
|
|
|
|
65
|
|
|
|
|
|
527
|
|
|
|
Fair value movement
|
|
|
|
|
(211)
|
|
|
|
|
|
(4,624)
|
|
|
|
Change in accrued interest
|
|
|
|
|
9
|
|
|
|
|
|
(42)
|
|
|
|
Balance at 31 December
|
|
|
|
|
37,966
|
|
|
|
|
|
41,449
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
13. Cash management assets (continued)
The cash management income and bank interest on the face of the consolidated statement of comprehensive income comprise:
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Realised gains (see above)
|
|
|
|
|
65
|
|
|
|
|
|
527
|
|
|
|
|
|
70
|
|
|
|
Fair value movement (see above)
|
|
|
|
|
(211)
|
|
|
|
|
|
(4,624)
|
|
|
|
|
|
823
|
|
|
|
Interest and dividend income
|
|
|
|
|
1,987
|
|
|
|
|
|
1,990
|
|
|
|
|
|
1,006
|
|
|
|
Bank interest income
|
|
|
|
|
4,862
|
|
|
|
|
|
3,908
|
|
|
|
|
|
751
|
|
|
|
Total cash management income and bank interest
|
|
|
|
|
6,703
|
|
|
|
|
|
1,801
|
|
|
|
|
|
2,650
|
|
|
14. Operating expenses
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Staff costs
|
|
|
|
|
49,191
|
|
|
|
|
|
48,198
|
|
|
|
|
|
39,839
|
|
|
|
Share-based payments
|
|
|
|
|
4,519
|
|
|
|
|
|
1,686
|
|
|
|
|
|
1,152
|
|
|
|
Pension costs
|
|
|
|
|
1,285
|
|
|
|
|
|
736
|
|
|
|
|
|
817
|
|
|
|
Non-executive directors’ remuneration
|
|
|
|
|
484
|
|
|
|
|
|
415
|
|
|
|
|
|
348
|
|
|
|
Non-staff operating expenses
|
|
|
|
|
15,724
|
|
|
|
|
|
11,478
|
|
|
|
|
|
7,182
|
|
|
|
Capital provision asset related costs
|
|
|
|
|
6,209
|
|
|
|
|
|
2,981
|
|
|
|
|
|
6,769
|
|
|
|
Case-related legal fees not included in asset cost
|
|
|
|
|
2,903
|
|
|
|
|
|
1,734
|
|
|
|
|
|
—
|
|
|
|
One-time expenses related to equity and listing matters
|
|
|
|
|
1,754
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Expenses incurred by consolidated entities*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital provision asset related costs
|
|
|
|
|
8,343
|
|
|
|
|
|
3,977
|
|
|
|
|
|
1,039
|
|
|
|
Non-staff operating expenses
|
|
|
|
|
990
|
|
|
|
|
|
626
|
|
|
|
|
|
333
|
|
|
|
Total operating expenses
|
|
|
|
|
91,402
|
|
|
|
|
|
71,831
|
|
|
|
|
|
57,479
|
|
|
*
Expenses incurred by consolidated entities are shown net of adjustments and eliminations as shown in note 23
|
Directors’ remuneration* comprise:
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Sir Peter Middleton
|
|
|
|
|
189
|
|
|
|
|
|
171
|
|
|
|
|
|
114
|
|
|
|
Hugh Steven Wilson
|
|
|
|
|
125
|
|
|
|
|
|
112
|
|
|
|
|
|
108
|
|
|
|
David Charles Lowe
|
|
|
|
|
85
|
|
|
|
|
|
66
|
|
|
|
|
|
63
|
|
|
|
Charles Nigel Kennedy Parkinson
|
|
|
|
|
85
|
|
|
|
|
|
66
|
|
|
|
|
|
63
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
415
|
|
|
|
|
|
348
|
|
|
*
The Directors are considered to be the Group’s key management personnel as they have the authority and responsibility for planning, directing and controlling the activities of the Group. The Directors’ remuneration is Sterling denominated and represents the total compensation for the Directors.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
14. Operating expenses (continued)
|
Fees paid and payable to Ernst & Young LLP comprise:
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Audit fees
|
|
|
|
|
1,386
|
|
|
|
|
|
961
|
|
|
|
|
|
743
|
|
|
|
Interim review fees
|
|
|
|
|
55
|
|
|
|
|
|
38
|
|
|
|
|
|
45
|
|
|
|
Tax compliance fees
|
|
|
|
|
348
|
|
|
|
|
|
287
|
|
|
|
|
|
206
|
|
|
|
Tax advisory fees
|
|
|
|
|
124
|
|
|
|
|
|
133
|
|
|
|
|
|
253
|
|
|
|
Other advisory fees
|
|
|
|
|
14
|
|
|
|
|
|
166
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
1,927
|
|
|
|
|
|
1,585
|
|
|
|
|
|
1,298
|
|
|
15. Other assets
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Trade receivable – insurance
|
|
|
|
|
658
|
|
|
|
|
|
7,438
|
|
|
|
Trade receivable – services
|
|
|
|
|
1,547
|
|
|
|
|
|
735
|
|
|
|
Asset management receivables
|
|
|
|
|
825
|
|
|
|
|
|
2,118
|
|
|
|
Reinsurance assets (note 11)
|
|
|
|
|
3,556
|
|
|
|
|
|
—
|
|
|
|
Prepayments
|
|
|
|
|
1,375
|
|
|
|
|
|
352
|
|
|
|
Financial asset held at amortised cost
|
|
|
|
|
500
|
|
|
|
|
|
1,500
|
|
|
|
Tax receivable
|
|
|
|
|
—
|
|
|
|
|
|
1,823
|
|
|
|
Other receivables
|
|
|
|
|
4,802
|
|
|
|
|
|
2,347
|
|
|
|
Total other assets
|
|
|
|
|
13,263
|
|
|
|
|
|
16,313
|
|
|
16. Other liabilities
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Audit fee payable
|
|
|
|
|
1,385
|
|
|
|
|
|
381
|
|
|
|
General expenses payable
|
|
|
|
|
24,782
|
|
|
|
|
|
30,657
|
|
|
|
Payable for capital provision assets
|
|
|
|
|
36
|
|
|
|
|
|
—
|
|
|
|
Lease liabilities
|
|
|
|
|
19,389
|
|
|
|
|
|
—
|
|
|
|
Insurance liabilities (note 11)
|
|
|
|
|
4,527
|
|
|
|
|
|
—
|
|
|
|
Tax payable
|
|
|
|
|
1,311
|
|
|
|
|
|
—
|
|
|
|
Due to limited partners
|
|
|
|
|
—
|
|
|
|
|
|
8
|
|
|
|
Total other liabilities
|
|
|
|
|
51,430
|
|
|
|
|
|
31,046
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
16. Other liabilities (continued)
The following table sets out the movement in lease liabilities during the year.
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Change in accounting policy – note 2
|
|
|
|
|
6,785
|
|
|
|
|
|
—
|
|
|
|
Restated at 1 January 2019
|
|
|
|
|
6,785
|
|
|
|
|
|
—
|
|
|
|
Additions
|
|
|
|
|
13,115
|
|
|
|
|
|
—
|
|
|
|
Lease liabilities interest expense
|
|
|
|
|
869
|
|
|
|
|
|
—
|
|
|
|
Payments of lease liabilities during year
|
|
|
|
|
(1,433)
|
|
|
|
|
|
—
|
|
|
|
Exchange differences
|
|
|
|
|
53
|
|
|
|
|
|
—
|
|
|
|
At 31 December
|
|
|
|
|
19,389
|
|
|
|
|
|
—
|
|
|
17. Loan capital
The Group has issued the following retail bonds listed on the London Stock Exchange’s Order Book for Retail Bonds.
|
Issuance date
|
|
|
19-Aug-2014
|
|
|
19-Apr-2016
|
|
|
1-Jun-2017
|
|
|
12-Feb-2018
|
|
|
Issuing entity (100% owned subsidiary)
|
|
|
Burford Capital PLC
|
|
|
Burford Capital PLC
|
|
|
Burford Capital PLC
|
|
|
Burford Capital Finance LLC
|
|
|
Currency
|
|
|
GBP
|
|
|
GBP
|
|
|
GBP
|
|
|
USD
|
|
|
Face amount (in currency)
|
|
|
|
£
|
90,000,000
|
|
|
|
|
£
|
100,000,000
|
|
|
|
|
£
|
175,000,000
|
|
|
|
|
$
|
180,000,000
|
|
|
|
Maturity date
|
|
|
19-Aug-2022
|
|
|
26-Oct-2024
|
|
|
1-Dec-2026
|
|
|
12-Aug-2025
|
|
|
Interest rate per annum
|
|
|
|
|
6.50%
|
|
|
|
|
|
6.125%
|
|
|
|
|
|
5.00%
|
|
|
|
|
|
6.125%
|
|
|
|
USD equivalent face value at exchange rate
at issuance
|
|
|
|
$
|
149,562,000
|
|
|
|
|
$
|
144,020,000
|
|
|
|
|
$
|
225,803,000
|
|
|
|
|
$
|
180,000,000
|
|
|
|
USD equivalent face value at 31 December 2019 exchange rate of $1.321 per £1.00
|
|
|
|
$
|
118,890,000
|
|
|
|
|
$
|
132,100,000
|
|
|
|
|
$
|
231,175,000
|
|
|
|
|
$
|
180,000,000
|
|
|
|
Fair value equivalent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2019
|
|
|
|
$
|
119,871,000
|
|
|
|
|
$
|
128,302,000
|
|
|
|
|
$
|
208,924,000
|
|
|
|
|
$
|
172,350,000
|
|
|
|
At 31 December 2018
|
|
|
|
$
|
121,098,000
|
|
|
|
|
$
|
134,872,000
|
|
|
|
|
$
|
224,240,000
|
|
|
|
|
$
|
177,075,000
|
|
|
The fair value equivalents for the Group’s retail bonds are based on the last traded price for each bond observed on the London Stock Exchange’s Order Book for Retail Bonds.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
17. Loan capital (continued)
|
Retail bonds
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January
|
|
|
|
|
647,992
|
|
|
|
|
|
492,328
|
|
|
|
Retail bonds issued
|
|
|
|
|
—
|
|
|
|
|
|
180,000
|
|
|
|
Bond issue costs
|
|
|
|
|
—
|
|
|
|
|
|
(2,637)
|
|
|
|
Loan capital finance costs
|
|
|
|
|
38,753
|
|
|
|
|
|
38,538
|
|
|
|
Interest paid
|
|
|
|
|
(37,568)
|
|
|
|
|
|
(33,108)
|
|
|
|
Foreign exchange (gains)/losses
|
|
|
|
|
16,165
|
|
|
|
|
|
(27,129)
|
|
|
|
As at 31 December
|
|
|
|
|
665,342
|
|
|
|
|
|
647,992
|
|
|
|
Split:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan capital
|
|
|
|
|
655,880
|
|
|
|
|
|
638,665
|
|
|
|
Loan interest payable
|
|
|
|
|
9,462
|
|
|
|
|
|
9,327
|
|
|
|
Total loan capital
|
|
|
|
|
665,342
|
|
|
|
|
|
647,992
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Loan capital interest expense
|
|
|
|
|
37,528
|
|
|
|
|
|
37,334
|
|
|
|
|
|
22,233
|
|
|
|
Bond issue costs incurred as finance costs
|
|
|
|
|
1,225
|
|
|
|
|
|
1,204
|
|
|
|
|
|
743
|
|
|
|
Loan notes interest expense
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,275
|
|
|
|
Loan capital finance costs (above)
|
|
|
|
|
38,753
|
|
|
|
|
|
38,538
|
|
|
|
|
|
24,251
|
|
|
|
Lease liabilities interest expense (see note 16)
|
|
|
|
|
869
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Total finance costs
|
|
|
|
|
39,622
|
|
|
|
|
|
38,538
|
|
|
|
|
|
24,251
|
|
|
18. Changes in liabilities arising from financing activities
A summary of the changes arising from cash flows and non-cash changes of loan capital is shown below.
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January
|
|
|
|
|
647,992
|
|
|
|
|
|
492,328
|
|
|
|
|
|
234,258
|
|
|
|
Cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance/(repayments) net of issue costs
|
|
|
|
|
—
|
|
|
|
|
|
177,363
|
|
|
|
|
|
222,633
|
|
|
|
Interest paid
|
|
|
|
|
(37,568)
|
|
|
|
|
|
(33,108)
|
|
|
|
|
|
(21,281)
|
|
|
|
Non-cash charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
37,528
|
|
|
|
|
|
37,334
|
|
|
|
|
|
22,233
|
|
|
|
Amortisation of bond issue costs
|
|
|
|
|
1,225
|
|
|
|
|
|
1,204
|
|
|
|
|
|
743
|
|
|
|
Foreign exchange (gains)/losses
|
|
|
|
|
16,165
|
|
|
|
|
|
(27,129)
|
|
|
|
|
|
33,742
|
|
|
|
As at 31 December
|
|
|
|
|
665,342
|
|
|
|
|
|
647,992
|
|
|
|
|
|
492,328
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
19. Intangible asset
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January
|
|
|
|
|
18,198
|
|
|
|
|
|
27,692
|
|
|
|
Amortisation
|
|
|
|
|
(9,495)
|
|
|
|
|
|
(9,494)
|
|
|
|
At 31 December
|
|
|
|
|
8,703
|
|
|
|
|
|
18,198
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Acquisition of subsidiary
|
|
|
|
|
39,666
|
|
|
|
|
|
39,666
|
|
|
|
Accumulated amortisation
|
|
|
|
|
(30,963)
|
|
|
|
|
|
(21,468)
|
|
|
|
Net book value at 31 December
|
|
|
|
|
8,703
|
|
|
|
|
|
18,198
|
|
|
Burford acquired Gerchen Keller Capital (GKC) on 14 December 2016. The intangible asset represents an assessment, for accounting purposes, of the value of GKC’s future asset management income at the date of acquisition. The intangible asset has an estimated useful life extending to 2020 and is being amortised over this period, in accordance with revenue generated from asset management income.
20. Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the purchase consideration over the fair value of the Group’s share of the assets acquired and the liabilities assumed on the date of the acquisition. The goodwill allocated to each of the Group’s operating business segments is set out in the table below.
Carrying Value of Goodwill
|
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January 2019
|
|
|
|
|
107,991
|
|
|
|
|
|
25,020
|
|
|
|
|
|
955
|
|
|
|
|
|
133,966
|
|
|
|
Foreign exchange gains
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
33
|
|
|
|
|
|
33
|
|
|
|
At 31 December 2019
|
|
|
|
|
107,991
|
|
|
|
|
|
25,020
|
|
|
|
|
|
988
|
|
|
|
|
|
133,999
|
|
|
|
|
|
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Services and
other
corporate
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January 2018
|
|
|
|
|
107,991
|
|
|
|
|
|
25,020
|
|
|
|
|
|
1,011
|
|
|
|
|
|
134,022
|
|
|
|
Foreign exchange losses
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(56)
|
|
|
|
|
|
(56)
|
|
|
|
At 31 December 2018
|
|
|
|
|
107,991
|
|
|
|
|
|
25,020
|
|
|
|
|
|
955
|
|
|
|
|
|
133,966
|
|
|
As goodwill does not generate cash flows independently of other assets or groups of assets the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. The Group’s CGU’s are consistent with the operating business segments above.
The Group’s value in use calculations require estimates in relation to uncertain items, including management’s expectations of future revenue growth, operating costs, profit margins, operating cash flows, and the discount rate for each CGU.
The future cash flows are discounted using a discount rate that reflects the time value of money. The discount rate used in each CGU is adjusted for the risk specific to the asset.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
20. Goodwill (continued)
The Group is required to test goodwill acquired in a business combination annually for impairment. This was carried out for the period ended 31 December 2019.
Key Assumptions and Sensitivities
The value in use of each CGU is determined using cash flow projections over a five-year period, based on past experience of business performance.
Discount rate
The discount rates used in performing the value in use calculation in 2019 were 9.0% (2018: 9.9%) except for Asset Management where we have used 8.3% (2018: 8.5%) reflecting the lower risk and volatility of income in this CGU. The discount rates estimated on a pre-tax equivalent basis were 10.0% (2018: 11.0%) and 10.4% (2018: 10.7%) for Asset Management.
Growth in commitments
The annual growth rate assumption for the five-year projection period is 5% (2018: 5%). The perpetuity growth rates are determined based on the forecast market growth rates of the economies in which the CGU operates, and they reflect an assessment of the long- term growth prospects of that market. For all CGUs this rate is 2% (2018: 2%).
Return on capital provision assets
The rates of return are determined based on historical experience. The rates used in performing the value in use calculation in 2019 were 22.5% for existing and new capital provision assets (2018: 22.5% and 20% respectively) per annum except for Asset Management where we have used rates of between 6.5% (2018: 6.5%) and 22.5% (2018: 22.5%) reflecting the differing rates of return expected on the different funds.
Sensitivities
Based on the methodology and assumptions set out above, the recoverable amounts estimated using the value in use calculation exceed the carrying amounts including goodwill of the CGU’s by $341,574,000 and $72,429,000 for the capital provision and asset management CGU’s respectively (2018: $464,073,000 and $205,222,000). The sensitivity to the key assumptions are set out in the table below.
|
|
|
|
|
|
|
|
|
|
31 December 2019
|
|
|
31 December 2018
|
|
|
|
|
|
|
|
|
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
Capital
provision
|
|
|
Asset
management
|
|
|
|
|
|
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assumption
|
|
|
|
|
Sensitivity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
|
|
+1%
|
|
|
|
|
|
(259,781)
|
|
|
|
|
|
(17,829)
|
|
|
|
|
|
(168,924)
|
|
|
|
|
|
(32,603)
|
|
|
|
Terminal growth rate
|
|
|
|
|
–1%
|
|
|
|
|
|
(200,020)
|
|
|
|
|
|
(14,374)
|
|
|
|
|
|
(119,958)
|
|
|
|
|
|
(25,205)
|
|
|
|
Return on capital provision assets
|
|
|
|
|
–1%
|
|
|
|
|
|
(198,301)
|
|
|
|
|
|
(9,611)
|
|
|
|
|
|
(224,828)
|
|
|
|
|
|
(34,993)
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
21. Fair value of assets and liabilities
Valuation methodology
The fair value of financial assets and liabilities continue to be valued using the techniques set out in the accounting policies in note 2.
Fair value hierarchy
|
31 December 2019
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital provision assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single case
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
458,340
|
|
|
|
|
|
458,340
|
|
|
|
Portfolio
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,241,106
|
|
|
|
|
|
1,241,106
|
|
|
|
Legal risk management
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,619
|
|
|
|
|
|
1,619
|
|
|
|
Asset recovery
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
86,128
|
|
|
|
|
|
86,128
|
|
|
|
Indirect – equity securities
|
|
|
|
|
65,780
|
|
|
|
|
|
—
|
|
|
|
|
|
192,356
|
|
|
|
|
|
258,136
|
|
|
|
Equity securities
|
|
|
|
|
31,396
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31,396
|
|
|
|
Cash management investments
|
|
|
|
|
37,966
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
37,966
|
|
|
|
Total assets
|
|
|
|
|
135,142
|
|
|
|
|
|
—
|
|
|
|
|
|
1,979,549
|
|
|
|
|
|
2,114,691
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
91,493
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
91,493
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
13,944
|
|
|
|
|
|
13,944
|
|
|
|
Loan capital, at fair value*
|
|
|
|
|
629,447
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
629,447
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
235,720
|
|
|
|
|
|
235,720
|
|
|
|
Total liabilities
|
|
|
|
|
720,940
|
|
|
|
|
|
—
|
|
|
|
|
|
249,664
|
|
|
|
|
|
970,604
|
|
|
|
Net total
|
|
|
|
|
(585,798)
|
|
|
|
|
|
—
|
|
|
|
|
|
1,729,885
|
|
|
|
|
|
1,144,087
|
|
|
*
Loan capital is held at amortised cost in the consolidated financial statements and the figures disclosed in the above tables represent the fair value equivalent amounts.
The principal types of capital provision assets transacted by the Group are as follows:
Single case:
Capital provision assets funded by Burford that are subject to binary legal risk, such as financing the costs of a single litigation claim.
Portfolio:
Capital provision assets with multiple paths to recovery, such as financing a pool of litigation claims.
Asset recovery:
Capital provision assets where Burford finances the cost of the pursuit of enforcement of an unpaid legal judgment.
Legal risk management:
Capital provision assets where all or a portion of the financing provided by Burford is providing some form of legal risk arrangement, such as to cover an indemnity or insurance for adverse costs.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
21. Fair value of assets and liabilities (continued)
Where capital is provided on a portfolio basis, Burford provides financing for a group of cases with the same counterparty on terms that tend to recognise the lower risk of loss generally associated with multi-case portfolios. Typically, the cases in the portfolio are cross collateralised, such that losses in one case can be recovered from successes in another. Cases in portfolios are underwritten and priced in a similar manner to single case capital provision assets and are anticipated to achieve a similar risk-adjusted return. Portfolios then allow us to originate larger volumes of assets with greater efficiency.
Asset recovery capital provision assets are underwritten, structured and priced in a similar manner to our single case and portfolio capital provision assets and, as a consequence, are anticipated to have similar risk-adjusted returns.
The key risk and sensitivity across all capital provision assets relates to the underlying litigation associated with each case that is underwritten and financed. The sensitivity to this level 3 input is therefore considered to be similar across the different types of capital provision assets and is expressed as a portfolio-wide stress.
|
31 December 2018
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital provision assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single case
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
217,703
|
|
|
|
|
|
217,703
|
|
|
|
Portfolio
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,058,979
|
|
|
|
|
|
1,058,979
|
|
|
|
Legal risk management
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,086
|
|
|
|
|
|
3,086
|
|
|
|
Asset recovery
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
42,217
|
|
|
|
|
|
42,217
|
|
|
|
Indirect – equity securities
|
|
|
|
|
137,809
|
|
|
|
|
|
72,692
|
|
|
|
|
|
108,549
|
|
|
|
|
|
319,050
|
|
|
|
Equity securities
|
|
|
|
|
582
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
582
|
|
|
|
Derivative financial asset
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
|
|
4,154
|
|
|
|
Cash management investments
|
|
|
|
|
41,449
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
41,449
|
|
|
|
Total assets
|
|
|
|
|
179,840
|
|
|
|
|
|
72,692
|
|
|
|
|
|
1,434,688
|
|
|
|
|
|
1,687,220
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
112,821
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
112,821
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
|
|
7,000
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,244
|
|
|
|
|
|
3,244
|
|
|
|
Loan capital, at fair value*
|
|
|
|
|
657,285
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
657,285
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
136,959
|
|
|
|
|
|
136,959
|
|
|
|
Total liabilities
|
|
|
|
|
770,106
|
|
|
|
|
|
—
|
|
|
|
|
|
147,203
|
|
|
|
|
|
917,309
|
|
|
|
Net total
|
|
|
|
|
(590,266)
|
|
|
|
|
|
72,692
|
|
|
|
|
|
1,287,485
|
|
|
|
|
|
769,911
|
|
|
*
Loan capital is held at amortised cost in the consolidated financial statements and the figures disclosed in the above tables represent the fair value equivalent amounts.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
21. Fair value of assets and liabilities (continued)
Movements in Level 3 fair value assets and liabilities
The table below provides analysis of the movements in the level 3 financial assets and liabilities.
|
|
|
|
At 1 January
2019
|
|
|
Transfers
into level 3
|
|
|
Additions
|
|
|
Realisations
|
|
|
Income for
the year
|
|
|
Foreign
exchange
losses
|
|
|
Transfer to
capital
provision
asset sub-
participation
|
|
|
At
31 December
2019
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Single case
|
|
|
|
|
217,703
|
|
|
|
|
|
—
|
|
|
|
|
|
179,727
|
|
|
|
|
|
(37,078)
|
|
|
|
|
|
97,787
|
|
|
|
|
|
201
|
|
|
|
|
|
—
|
|
|
|
|
|
458,340
|
|
|
|
Portfolio
|
|
|
|
|
1,058,979
|
|
|
|
|
|
—
|
|
|
|
|
|
116,232
|
|
|
|
|
|
(152,377)
|
|
|
|
|
|
209,265
|
|
|
|
|
|
(1,693)
|
|
|
|
|
|
10,700
|
|
|
|
|
|
1,241,106
|
|
|
|
Legal risk management
|
|
|
|
|
3,086
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,762)
|
|
|
|
|
|
190
|
|
|
|
|
|
105
|
|
|
|
|
|
—
|
|
|
|
|
|
1,619
|
|
|
|
Asset recovery
|
|
|
|
|
42,217
|
|
|
|
|
|
—
|
|
|
|
|
|
30,439
|
|
|
|
|
|
(1,438)
|
|
|
|
|
|
13,485
|
|
|
|
|
|
1,425
|
|
|
|
|
|
—
|
|
|
|
|
|
86,128
|
|
|
|
Indirect – equity securities
|
|
|
|
|
108,549
|
|
|
|
|
|
210,501
|
|
|
|
|
|
149,152
|
|
|
|
|
|
(327,274)
|
|
|
|
|
|
51,428
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
192,356
|
|
|
|
Derivative financial assets
|
|
|
|
|
4,154
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,154)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Total level 3 assets
|
|
|
|
|
1,434,688
|
|
|
|
|
|
210,501
|
|
|
|
|
|
475,550
|
|
|
|
|
|
(519,929)
|
|
|
|
|
|
368,001
|
|
|
|
|
|
38
|
|
|
|
|
|
10,700
|
|
|
|
|
|
1,979,549
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
(3,244)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,700)
|
|
|
|
|
|
(13,944)
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
(7,000)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
(136,959)
|
|
|
|
|
|
—
|
|
|
|
|
|
(167,685)
|
|
|
|
|
|
84,242
|
|
|
|
|
|
(15,318)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(235,720)
|
|
|
|
Total level 3 liabilities
|
|
|
|
|
(147,203)
|
|
|
|
|
|
—
|
|
|
|
|
|
(167,685)
|
|
|
|
|
|
84,242
|
|
|
|
|
|
(8,318)
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,700)
|
|
|
|
|
|
(249,664)
|
|
|
|
|
|
|
|
|
At 1 January
2018
|
|
|
Transfers
into level 3
|
|
|
Additions
|
|
|
Realisations
|
|
|
Income for
the year
|
|
|
Foreign
exchange
losses
|
|
|
Transfer to
capital
provision
asset sub-
participation
|
|
|
At
31 December
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Single case
|
|
|
|
|
159,054
|
|
|
|
|
|
—
|
|
|
|
|
|
73,103
|
|
|
|
|
|
(134,455)
|
|
|
|
|
|
113,408
|
|
|
|
|
|
(407)
|
|
|
|
|
|
7,000
|
|
|
|
|
|
217,703
|
|
|
|
Portfolio
|
|
|
|
|
651,013
|
|
|
|
|
|
—
|
|
|
|
|
|
292,425
|
|
|
|
|
|
(143,699)
|
|
|
|
|
|
261,110
|
|
|
|
|
|
(4,120)
|
|
|
|
|
|
2,250
|
|
|
|
|
|
1,058,979
|
|
|
|
Legal risk management
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,863
|
|
|
|
|
|
—
|
|
|
|
|
|
1,360
|
|
|
|
|
|
(137)
|
|
|
|
|
|
—
|
|
|
|
|
|
3,086
|
|
|
|
Asset recovery
|
|
|
|
|
9,514
|
|
|
|
|
|
—
|
|
|
|
|
|
33,074
|
|
|
|
|
|
(7,138)
|
|
|
|
|
|
7,879
|
|
|
|
|
|
(1,112)
|
|
|
|
|
|
—
|
|
|
|
|
|
42,217
|
|
|
|
Indirect – equity securities
|
|
|
|
|
205,361
|
|
|
|
|
|
49,050
|
|
|
|
|
|
90,175
|
|
|
|
|
|
(259,484)
|
|
|
|
|
|
23,447
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
108,549
|
|
|
|
Derivative financial assets
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,616
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,462)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
Total level 3 assets
|
|
|
|
|
1,024,942
|
|
|
|
|
|
49,050
|
|
|
|
|
|
498,256
|
|
|
|
|
|
(544,776)
|
|
|
|
|
|
403,742
|
|
|
|
|
|
(5,776)
|
|
|
|
|
|
9,250
|
|
|
|
|
|
1,434,688
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
(3,152)
|
|
|
|
|
|
—
|
|
|
|
|
|
(274)
|
|
|
|
|
|
182
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,244)
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,250
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,250)
|
|
|
|
|
|
(7,000)
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
(143,639)
|
|
|
|
|
|
—
|
|
|
|
|
|
(113,690)
|
|
|
|
|
|
123,718
|
|
|
|
|
|
(3,348)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(136,959)
|
|
|
|
Total level 3 liabilities
|
|
|
|
|
(146,791)
|
|
|
|
|
|
—
|
|
|
|
|
|
(113,964)
|
|
|
|
|
|
123,900
|
|
|
|
|
|
(1,098)
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,250)
|
|
|
|
|
|
(147,203)
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
21. Fair value of assets and liabilities (continued)
There were no gains or losses recognised in other comprehensive income with respect to these assets and liabilities.
All transfers into and out of level 3 are recognised as if they have taken place at the beginning of each reporting period. Transfers into level 3 during the year of $210,501,000 (2018: $49,050,000) relate to assets where the underlying asset no longer has a quoted price and becomes subject to the Group’s valuation methodology for level 3 financial instruments as set out in the accounting policies in note 2.
Sensitivity of level 3 valuations
For the vast majority of our legal finance assets, valuation relates to objective events in the litigation process. If there have been no objective events, we typically assess the fair value of our legal finance assets to be equivalent to the cost of the asset in line with our valuation policy and the absence of an objective event impacting valuation assessment. The valuation policy assigns valuation changes in fixed ranges based on these objective events. The policy discounts the impact of the objective events commensurate with the remaining litigation risk, including both the likelihood of a positive outcome and the time required to reach that outcome. Since our legal finance assets are typically relatively short in tenor (two to three years), no additional discounting explicitly for the time value of money is typically applied; rather, the potential impact of timing is encompassed in the applicable value range. In a small number of instances, the Group has the benefit of a secondary sale of a portion of an asset. When that occurs, the market evidence is factored into the valuation process; the more robust the market testing of value is, the more weight that is accorded to the market price. The table below provides a stratification of our capital provision direct and indirect level 3 assets at 31 December 2019 and 2018 into different categories of fair valuation factors (reflecting the objective litigation events) that underlie the current valuation of those assets.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
21. Fair value of assets and liabilities (continued)
At 31 December 2019
Consolidated capital provision level 3 assets
|
|
|
|
Positive Fair Value Adjustments
|
|
|
Negative Fair Value Adjustments
|
|
|
Asset Fair Valuation Factors
(in U.S. dollar thousands)
|
|
|
Total
Carrying
Value
($)
|
|
|
Cost
($)
|
|
|
Aggregate
FV
Adjustment
($)
|
|
|
Weighted
Average(2)
FV
Adjustment(1)
(%)
|
|
|
Maximum
FV
Adjustment(1)
(%)
|
|
|
Minimum
FV
Adjustment(1)
(%)
|
|
|
Total
Carrying
Value
($)
|
|
|
Cost
($)
|
|
|
Aggregate
FV
Adjustment
($)
|
|
|
Weighted
Average(7)
FV
Adjustment(5)
(%)
|
|
|
Maximum
FV
Adjustment(5)
(%)
|
|
|
Minimum
FV
Adjustment(5)
(%)
|
|
|
Market transactions(4)
|
|
|
|
|
773,133
|
|
|
|
|
|
39,190
|
|
|
|
|
|
733,943
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
Ruling or other objective
pre-trial event
|
|
|
|
|
71,592
|
|
|
|
|
|
51,046
|
|
|
|
|
|
20,546
|
|
|
|
|
|
27%
|
|
|
|
|
|
40%
|
|
|
|
|
|
10%
|
|
|
|
|
|
9,897
|
|
|
|
|
|
18,050
|
|
|
|
|
|
(8,153)
|
|
|
|
|
|
(45)%
|
|
|
|
|
|
(100)%
|
|
|
|
|
|
(32)%
|
|
|
|
Trial court judgment or tribunal award
|
|
|
|
|
45,367
|
|
|
|
|
|
26,092
|
|
|
|
|
|
19,275
|
|
|
|
|
|
49%
|
|
|
|
|
|
60%
|
|
|
|
|
|
40%
|
|
|
|
|
|
392
|
|
|
|
|
|
980
|
|
|
|
|
|
(588)
|
|
|
|
|
|
(60)%
|
|
|
|
|
|
(60)%
|
|
|
|
|
|
(60)%
|
|
|
|
Appeal judgment
|
|
|
|
|
21,431
|
|
|
|
|
|
16,242
|
|
|
|
|
|
5,189
|
|
|
|
|
|
20%
|
|
|
|
|
|
20%
|
|
|
|
|
|
20%
|
|
|
|
|
|
3,625
|
|
|
|
|
|
6,000
|
|
|
|
|
|
(2,375)
|
|
|
|
|
|
(40)%
|
|
|
|
|
|
(50)%
|
|
|
|
|
|
(38)%
|
|
|
|
Settlements
|
|
|
|
|
66,156
|
|
|
|
|
|
51,078
|
|
|
|
|
|
15,078
|
|
|
|
|
|
38%
|
|
|
|
|
|
100%
|
|
|
|
|
|
11%
|
|
|
|
|
|
12,263
|
|
|
|
|
|
27,053
|
|
|
|
|
|
(14,790)
|
|
|
|
|
|
(54)%
|
|
|
|
|
|
(70)%
|
|
|
|
|
|
(9)%
|
|
|
|
Fair value equivalent to cost of asset
|
|
|
|
|
586,768
|
|
|
|
|
|
586,768
|
|
|
|
|
|
—
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Portfolios with multiple FV factors(6)
|
|
|
|
|
193,900
|
|
|
|
|
|
161,984
|
|
|
|
|
|
31,916
|
|
|
|
|
|
53%
|
|
|
|
|
|
100%
|
|
|
|
|
|
(100)%
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Fair value equivalent to cost of asset plus accrued interest
|
|
|
|
|
179,147
|
|
|
|
|
|
143,610
|
|
|
|
|
|
35,537
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
13,209
|
|
|
|
|
|
14,826
|
|
|
|
|
|
(1,617)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
Other
|
|
|
|
|
1,619
|
|
|
|
|
|
—
|
|
|
|
|
|
1,619
|
|
|
|
|
|
100%
|
|
|
|
|
|
100%
|
|
|
|
|
|
100%
|
|
|
|
|
|
1,050
|
|
|
|
|
|
19,088
|
|
|
|
|
|
(18,038)
|
|
|
|
|
|
(94)%
|
|
|
|
|
|
(100)%
|
|
|
|
|
|
(64)%
|
|
|
|
Totals:
|
|
|
|
$
|
1,939,113
|
|
|
|
|
$
|
1,076,010
|
|
|
|
|
$
|
863,103
|
|
|
|
|
|
|
|
$
|
40,436
|
|
|
|
|
$
|
85,997
|
|
|
|
|
$
|
(45,561)
|
|
|
|
|
|
|
|
|
Total Capital Provision Level 3 Assets:
|
|
|
Carrying
Value
|
|
|
Cost
|
|
|
Unrealised
Gain
|
|
|
Capital Provision – direct
|
|
|
|
$
|
1,787,193
|
|
|
|
|
$
|
1,003,571
|
|
|
|
|
$
|
783,622
|
|
|
|
Capital Provision – indirect
|
|
|
|
$
|
192,356
|
|
|
|
|
$
|
158,436
|
|
|
|
|
$
|
33,920
|
|
|
|
Total Capital Provision
|
|
|
|
$
|
1,979,549
|
|
|
|
|
$
|
1,162,007
|
|
|
|
|
$
|
817,542
|
|
|
(1)
As percentage of expected recovery above cost.
(2)
Weighted by fair value of asset
(3)
Not valued based on a percentage of expected recovery
(4)
Although market transactions are a significant input into the valuation of these assets, the nature of these market transactions and the influence of other factors on valuation causes these assets to be characterized as Level 3 rather than Levels 1 or 2.
(5)
As percentage of cost
(6)
Portfolios where the underlying cases have multiple FV factors; if a portolio’s cases have only one FV factor, the portfolio is categorised with that factor. FV adjustment statistics for portfolios represent the weighted average, maximum and minimum adjustments for the underlying cases in those portfolios.
(7)
Weighted by cost of asset
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
21. Fair value of assets and liabilities (continued)
At 31 December 2018
Consolidated capital provision level 3 assets
|
|
|
|
Positive Fair Value Adjustments
|
|
|
Negative Fair Value Adjustments
|
|
|
Asset Fair Valuation Factors
(in U.S. dollar thousands)
|
|
|
Total
Carrying
Value
($)
|
|
|
Cost
($)
|
|
|
Aggregate
FV
Adjustment
($)
|
|
|
Weighted
Average(2)
FV
Adjustment(1)
(%)
|
|
|
Maximum
FV
Adjustment(1)
(%)
|
|
|
Minimum
FV
Adjustment(1)
(%)
|
|
|
Total
Carrying
Value
($)
|
|
|
Cost
($)
|
|
|
Aggregate
FV
Adjustment
($)
|
|
|
Weighted
Average(7)
FV
Adjustment(5)
(%)
|
|
|
Maximum
FV
Adjustment(5)
(%)
|
|
|
Minimum
FV
Adjustment(5)
(%)
|
|
|
Market transactions(4)
|
|
|
|
|
678,333
|
|
|
|
|
|
34,055
|
|
|
|
|
|
644,278
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
Ruling or other objective
pre-trial event
|
|
|
|
|
43,564
|
|
|
|
|
|
36,360
|
|
|
|
|
|
7,204
|
|
|
|
|
|
18%
|
|
|
|
|
|
27%
|
|
|
|
|
|
4%
|
|
|
|
|
|
18,169
|
|
|
|
|
|
60,858
|
|
|
|
|
|
(42,689)
|
|
|
|
|
|
(70)%
|
|
|
|
|
|
(100)%
|
|
|
|
|
|
(32)%
|
|
|
|
Trial court judgment or tribunal award
|
|
|
|
|
5,490
|
|
|
|
|
|
3,887
|
|
|
|
|
|
1,603
|
|
|
|
|
|
40%
|
|
|
|
|
|
50%
|
|
|
|
|
|
30%
|
|
|
|
|
|
5,785
|
|
|
|
|
|
23,969
|
|
|
|
|
|
(18,184)
|
|
|
|
|
|
(76)%
|
|
|
|
|
|
(100)%
|
|
|
|
|
|
(50)%
|
|
|
|
Appeal judgment
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,500
|
|
|
|
|
|
6,000
|
|
|
|
|
|
(3,500)
|
|
|
|
|
|
(58)%
|
|
|
|
|
|
(60)%
|
|
|
|
|
|
(50)%
|
|
|
|
Settlements
|
|
|
|
|
34,063
|
|
|
|
|
|
28,110
|
|
|
|
|
|
5,953
|
|
|
|
|
|
31%
|
|
|
|
|
|
40%
|
|
|
|
|
|
11%
|
|
|
|
|
|
3,603
|
|
|
|
|
|
13,273
|
|
|
|
|
|
(9,670)
|
|
|
|
|
|
(73)%
|
|
|
|
|
|
(73)%
|
|
|
|
|
|
(73)%
|
|
|
|
Fair value equivalent to cost of asset
|
|
|
|
|
489,944
|
|
|
|
|
|
489,944
|
|
|
|
|
|
—
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Portfolios with multiple FV factors(6)
|
|
|
|
|
34,879
|
|
|
|
|
|
16,110
|
|
|
|
|
|
18,769
|
|
|
|
|
|
50%
|
|
|
|
|
|
60%
|
|
|
|
|
|
(100)%
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Fair value equivalent to cost of asset plus accrued interest
|
|
|
|
|
108,549
|
|
|
|
|
|
97,136
|
|
|
|
|
|
11,413
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
NA(3)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Other
|
|
|
|
|
5,084
|
|
|
|
|
|
3,280
|
|
|
|
|
|
1,804
|
|
|
|
|
|
37%
|
|
|
|
|
|
100%
|
|
|
|
|
|
15%
|
|
|
|
|
|
4,725
|
|
|
|
|
|
23,439
|
|
|
|
|
|
(18,714)
|
|
|
|
|
|
(80)%
|
|
|
|
|
|
(100)%
|
|
|
|
|
|
(45)%
|
|
|
|
Totals:
|
|
|
|
$
|
1,399,906
|
|
|
|
|
$
|
708,882
|
|
|
|
|
$
|
691,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
34,782
|
|
|
|
|
$
|
127,539
|
|
|
|
|
$
|
(92,757)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Provision Level 3 Assets:
|
|
|
Carrying
Value
|
|
|
Cost
|
|
|
Unrealised
Gain
|
|
|
Capital Provision – direct
|
|
|
|
$
|
1,326,139
|
|
|
|
|
$
|
739,285
|
|
|
|
|
$
|
586,854
|
|
|
|
Capital Provision – indirect
|
|
|
|
$
|
108,549
|
|
|
|
|
$
|
97,136
|
|
|
|
|
$
|
11,413
|
|
|
|
Total Capital Provision
|
|
|
|
$
|
1,434,688
|
|
|
|
|
$
|
836,421
|
|
|
|
|
$
|
598,267
|
|
|
(1)
As percentage of expected recovery above cost.
(2)
Weighted by fair value of asset
(3)
Not valued based on a percentage of expected recovery
(4)
Although market transactions are a significant input into the valuation of these assets, the nature of these market transactions and the influence of other factors on valuation causes these assets to be characterized as Level 3 rather than Levels 1 or 2.
(5)
As percentage of cost
(6)
Portfolios where the underlying cases have multiple FV factors; if a portolio's cases have only one FV factor, the portfolio is categorised with that factor. FV adjustment statistics for portfolios represent the weighted average, maximum and minimum adjustments for the underlying cases in those portfolios.
(7)
Weighted by cost of asset
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
21. Fair value of assets and liabilities (continued)
Following origination, the Group engages in a semi-annual review of each capital provision asset’s fair value. At 31 December 2019, should the value of those instruments have been 10% higher or lower than provided for in the Group’s fair value estimation, while all other variables remained constant, the Group’s income and net assets would have increased and decreased respectively by $172,989,000 (2018: $128,749,000). The impact has been provided on a pre-tax basis on both income and net assets as the Group considers the fluctuation in the Group’s effective tax rate from period to period could indicate changes in sensitivity not driven by the valuation that are difficult to follow and detract from the comparability of this information.
Reasonably possible alternative assumptions
The determination of fair value for capital provision assets, derivative financial liabilities and asset subparticipations involve significant judgements and estimates. Whilst the potential range of outcomes for the assets is wide, the Group’s fair value estimation is its best assessment of the current fair value of each asset. That estimate is inherently subjective, being based largely on an assessment of how individual events have changed the possible outcomes of the asset and their relative probabilities and hence the extent to which the fair value has altered. The aggregate of the fair values selected falls within a wide range of reasonably possible estimates. In the Group’s opinion there is no useful alternative valuation that would better quantify the market risk inherent in the portfolio and there are no inputs or variables to which the values of the assets are correlated.
22. Risk management
Market and asset risk
The Group is exposed to market and asset risk with respect to its cash management assets, capital provision assets, financial liabilities at fair value through profit and loss and derivative financial assets and liabilities. The maximum risk equals the fair value of all such financial instruments.
With respect to the Group’s cash management assets, consisting of corporate bonds and investment funds, market risk is the risk that the fair value of financial instruments will fluctuate due to changes in market variables such as interest rates, credit risk, security and bond prices and foreign exchange rates. At 31 December 2019, should the prices of the investments in corporate bonds and investment funds have been 10% higher or lower while all other variables remained constant, the Group’s income and net assets would have increased and decreased respectively by $3,797,000 (2018: $4,145,000).
With respect to the Group’s financial liabilities at fair value through profit and loss and derivative financial assets the market risk is negligible as the positions are held exclusively as economic hedges against gains and losses arising on offsetting long positions included in the Group’s capital provision assets. The fair value of the Group’s offsetting long positions is approximately $91,493,000 at 31 December 2019 (2018: $112,821,000).
The Group only funds capital provision assets following a due diligence process. However, such assets involve high risk and there can be no assurance of any particular recovery in any individual asset. Certain of the Group’s capital provision assets are comprised of a portfolio of assets thereby mitigating the impact of the outcome of any single asset. While the claims underlying the Group’s capital provision assets are generally diverse, the Group monitors and manages the portfolio for related exposures that finance different clients relative to the same or very similar claims, such that the outcomes on those related exposures are likely to be correlated.
Liquidity risk
The Group is exposed to liquidity risk. The Group’s financing of capital provision assets require funds to meet commitments (see note 30) and for settlement of operating liabilities. The Group’s capital provision
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
22. Risk management (continued)
assets (as described in note 2) typically require significant capital contributions with little or no immediate return and no guarantee of return or repayment. In order to manage liquidity risk the Group finances assets with a range of anticipated lives and holds cash management assets which can be readily realised to meet those liabilities and commitments.
Cash management assets include listed fixed income instruments and investment funds that can be redeemed on short notice or can be sold on an active trading market.
In 2014, 2016, 2017 and 2018, the total issues of $699 million in retail bonds raised sufficient extra capital to help mitigate liquidity risk. Interest payments on the bonds will total approximately $211 million over the remaining three-year, five-year, six-year and seven- year periods until maturity in August 2022, October 2024, August 2025 and December 2026, respectively, at which point the principal amounts shall be repaid.
The tables below summarise the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.
Liabilities
|
31 December 2019
|
|
|
Less than
3 months
|
|
|
3 to 6
months
|
|
|
6 to 12
months
|
|
|
1 to 5
years
|
|
|
Greater than
5 years
|
|
|
No
contractual
maturity date
|
|
|
Total
undiscounted
cash outflows
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
91,493
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
91,493
|
|
|
|
Due to brokers
|
|
|
|
|
51,401
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
51,401
|
|
|
|
Loan interest payable
|
|
|
|
|
9,376
|
|
|
|
|
|
9,825
|
|
|
|
|
|
19,201
|
|
|
|
|
|
138,155
|
|
|
|
|
|
34,143
|
|
|
|
|
|
—
|
|
|
|
|
|
210,700
|
|
|
|
Other liabilities
|
|
|
|
|
28,072
|
|
|
|
|
|
791
|
|
|
|
|
|
1,587
|
|
|
|
|
|
12,455
|
|
|
|
|
|
10,029
|
|
|
|
|
|
—
|
|
|
|
|
|
52,934
|
|
|
|
Loan capital
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
250,990
|
|
|
|
|
|
411,175
|
|
|
|
|
|
—
|
|
|
|
|
|
662,165
|
|
|
|
Capital provision asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subparticipations
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
13,944
|
|
|
|
|
|
13,944
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
235,720
|
|
|
|
|
|
235,720
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,662
|
|
|
|
|
|
9,662
|
|
|
|
|
|
|
|
|
180,342
|
|
|
|
|
|
10,616
|
|
|
|
|
|
20,788
|
|
|
|
|
|
401,600
|
|
|
|
|
|
455,347
|
|
|
|
|
|
259,326
|
|
|
|
|
|
1,328,019
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
22. Risk management (continued)
|
31 December 2018
|
|
|
Less than
3 months
|
|
|
3 to 6
months
|
|
|
6 to 12
months
|
|
|
1 to 5
years
|
|
|
Greater than
5 years
|
|
|
No
contractual
maturity date
|
|
|
Total
undiscounted
cash outflows
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
112,821
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
112,821
|
|
|
|
Due to brokers
|
|
|
|
|
12,667
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
12,667
|
|
|
|
Loan interest payable
|
|
|
|
|
9,247
|
|
|
|
|
|
9,497
|
|
|
|
|
|
18,744
|
|
|
|
|
|
142,485
|
|
|
|
|
|
63,390
|
|
|
|
|
|
—
|
|
|
|
|
|
243,363
|
|
|
|
Other liabilities
|
|
|
|
|
31,046
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31,046
|
|
|
|
Loan capital
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
114,921
|
|
|
|
|
|
531,148
|
|
|
|
|
|
—
|
|
|
|
|
|
646,069
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
|
|
7,000
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,244
|
|
|
|
|
|
3,244
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
136,959
|
|
|
|
|
|
136,959
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,099
|
|
|
|
|
|
4,099
|
|
|
|
|
|
|
|
|
165,781
|
|
|
|
|
|
9,497
|
|
|
|
|
|
18,744
|
|
|
|
|
|
257,406
|
|
|
|
|
|
594,538
|
|
|
|
|
|
151,302
|
|
|
|
|
|
1,197,268
|
|
|
The tables below present an analysis of the Group’s assets and liabilities split between a current and non-current classification.
|
|
|
|
31 December 2019
|
|
|
31 December 2018
|
|
|
|
|
|
Current
|
|
|
Non-current
|
|
|
Total
|
|
|
Current
|
|
|
Non-current
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
186,621
|
|
|
|
|
|
—
|
|
|
|
|
|
186,621
|
|
|
|
|
|
265,551
|
|
|
|
|
|
—
|
|
|
|
|
|
265,551
|
|
|
|
Cash management assets
|
|
|
|
|
37,966
|
|
|
|
|
|
—
|
|
|
|
|
|
37,966
|
|
|
|
|
|
41,449
|
|
|
|
|
|
—
|
|
|
|
|
|
41,449
|
|
|
|
Due from brokers
|
|
|
|
|
95,226
|
|
|
|
|
|
—
|
|
|
|
|
|
95,226
|
|
|
|
|
|
129,911
|
|
|
|
|
|
—
|
|
|
|
|
|
129,911
|
|
|
|
Other assets
|
|
|
|
|
9,207
|
|
|
|
|
|
4,056
|
|
|
|
|
|
13,263
|
|
|
|
|
|
14,813
|
|
|
|
|
|
1,500
|
|
|
|
|
|
16,313
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
50,608
|
|
|
|
|
|
3,750
|
|
|
|
|
|
54,358
|
|
|
|
|
|
34,026
|
|
|
|
|
|
3,083
|
|
|
|
|
|
37,109
|
|
|
|
Capital provision assets
|
|
|
|
|
—
|
|
|
|
|
|
2,045,329
|
|
|
|
|
|
2,045,329
|
|
|
|
|
|
—
|
|
|
|
|
|
1,641,035
|
|
|
|
|
|
1,641,035
|
|
|
|
Derivative financial asset
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
Equity securities
|
|
|
|
|
31,367
|
|
|
|
|
|
29
|
|
|
|
|
|
31,396
|
|
|
|
|
|
—
|
|
|
|
|
|
582
|
|
|
|
|
|
582
|
|
|
|
Tangible fixed assets
|
|
|
|
|
—
|
|
|
|
|
|
20,184
|
|
|
|
|
|
20,184
|
|
|
|
|
|
—
|
|
|
|
|
|
1,866
|
|
|
|
|
|
1,866
|
|
|
|
Intangible asset
|
|
|
|
|
—
|
|
|
|
|
|
8,703
|
|
|
|
|
|
8,703
|
|
|
|
|
|
—
|
|
|
|
|
|
18,198
|
|
|
|
|
|
18,198
|
|
|
|
Goodwill
|
|
|
|
|
—
|
|
|
|
|
|
133,999
|
|
|
|
|
|
133,999
|
|
|
|
|
|
—
|
|
|
|
|
|
133,966
|
|
|
|
|
|
133,966
|
|
|
|
Deferred tax asset
|
|
|
|
|
—
|
|
|
|
|
|
24,939
|
|
|
|
|
|
24,939
|
|
|
|
|
|
—
|
|
|
|
|
|
28,848
|
|
|
|
|
|
28,848
|
|
|
|
|
|
|
|
|
410,995
|
|
|
|
|
|
2,240,989
|
|
|
|
|
|
2,651,984
|
|
|
|
|
|
489,904
|
|
|
|
|
|
1,829,078
|
|
|
|
|
|
2,318,982
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
22. Risk management (continued)
|
|
|
|
31 December 2019
|
|
|
31 December 2018
|
|
|
|
|
|
Current
|
|
|
Non-current
|
|
|
Total
|
|
|
Current
|
|
|
Non-current
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
91,493
|
|
|
|
|
|
—
|
|
|
|
|
|
91,493
|
|
|
|
|
|
112,821
|
|
|
|
|
|
—
|
|
|
|
|
|
112,821
|
|
|
|
Due to brokers
|
|
|
|
|
51,401
|
|
|
|
|
|
—
|
|
|
|
|
|
51,401
|
|
|
|
|
|
12,667
|
|
|
|
|
|
—
|
|
|
|
|
|
12,667
|
|
|
|
Loan interest payable
|
|
|
|
|
9,462
|
|
|
|
|
|
—
|
|
|
|
|
|
9,462
|
|
|
|
|
|
9,327
|
|
|
|
|
|
—
|
|
|
|
|
|
9,327
|
|
|
|
Other liabilities
|
|
|
|
|
29,324
|
|
|
|
|
|
22,106
|
|
|
|
|
|
51,430
|
|
|
|
|
|
31,046
|
|
|
|
|
|
—
|
|
|
|
|
|
31,046
|
|
|
|
Loan capital
|
|
|
|
|
—
|
|
|
|
|
|
655,880
|
|
|
|
|
|
655,880
|
|
|
|
|
|
—
|
|
|
|
|
|
638,665
|
|
|
|
|
|
638,665
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
—
|
|
|
|
|
|
13,944
|
|
|
|
|
|
13,944
|
|
|
|
|
|
—
|
|
|
|
|
|
3,244
|
|
|
|
|
|
3,244
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
235,720
|
|
|
|
|
|
235,720
|
|
|
|
|
|
—
|
|
|
|
|
|
136,959
|
|
|
|
|
|
136,959
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
—
|
|
|
|
|
|
9,662
|
|
|
|
|
|
9,662
|
|
|
|
|
|
—
|
|
|
|
|
|
4,099
|
|
|
|
|
|
4,099
|
|
|
|
|
|
|
|
|
181,680
|
|
|
|
|
|
937,312
|
|
|
|
|
|
1,118,992
|
|
|
|
|
|
172,861
|
|
|
|
|
|
782,967
|
|
|
|
|
|
955,828
|
|
|
Credit risk
The Group is exposed to credit risk in various asset structures (see note 2), most of which involve financing sums recoverable only out of successful capital provision assets with a concomitant risk of loss of invested cost. On becoming contractually entitled to proceeds, depending on the structure of the particular asset, the Group could be a creditor of, and subject to direct or indirect credit risk from, a claimant, a defendant, both or other parties. Moreover, the Group may be indirectly subject to credit risk to the extent a defendant does not pay a claimant immediately notwithstanding successful adjudication of a claim in the claimant’s favour. The Group’s credit risk is uncertain given that its entitlement pursuant to its assets is generally not established until a successful resolution of claims and the Group’s potential credit risk is mitigated by the diversity of its counterparties and indirect creditors.
The Group is also exposed to credit risk in respect of the cash management assets, due from broker and cash and cash equivalents. The credit risk of the due from broker and cash and cash equivalents is mitigated as all cash is placed with reputable banks with a sound credit rating (A-2 or higher by S&P; P-2 or higher by Moody’s). Cash management assets are held in a listed fund investing in senior short duration floating rate corporate debt and investment grade corporate bonds.
The Group is also exposed to credit risk from opponents in litigation insurance. The underwriting process includes an assessment of counterparty credit risk and there is a large diversification of counterparties.
The maximum credit risk exposure represented by cash, cash equivalents, due from broker and capital provision assets is as stated on the consolidated statement of financial position.
The Group is exposed to credit risk on financial assets held at amortised cost including amounts due from settlement of capital provision assets and receivables. The maximum credit exposure for amounts due from settlement of capital provision assets and receivables is the carrying value at 31 December 2019 of $62,690,000 (2018: $51,247,000). The Group applies the simplified approach to recognise impairment on settlement and receivable balances based on the lifetime expected credit loss. The Group reviews the lifetime expected credit loss based on historical collection performance, the specific provisions of any settlement
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
22. Risk management (continued)
agreement and a forward-looking assessment of macro-economic factors. Based on this review, the Group has not identified any material expected credit loss relating to the financial assets held at amortised cost except for as set out in note 6, the Group recognised $4,083,000 of impairment against two specific financial assets during the year ended 31 December 2019 (2018: nil).
Financial assets are generally considered to be in default when amounts are more than 90 days past due or if sufficient indicators exist that the debtor is unlikely to pay. Amounts are written off as uncollectable when all reasonably collectable amounts have been recovered and following the completion or cessation of enforcement activity.
Currency risk
The Group holds assets denominated in currencies other than US dollars, the functional currency of the Company, including Sterling, the functional currency of Burford UK. Further, the Group issued Sterling loan capital during 2014, 2016, and 2017. It is therefore exposed to currency risk, as values of the assets and liabilities denominated in other currencies will fluctuate due to changes in exchange rates. The Group may use forward exchange contracts from time to time to mitigate currency risk.
At 31 December 2019, the Group’s net exposure to currency risk could be analysed as follows:
|
|
|
|
Capital
provision
assets
|
|
|
Other Net
Assets/
(Liabilities)
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
US dollar
|
|
|
|
|
1,837,750
|
|
|
|
|
|
(31,425)
|
|
|
|
Sterling
|
|
|
|
|
65,290
|
|
|
|
|
|
(480,912)
|
|
|
|
Euro
|
|
|
|
|
139,418
|
|
|
|
|
|
—
|
|
|
|
Australian dollar
|
|
|
|
|
2,689
|
|
|
|
|
|
—
|
|
|
|
Swiss Franc
|
|
|
|
|
182
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
2,045,329
|
|
|
|
|
|
(512,337)
|
|
|
At 31 December 2018, the Group’s net exposure to currency risk could be analysed as follows:
|
|
|
|
Capital
provision
assets
|
|
|
Other Net
Assets/
(Liabilities)
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
US dollar
|
|
|
|
|
1,488,582
|
|
|
|
|
|
160,848
|
|
|
|
Sterling
|
|
|
|
|
41,895
|
|
|
|
|
|
(438,693)
|
|
|
|
Euro
|
|
|
|
|
107,888
|
|
|
|
|
|
(36)
|
|
|
|
Australian dollar
|
|
|
|
|
2,670
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1,641,035
|
|
|
|
|
|
(277,881)
|
|
|
At 31 December 2019, should the Sterling, Euro, Australian dollar and Swiss Franc have strengthened or weakened by 10% against the US dollar and all other variables held constant, the Group’s net profit and net assets would have (decreased)/increased and increased/(decreased) respectively as noted in the table below:
|
Increase or (decrease) in net profit and net assets
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Sterling
|
|
|
|
|
(41,562)
|
|
|
|
|
|
(39,680)
|
|
|
|
Euro
|
|
|
|
|
13,942
|
|
|
|
|
|
10,785
|
|
|
|
Australian dollar
|
|
|
|
|
269
|
|
|
|
|
|
267
|
|
|
|
Swiss Franc
|
|
|
|
|
18
|
|
|
|
|
|
—
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
22. Risk management (continued)
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to market risk for changes in floating interest rates relates primarily to the Group’s cash, certain cash management assets and capital provision assets. All cash bears interest at floating rates. There are certain capital provision assets, due from settlement of assets and cash management assets that earn interest based on fixed rates; however, those assets do not have interest rate risk as they are not exposed to changes in market interest rates. The Group’s loan capital incurs interest at a fixed rate and so is not exposed to changes in market interest rates. The following table sets out the Group’s exposure to interest rate risk.
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Non interest-bearing
|
|
|
|
|
1,666,761
|
|
|
|
|
|
1,430,085
|
|
|
|
Interest-bearing – floating rate
|
|
|
|
|
374,904
|
|
|
|
|
|
509,661
|
|
|
|
Interest-bearing – fixed rate
|
|
|
|
|
(508,673)
|
|
|
|
|
|
(576,592)
|
|
|
|
Total net assets
|
|
|
|
|
1,532,992
|
|
|
|
|
|
1,363,154
|
|
|
The interest-bearing floating rate assets and liabilities are denominated in both US Dollars and Sterling. If interest rates increased/decreased by 25 basis points while all other variables remained constant, the profit for the year and net assets would increase/decrease by $937,000 (2018: $1,274,000). For fixed rate assets and liabilities, it is estimated that there would be no material profit or net assets impact. Fixed rate liabilities include the loan capital as disclosed in note 17.
The maturity profile of interest-bearing assets and liabilities is:
|
Maturity period at 31 December 2019
|
|
|
Floating
|
|
|
Fixed
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 3 months
|
|
|
|
|
310,646
|
|
|
|
|
|
955
|
|
|
|
|
|
311,601
|
|
|
|
3 to 6 months
|
|
|
|
|
—
|
|
|
|
|
|
802
|
|
|
|
|
|
802
|
|
|
|
6 to 12 months
|
|
|
|
|
—
|
|
|
|
|
|
654
|
|
|
|
|
|
654
|
|
|
|
1 to 2 years
|
|
|
|
|
—
|
|
|
|
|
|
2,140
|
|
|
|
|
|
2,140
|
|
|
|
Greater than 2 years
|
|
|
|
|
64,258
|
|
|
|
|
|
148,941
|
|
|
|
|
|
213,199
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 2 years
|
|
|
|
|
—
|
|
|
|
|
|
(662,165)
|
|
|
|
|
|
(662,165)
|
|
|
|
Net assets/(liabilities)
|
|
|
|
|
374,904
|
|
|
|
|
|
(508,673)
|
|
|
|
|
|
(133,769)
|
|
|
|
|
|
Maturity period at 31 December 2018
|
|
|
Floating
|
|
|
Fixed
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 3 months
|
|
|
|
|
415,026
|
|
|
|
|
|
762
|
|
|
|
|
|
415,788
|
|
|
|
3 to 6 months
|
|
|
|
|
—
|
|
|
|
|
|
1,453
|
|
|
|
|
|
1,453
|
|
|
|
6 to 12 months
|
|
|
|
|
—
|
|
|
|
|
|
2,522
|
|
|
|
|
|
2,522
|
|
|
|
1 to 2 years
|
|
|
|
|
—
|
|
|
|
|
|
2,193
|
|
|
|
|
|
2,193
|
|
|
|
Greater than 2 years
|
|
|
|
|
94,635
|
|
|
|
|
|
62,547
|
|
|
|
|
|
157,182
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 2 years
|
|
|
|
|
—
|
|
|
|
|
|
(646,069)
|
|
|
|
|
|
(646,069)
|
|
|
|
Net assets/(liabilities)
|
|
|
|
|
509,661
|
|
|
|
|
|
(576,592)
|
|
|
|
|
|
(66,931)
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
22. Risk management (continued)
Management of capital
The Group’s approach to capital management is intended to ensure adequate liquidity to meet its funding commitments and ongoing expenses while also ensuring that adequate resources are available to finance new assets as opportunities arise.
The Group’s assets generate a significant amount of cash proceeds in a typical period as assets are realised into due from settlement receivables, which are in turn, resolved into cash. The Group uses the cash from these realisations as well as fee income as its primary sources of liquidity for funding assets and expenses. Because the timing of cash realisations from its capital provision assets is uncertain, the Group normally maintains a substantial balance of cash and cash management assets to provide liquidity during periods when cash realisations are less than funding and expense needs.
To the degree that the Group intends to grow its capital provision assets portfolio, it requires external financing beyond its cash realisations from assets. Over the past several years, the Group has grown its portfolio beyond its cash realisations. The Group has financed that growth through:
•
Third party fund vehicles, which the Group manages, including the Burford Opportunity Fund and BOF-C raised in 2018 and Burford Alternative Investment Fund raised in 2019.
•
Loan capital in the form of bond issuances totally approximately $699 million issued in 2014, 2016, 2017 and 2018.
•
Share issuance of approximately $245 million in 2018.
The Group manages its balance sheet with relatively low levels of leverage. Its debt issues contain one significant financial covenant, which is a leverage ratio requirement that the Group maintain a consolidated level of net debt (debt less cash) less than 0.5 times the level of tangible assets (total assets less intangibles). At December 31, 2019, the leverage ratio on this basis was 17% (2018: 15%), significantly lower than required.
In planning its bond issuances, the Group has purposely constructed a set of laddered maturities with an overall weighted average maturity well in excess of the expected weighted average life of its legal finance assets. It has also sized these issues so that any single year’s maturity amount is significantly less than the historical annual rate of legal finance asset realisations, such that the Group is expected to have more than sufficient liquidity to redeem these bonds should it choose not to refinance them.
The Group expects from time to time to issue additional debt, depending on its liquidity needs, capital deployment prospects and market conditions.
23. Investment in consolidated entities
Burford may invest in entities that it manages and may be deemed to control such entities, which results in their consolidation on a line-by-line basis as detailed below.
Line-by-line consolidation
The following tables reflect the line-by-line impact of consolidating the results of the entities with the stand alone results for Burford (i.e., if Burford-only accounted for its investment in the entities) to arrive at the totals reported in the consolidated statement of comprehensive income and consolidated statement of financial position.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
23. Investment in consolidated entities (continued)
Consolidated Statement of Comprehensive Income
|
31 December 2019
|
|
|
Burford-only
|
|
|
Entities
|
|
|
Adjustments
and
eliminations*
|
|
|
Consolidated
total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Capital provision income
|
|
|
|
|
316,780
|
|
|
|
|
|
60,183
|
|
|
|
|
|
(25,135)
|
|
|
|
|
|
351,828
|
|
|
|
Asset management income
|
|
|
|
|
26,130
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,970)
|
|
|
|
|
|
15,160
|
|
|
|
Insurance income
|
|
|
|
|
3,545
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,545
|
|
|
|
Services income
|
|
|
|
|
2,133
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,133
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
6,070
|
|
|
|
|
|
633
|
|
|
|
|
|
—
|
|
|
|
|
|
6,703
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
2,052
|
|
|
|
|
|
(228)
|
|
|
|
|
|
168
|
|
|
|
|
|
1,992
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(15,318)
|
|
|
|
|
|
(15,318)
|
|
|
|
Total income
|
|
|
|
|
356,710
|
|
|
|
|
|
60,588
|
|
|
|
|
|
(51,255)
|
|
|
|
|
|
366,043
|
|
|
|
Operating expenses
|
|
|
|
|
(82,069)
|
|
|
|
|
|
(19,708)
|
|
|
|
|
|
10,375
|
|
|
|
|
|
(91,402)
|
|
|
|
Amortisation of intangible asset
|
|
|
|
|
(9,495)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,495)
|
|
|
|
Operating profit
|
|
|
|
|
265,146
|
|
|
|
|
|
40,880
|
|
|
|
|
|
(40,880)
|
|
|
|
|
|
265,146
|
|
|
|
Finance costs
|
|
|
|
|
(39,622)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(39,622)
|
|
|
|
Profit before tax
|
|
|
|
|
225,524
|
|
|
|
|
|
40,880
|
|
|
|
|
|
(40,880)
|
|
|
|
|
|
225,524
|
|
|
|
Taxation
|
|
|
|
|
(13,417)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(13,417)
|
|
|
|
Profit after tax
|
|
|
|
|
212,107
|
|
|
|
|
|
40,880
|
|
|
|
|
|
(40,880)
|
|
|
|
|
|
212,107
|
|
|
|
Other comprehensive income
|
|
|
|
|
(17,525)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(17,525)
|
|
|
|
Total comprehensive income
|
|
|
|
|
194,582
|
|
|
|
|
|
40,880
|
|
|
|
|
|
(40,880)
|
|
|
|
|
|
194,582
|
|
|
*
The adjustments and eliminations are required due to the services provided by the Group to the consolidated entities as investment manager and the Group’s investment as a limited partner in consolidated entities. Accordingly, these adjustments and eliminations do not have an effect on the net income or total net assets of Burford.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
23. Investment in consolidated entities (continued)
|
31 December 2018
|
|
|
Burford-only
|
|
|
Entities
|
|
|
Adjustments
and
eliminations*
|
|
|
Consolidated
total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Capital provision income
|
|
|
|
|
392,525
|
|
|
|
|
|
22,203
|
|
|
|
|
|
(10,498)
|
|
|
|
|
|
404,230
|
|
|
|
Asset management income
|
|
|
|
|
15,799
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,108)
|
|
|
|
|
|
11,691
|
|
|
|
Insurance income
|
|
|
|
|
10,406
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
10,406
|
|
|
|
Services income
|
|
|
|
|
1,650
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,650
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
1,467
|
|
|
|
|
|
954
|
|
|
|
|
|
(620)
|
|
|
|
|
|
1,801
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
(1,473)
|
|
|
|
|
|
20
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,453)
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,348)
|
|
|
|
|
|
(3,348)
|
|
|
|
Total income
|
|
|
|
|
420,374
|
|
|
|
|
|
23,177
|
|
|
|
|
|
(18,574)
|
|
|
|
|
|
424,977
|
|
|
|
Operating expenses
|
|
|
|
|
(67,228)
|
|
|
|
|
|
(8,494)
|
|
|
|
|
|
3,891
|
|
|
|
|
|
(71,831)
|
|
|
|
Amortisation of intangible asset
|
|
|
|
|
(9,494)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,494)
|
|
|
|
Operating profit
|
|
|
|
|
343,652
|
|
|
|
|
|
14,683
|
|
|
|
|
|
(14,683)
|
|
|
|
|
|
343,652
|
|
|
|
Finance costs
|
|
|
|
|
(38,538)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(38,538)
|
|
|
|
Profit before tax
|
|
|
|
|
305,114
|
|
|
|
|
|
14,683
|
|
|
|
|
|
(14,683)
|
|
|
|
|
|
305,114
|
|
|
|
Taxation credit
|
|
|
|
|
12,463
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
12,463
|
|
|
|
Profit after tax
|
|
|
|
|
317,577
|
|
|
|
|
|
14,683
|
|
|
|
|
|
(14,683)
|
|
|
|
|
|
317,577
|
|
|
|
Other comprehensive income
|
|
|
|
|
24,701
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
24,701
|
|
|
|
Total comprehensive income
|
|
|
|
|
342,278
|
|
|
|
|
|
14,683
|
|
|
|
|
|
(14,683)
|
|
|
|
|
|
342,278
|
|
|
*
The adjustments and eliminations are required due to the services provided by the Group to the consolidated entities as investment manager and the Group’s investment as a limited partner in consolidated entities. Accordingly, these adjustments and eliminations do not have an effect on the net income or total net assets of Burford.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
23. Investment in consolidated entities (continued)
|
31 December 2017
|
|
|
Burford-only
|
|
|
Entities
|
|
|
Adjustments
and
eliminations*
|
|
|
Consolidated
total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Capital provision income
|
|
|
|
|
312,412
|
|
|
|
|
|
6,405
|
|
|
|
|
|
(3,537)
|
|
|
|
|
|
315,280
|
|
|
|
Asset management income
|
|
|
|
|
15,626
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,168)
|
|
|
|
|
|
14,458
|
|
|
|
Insurance income
|
|
|
|
|
7,613
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,613
|
|
|
|
Services income
|
|
|
|
|
1,837
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,837
|
|
|
|
Cash management income and bank interest
|
|
|
|
|
2,199
|
|
|
|
|
|
718
|
|
|
|
|
|
(267)
|
|
|
|
|
|
2,650
|
|
|
|
Foreign exchange gains/(losses)
|
|
|
|
|
1,554
|
|
|
|
|
|
85
|
|
|
|
|
|
—
|
|
|
|
|
|
1,639
|
|
|
|
Third-party share of gains relating to interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(863)
|
|
|
|
|
|
(863)
|
|
|
|
Total income
|
|
|
|
|
341,241
|
|
|
|
|
|
7,208
|
|
|
|
|
|
(5,835)
|
|
|
|
|
|
342,614
|
|
|
|
Operating expenses
|
|
|
|
|
(56,107)
|
|
|
|
|
|
(2,278)
|
|
|
|
|
|
906
|
|
|
|
|
|
(57,479)
|
|
|
|
Amortisation of intangible asset
|
|
|
|
|
(11,702)
|
|
|
|
|
|
—
|
|
|
|
|
|
(1)
|
|
|
|
|
|
(11,703)
|
|
|
|
Operating profit
|
|
|
|
|
273,432
|
|
|
|
|
|
4,930
|
|
|
|
|
|
(4,930)
|
|
|
|
|
|
273,432
|
|
|
|
Finance costs
|
|
|
|
|
(24,251)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(24,251)
|
|
|
|
Profit before tax
|
|
|
|
|
249,181
|
|
|
|
|
|
4,930
|
|
|
|
|
|
(4,930)
|
|
|
|
|
|
249,181
|
|
|
|
Taxation credit
|
|
|
|
|
123
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
123
|
|
|
|
Profit after tax
|
|
|
|
|
249,304
|
|
|
|
|
|
4,930
|
|
|
|
|
|
(4,930)
|
|
|
|
|
|
249,304
|
|
|
|
Other comprehensive income
|
|
|
|
|
(28,206)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,206)
|
|
|
|
Total comprehensive income
|
|
|
|
|
221,098
|
|
|
|
|
|
4,930
|
|
|
|
|
|
(4,930)
|
|
|
|
|
|
221,098
|
|
|
*
The adjustments and eliminations are required due to the services provided by the Group to the consolidated entities as investment manager and the Group’s investment as a limited partner in consolidated entities. Accordingly, these adjustments and eliminations do not have an effect on the net income or total net assets of Burford.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
23. Investment in consolidated entities (continued)
Consolidated Statement of Financial Position
|
31 December 2019
|
|
|
Burford-only
|
|
|
Entities
|
|
|
Adjustments
and
eliminations*
|
|
|
Consolidated
total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
168,463
|
|
|
|
|
|
18,158
|
|
|
|
|
|
—
|
|
|
|
|
|
186,621
|
|
|
|
Cash management assets
|
|
|
|
|
37,966
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
37,966
|
|
|
|
Due from brokers
|
|
|
|
|
—
|
|
|
|
|
|
95,226
|
|
|
|
|
|
—
|
|
|
|
|
|
95,226
|
|
|
|
Other assets
|
|
|
|
|
19,765
|
|
|
|
|
|
6,615
|
|
|
|
|
|
(13,117)
|
|
|
|
|
|
13,263
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
18,989
|
|
|
|
|
|
43,395
|
|
|
|
|
|
(8,026)
|
|
|
|
|
|
54,358
|
|
|
|
Capital provision assets
|
|
|
|
|
1,833,990
|
|
|
|
|
|
496,463
|
|
|
|
|
|
(285,124)
|
|
|
|
|
|
2,045,329
|
|
|
|
Equity securities
|
|
|
|
|
29
|
|
|
|
|
|
31,367
|
|
|
|
|
|
—
|
|
|
|
|
|
31,396
|
|
|
|
Tangible fixed assets
|
|
|
|
|
20,184
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
20,184
|
|
|
|
Intangible asset
|
|
|
|
|
8,703
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,703
|
|
|
|
Goodwill
|
|
|
|
|
133,999
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133,999
|
|
|
|
Deferred tax asset
|
|
|
|
|
24,939
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
24,939
|
|
|
|
Total assets
|
|
|
|
|
2,267,027
|
|
|
|
|
|
691,224
|
|
|
|
|
|
(306,267)
|
|
|
|
|
|
2,651,984
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
—
|
|
|
|
|
|
91,493
|
|
|
|
|
|
—
|
|
|
|
|
|
91,493
|
|
|
|
Due to brokers
|
|
|
|
|
—
|
|
|
|
|
|
51,401
|
|
|
|
|
|
—
|
|
|
|
|
|
51,401
|
|
|
|
Loan interest payable
|
|
|
|
|
9,462
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,462
|
|
|
|
Other liabilities
|
|
|
|
|
50,995
|
|
|
|
|
|
16,421
|
|
|
|
|
|
(15,986)
|
|
|
|
|
|
51,430
|
|
|
|
Loan capital
|
|
|
|
|
655,880
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
655,880
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
8,036
|
|
|
|
|
|
14,266
|
|
|
|
|
|
(8,358)
|
|
|
|
|
|
13,944
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
235,720
|
|
|
|
|
|
235,720
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
9,662
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,662
|
|
|
|
Total liabilities
|
|
|
|
|
734,035
|
|
|
|
|
|
173,581
|
|
|
|
|
|
211,376
|
|
|
|
|
|
1,118,992
|
|
|
|
Total net assets
|
|
|
|
|
1,532,992
|
|
|
|
|
|
517,643
|
|
|
|
|
|
(517,643)
|
|
|
|
|
|
1,532,992
|
|
|
*
The adjustments and eliminations are required due to the services provided by the Group to the consolidated entities as investment manager and the Group’s investment as a limited partner in consolidated entities. Accordingly, these adjustments and eliminations do not have an effect on the net income or total net assets of Burford.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
23. Investment in consolidated entities (continued)
|
31 December 2018
|
|
|
Burford-only
|
|
|
Entities
|
|
|
Adjustments
and
eliminations*
|
|
|
Consolidated
total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
235,977
|
|
|
|
|
|
29,574
|
|
|
|
|
|
—
|
|
|
|
|
|
265,551
|
|
|
|
Cash management assets
|
|
|
|
|
41,449
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
41,449
|
|
|
|
Due from brokers
|
|
|
|
|
—
|
|
|
|
|
|
129,911
|
|
|
|
|
|
—
|
|
|
|
|
|
129,911
|
|
|
|
Other assets
|
|
|
|
|
36,706
|
|
|
|
|
|
273
|
|
|
|
|
|
(20,666)
|
|
|
|
|
|
16,313
|
|
|
|
Due from settlement of capital provision assets
|
|
|
|
|
37,109
|
|
|
|
|
|
35
|
|
|
|
|
|
(35)
|
|
|
|
|
|
37,109
|
|
|
|
Capital provision assets
|
|
|
|
|
1,521,591
|
|
|
|
|
|
416,380
|
|
|
|
|
|
(296,936)
|
|
|
|
|
|
1,641,035
|
|
|
|
Derivative financial asset
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
|
|
—
|
|
|
|
|
|
4,154
|
|
|
|
Equity securities
|
|
|
|
|
582
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
582
|
|
|
|
Tangible fixed assets
|
|
|
|
|
1,866
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,866
|
|
|
|
Intangible asset
|
|
|
|
|
18,198
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,198
|
|
|
|
Goodwill
|
|
|
|
|
133,966
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133,966
|
|
|
|
Deferred tax asset
|
|
|
|
|
28,848
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
28,848
|
|
|
|
Total assets
|
|
|
|
|
2,056,292
|
|
|
|
|
|
580,327
|
|
|
|
|
|
(317,637)
|
|
|
|
|
|
2,318,982
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
—
|
|
|
|
|
|
112,821
|
|
|
|
|
|
—
|
|
|
|
|
|
112,821
|
|
|
|
Due to brokers
|
|
|
|
|
—
|
|
|
|
|
|
12,667
|
|
|
|
|
|
—
|
|
|
|
|
|
12,667
|
|
|
|
Loan interest payable
|
|
|
|
|
9,327
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,327
|
|
|
|
Other liabilities
|
|
|
|
|
30,632
|
|
|
|
|
|
9,957
|
|
|
|
|
|
(9,543)
|
|
|
|
|
|
31,046
|
|
|
|
Loan capital
|
|
|
|
|
638,665
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
638,665
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
7,000
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,000
|
|
|
|
Capital provision asset subparticipations
|
|
|
|
|
3,415
|
|
|
|
|
|
6,948
|
|
|
|
|
|
(7,119)
|
|
|
|
|
|
3,244
|
|
|
|
Third-party interests in consolidated entities
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
136,959
|
|
|
|
|
|
136,959
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
4,099
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,099
|
|
|
|
Total liabilities
|
|
|
|
|
693,138
|
|
|
|
|
|
142,393
|
|
|
|
|
|
120,297
|
|
|
|
|
|
955,828
|
|
|
|
Total net assets
|
|
|
|
|
1,363,154
|
|
|
|
|
|
437,934
|
|
|
|
|
|
(437,934)
|
|
|
|
|
|
1,363,154
|
|
|
*
The adjustments and eliminations are required due to the services provided by the Group to the consolidated entities as investment manager and the Group’s investment as a limited partner in consolidated entities. Accordingly, these adjustments and eliminations do not have an effect on the net income or total net assets of Burford.
24. Structured entities
A structured entity is an entity in which voting or similar rights are not the dominant factor in establishing control, for example where contractual arrangements are the dominant factor in affecting an investor’s returns. Structured entities are generally created to achieve a narrow and well-defined objective with restrictions on their permitted activities.
The key considerations in assessing whether the Group controls a structured entity are set out in the Group’s principal accounting policies in note 2.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
24. Structured entities (continued)
Consolidated structured entities
The Group holds investments in certain funds where it also acts as investment adviser. The total investment in these funds was $201,795,000 as at 31 December 2019 (2018: $242,874,000). The Group provides revolving credit facilities to certain investment funds to bridge capital calls when needed. These facilities are entirely discretionary in that the Group is not obligated to provide funding under them. The balance outstanding on the revolving credit facilities as at 31 December 2019 was $nil (2018: $4,744,000).
As at 31 December 2019 $544,909,000 (2018: $478,827,000) of the total assets included in the Group’s balance sheet relates to the consolidated investment funds, held to pay principal and return to the holders of interests in those funds. The Group cannot access the assets except for the investment made by the Group in these funds.
Unconsolidated structured entities
The Group’s maximum exposure to loss from unconsolidated structured entities is the sum total of any capital provision asset held, fee receivables, accrued income and loans to those entities, and is $23,834,000 as at 31 December 2019 (2018: $26,808,000). The Group’s interests in, and exposure to, unconsolidated structured entities are set out below.
|
As at 31 December 2019
|
|
|
Investment
funds
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Capital provision assets
|
|
|
|
|
—
|
|
|
|
|
|
11,075
|
|
|
|
|
|
11,075
|
|
|
|
Other assets
|
|
|
|
|
2,012
|
|
|
|
|
|
—
|
|
|
|
|
|
2,012
|
|
|
|
Total on balance sheet exposures
|
|
|
|
|
2,012
|
|
|
|
|
|
11,075
|
|
|
|
|
|
13,087
|
|
|
|
Off balance sheet – undrawn commitments
|
|
|
|
|
—
|
|
|
|
|
|
10,747
|
|
|
|
|
|
10,747
|
|
|
|
Maximum exposure to loss
|
|
|
|
|
2,012
|
|
|
|
|
|
21,822
|
|
|
|
|
|
23,834
|
|
|
|
Total assets of the entity
|
|
|
|
|
923,346
|
|
|
|
|
|
11,075
|
|
|
|
|
|
934,421
|
|
|
|
|
|
As at 31 December 2018
|
|
|
Investment
funds
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Capital provision assets
|
|
|
|
|
—
|
|
|
|
|
|
9,109
|
|
|
|
|
|
9,109
|
|
|
|
Other assets
|
|
|
|
|
2,118
|
|
|
|
|
|
—
|
|
|
|
|
|
2,118
|
|
|
|
Total on balance sheet maximum exposure
|
|
|
|
|
2,118
|
|
|
|
|
|
9,109
|
|
|
|
|
|
11,227
|
|
|
|
Off balance sheet – undrawn commitments
|
|
|
|
|
—
|
|
|
|
|
|
15,581
|
|
|
|
|
|
15,581
|
|
|
|
Maximum exposure to loss
|
|
|
|
|
2,118
|
|
|
|
|
|
24,690
|
|
|
|
|
|
26,808
|
|
|
|
Total assets of the entity
|
|
|
|
|
693,271
|
|
|
|
|
|
9,109
|
|
|
|
|
|
702,380
|
|
|
Investment funds
The Group acts as investment adviser to a number of unconsolidated funds and sidecar vehicles where the Group’s interest in the funds is generally restricted to management and incentive fees. The value of the fees are typically based on investor commitments, capital deployed or committed to investments and the performance of the fund. The Group provides revolving credit facilities to certain investment funds to bridge capital calls when needed. These facilities are entirely discretionary in that the Group is not obligated to provide funding under them. The figures included in the table above for the comparative 2018 year have been corrected to reflect the discretionary nature of the facilities.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
24. Structured entities (continued)
Other
This includes legal finance assets with structured entities that aggregate claims from multiple parties. The nature and recourse of the Group’s investment in these matters is consistent with the rest of the litigation investments portfolio and the use of the structured entity to aggregate the claims does not introduce incremental risk. The off balance sheet exposure represents the maximum extent of the undrawn committed amounts relating to these litigation commitments.
25. Investments in joint ventures and associates
The Group holds certain of its capital provision assets or in associate companies under joint arrangements that are classified as joint ventures in accordance with IAS 28 Investments in Associates and Joint Ventures and accounted for at fair value through profit and loss in accordance with IFRS 9. The total fair value of the Group’s interest in associate companies as at 31 December 2019 is $4,673,000 (2018:$638,000) and is included in capital provision assets in the consolidated statement of financial position. The total fair value of the Group’s interest in joint ventures as at 31 December 2019 is $106,924,000 (2018: $95,494,000) and is included within capital provision assets in the consolidated statement of financial position. None of the associate companies or joint venture arrangements are individually material to the Group and there are no significant restrictions on the ability of the joint ventures to make cash distributions or repayment of advances to the Group.
The Group’s share of commitments and contingencies for its associates and joint ventures at 31 December 2019 is $1,500,000 and $122,628,000, respectively (2018: $nil and $87,076,000) and are included in the commitment amounts relating to funding obligations on asset agreements disclosed in note 30.
26. Share capital
|
Authorised share capital
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
Unlimited ordinary shares of no par value
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Issued share capital
|
|
|
Number
|
|
|
Number
|
|
|
Ordinary shares of no par value
|
|
|
|
|
218,649,877
|
|
|
|
|
|
218,649,877
|
|
|
80,000,001 ordinary shares were issued at 100p each on 21 October 2009. A further 100,000,000 ordinary shares were issued at 110p each on 9 December 2010. A further 24,545,454 shares were issued on 12 December 2012 in connection with the restructuring of the Group. A further 3,692,524 shares were issued on 14 December 2016 as part of the GKC acquisition. A further 10,411,898 shares were issued at 1850p each on 4 October 2018.
|
31 December 2019
|
|
|
Share Capital
|
|
|
Contingent
Share Capital
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January and 31 December
|
|
|
|
|
596,454
|
|
|
|
|
|
13,500
|
|
|
|
|
|
609,954
|
|
|
|
31 December 2018
|
|
|
Share Capital
|
|
|
Contingent
Share Capital
|
|
|
Total
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
At 1 January 2018
|
|
|
|
|
351,249
|
|
|
|
|
|
13,500
|
|
|
|
|
|
364,749
|
|
|
|
Share capital issued
|
|
|
|
|
249,983
|
|
|
|
|
|
—
|
|
|
|
|
|
249,983
|
|
|
|
Share capital issue costs
|
|
|
|
|
(4,778)
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,778)
|
|
|
|
At 31 December 2018
|
|
|
|
|
596,454
|
|
|
|
|
|
13,500
|
|
|
|
|
|
609,954
|
|
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
26. Share capital (continued)
Also, the GKC acquisition in 2016 included $15,000,000 of contingent equity consideration. In calculating the fair value of the contingent consideration a discount of 10% was applied for non-performance risk, hence the contingent equity consideration is valued at $13,500,000 at acquisition. Shares of 2,461,682 will be issued only after GKC’s investment funds contribute more than $100 million in performance fee income (and, in certain instances, fee income from new funds or other capital provision income) to Burford. If the $100 million income target is not achieved, no contingent consideration is payable.
27. Long term incentive plan
In 2017 the Group introduced a long-term incentive plan (“LTIP”). Participants will only be entitled to these shares at the end of a three-year period if the Group has met the relevant pre-determined corporate performance measures over the three-year performance period and they are still employed by the Group. The performance measures for the 2017 and 2018 awards are equally weighted between the Group’s total shareholder return as compared to a group of comparable public companies; earnings per share growth adjusted to remove amortisation and other non-cash items; and growth in aggregate asset value defined as gross investment assets plus gross cash receipts from investments. The performance measures for the 2019 awards are weighted 2/3 on the Group’s total shareholder return as compared to a group of comparable public companies; and 1/3 earnings per share growth adjusted to remove amortisation and certain other items.
The expense included within these financial statements arising from equity-settled share-based payment transactions amounted to $4,519,000 (2018: $1,686,000, 2017: $1,652,000).
The following table summarises the fair values and key assumptions used for valuing grants made under the LTIP in each of the years awards were granted:
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Awards granted (number of shares)
|
|
|
|
|
695,330
|
|
|
|
|
|
288,752
|
|
|
|
|
|
506,637
|
|
|
|
Dividend yield (%)
|
|
|
|
|
1.00%
|
|
|
|
|
|
1.90%
|
|
|
|
|
|
2.80%
|
|
|
|
Expected volatility (%)
|
|
|
|
|
40.80%
|
|
|
|
|
|
35.60%
|
|
|
|
|
|
25.80%
|
|
|
|
Risk-free interest rate (%)
|
|
|
|
|
0.63%
|
|
|
|
|
|
0.93%
|
|
|
|
|
|
0.15%
|
|
|
|
Expected life of share awards (years)
|
|
|
|
|
3
|
|
|
|
|
|
3
|
|
|
|
|
|
3
|
|
|
|
Weighted average fair value ($)
|
|
|
|
|
15.85
|
|
|
|
|
|
16.72
|
|
|
|
|
|
9.1
|
|
|
|
Weighted average share price ($)
|
|
|
|
|
16.78
|
|
|
|
|
|
19.46
|
|
|
|
|
|
10.27
|
|
|
|
Model used
|
|
|
Monte Carlo
|
|
|
Monte Carlo
|
|
|
Monte Carlo
|
|
The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the awards is indicative of future trends, which may not necessarily be the actual outcome.
28. Profit per ordinary share and comprehensive income per ordinary share
Profit per ordinary share is calculated based on profit attributable to ordinary shareholders for the year of $212,107,000 (2018: $317,577,000, 2017: $249,304,000) and the weighted average number of ordinary shares in issue for the year of 218,649,877 (2018: 210,776,771, 2017: 208,237,979). Comprehensive income per ordinary share is calculated based on total comprehensive income attributable to ordinary shareholders for the year of $194,582,000 (2018: $342,278,000, 2017: $221,098,000), and the same weighted average number of ordinary shares in issue as above The effect of dilution is attributable to the addition of 973,268 shares related to the LTIP (2018: 554,680, 2017: 298,575).
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
29. Dividends
The Directors paid an interim dividend for 2019 of 4.17¢ in December 2019. The Directors proposed and paid a 2017 interim dividend of 3.05¢ in November 2017 and a final dividend of 7.95¢ per share on 22 June 2018 to shareholders on the register as at close of business on 1 June 2018.
30. Financial commitments and contingent liabilities
As a normal part of its business, the Group routinely enters into some financing agreements that oblige the Group to provide continuing funding over time, whereas other agreements provide for the immediate funding of the total commitment. The terms of the former type of agreements vary widely; in some cases (discretionary commitments), the Group has broad discretion as to each incremental funding of a continuing investment, and in others (definitive commitments), the Group has little discretion and would suffer adverse consequences were it to fail to provide incremental funding.
The Group’s funding obligations are capped at a fixed amount in its agreements. At 31 December 2019, the Group had outstanding commitments for $981,554,000 (2018: $646,631,000).
In addition, at 31 December 2019 at current exchange rates, the Group had $89,294,000 of exposure to assets where the Group is providing some form of legal risk arrangement pursuant to which the Group does not generally expect to deploy the full committed capital unless there is a failure of the claim, such as providing an indemnity for adverse costs (2018: $72,523,000).
The following table reflects the line-by-line impact of eliminating the interests of third-parties in the entities which Burford consolidates from the commitment balances reported above to arrive at Burford’s commitments at 31 December 2019.
|
31 December 2019
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Unfunded commitments – capital provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Definitive
|
|
|
|
|
342,452
|
|
|
|
|
|
(53,939)
|
|
|
|
|
|
288,513
|
|
|
|
Discretionary
|
|
|
|
|
639,102
|
|
|
|
|
|
(99,007)
|
|
|
|
|
|
540,095
|
|
|
|
Total
|
|
|
|
|
981,554
|
|
|
|
|
|
(152,946)
|
|
|
|
|
|
828,608
|
|
|
|
Legal risk (Definitive)
|
|
|
|
|
89,294
|
|
|
|
|
|
(6,233)
|
|
|
|
|
|
83,061
|
|
|
|
|
|
31 December 2018
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Unfunded commitments – capital provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Definitive
|
|
|
|
|
261,578
|
|
|
|
|
|
(6,415)
|
|
|
|
|
|
255,163
|
|
|
|
Discretionary
|
|
|
|
|
385,053
|
|
|
|
|
|
(25,376)
|
|
|
|
|
|
359,677
|
|
|
|
Total
|
|
|
|
|
646,631
|
|
|
|
|
|
(31,791)
|
|
|
|
|
|
614,840
|
|
|
|
Legal risk (Definitive)
|
|
|
|
|
72,523
|
|
|
|
|
|
—
|
|
|
|
|
|
72,523
|
|
|
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
30. Financial commitments and contingent liabilities (continued)
The following tables show the experience over the past two years of deployments during the year on commitments outstanding at the end of the prior year.
|
Deployments on commitments in 2019
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Outstanding commitments at 31 December 2018
|
|
|
|
|
646,631
|
|
|
|
|
|
(31,791)
|
|
|
|
|
|
614,840
|
|
|
|
Deployed in 2019
|
|
|
|
|
99,145
|
|
|
|
|
|
(5,123)
|
|
|
|
|
|
94,022
|
|
|
|
Deployed in 2019 (%)
|
|
|
|
|
15.3%
|
|
|
|
|
|
—
|
|
|
|
|
|
15.3%
|
|
|
|
|
|
Deployments on commitments in 2018
|
|
|
Consolidated
total
|
|
|
Elimination of
third-party
interests
|
|
|
Burford-only
|
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
$’000
|
|
|
Outstanding commitments at 31 December 2017
|
|
|
|
|
503,435
|
|
|
|
|
|
—
|
|
|
|
|
|
503,435
|
|
|
|
Deployed in 2018
|
|
|
|
|
152,498
|
|
|
|
|
|
—
|
|
|
|
|
|
152,498
|
|
|
|
Deployed in 2018 (%)
|
|
|
|
|
30.3%
|
|
|
|
|
|
—
|
|
|
|
|
|
30.3%
|
|
|
Given the nature of the Company’s business the Company may from time to time receive claims against it or be subject to inbound litigation. Having considered the legal merits of any relevant claims or progressed litigation, and having received relevant legal advice including from external advisers, the Company considers there to be no material contingent liability in respect of any such situations requiring disclosure in the financial statements.
31. Related party transactions
Directors’ fees paid in the year amounted to $484,000 (2018: $415,000). There were no directors’ fees outstanding at 31 December 2019 or 31 December 2018.
The Group holds investments on associates and joint ventures conducted on the same terms as third party transactions. Details of the balances held with associates and joint ventures are set out in note 25. Funding during the year on the investments in associates and joint ventures was $15,914,000 (2018: $80,858,000).
There is no controlling party.
32. Subsequent events
On January 30, 2020, the World Health Organization declared the outbreak of coronavirus (“COVID-19”) to be a public health emergency of international concern. This coronavirus pandemic has severely restricted the level of economic activity around the world. In response to this coronavirus pandemic, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forego their time outside of their homes. In response to this the Group has closed its offices and implemented business continuity plans for staff to work from home without noticeable impact on service delivery and operations.
The Group has assessed the coronavirus pandemic as a non-adjusting post balance sheet event.
The Group has undertaken a detailed review of the potential impacts of COVID-19 and continues to monitor developments closely. As at the date of this report the most likely impact for the Group is expected to be some potential delays in the realisation of cash flows from the capital provision asset portfolio.
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2019
32. Subsequent events (continued)
While litigation matters that do not require in-person attendance are continuing, courts and arbitration tribunals are postponing some trials and hearings as they adapt to the new environment. In addition, some liquidity constrained corporate defendants may defer settling cases.
The impact of COVID-19 has also been assessed with respect to the Group’s deferred tax asset and goodwill. While some deterioration of headroom is expected in the short-term due to potential delays in the realisation of capital provision income this is currently not expected to be material enough to impact the recoverability of the deferred tax asset or to trigger an impairment of goodwill. Disruptive events and economic downturns tend to be positive in generating litigation activity and increases the demand for external capital.
Further consideration in respect of the assessment of COVID-19 impact and how this has been considered in respect of forming a conclusion in respect of the going concern assumption for the Group is set out in note 2 on page
F-8.
Subsequent to 31 December 2019 various court outcomes or arbitral awards have been obtained relating to certain capital provision assets that, if paid in full, are expected to generate approximately $300 million in capital provision income across the Group. Risk remains in litigation until matters actually pay cash, and it is always possible that the anticipated income described above will be reduced by further court action or by agreement between the parties. The Group has assessed these developments as a non- adjusting post balance sheet event.
Exhibit 1.1
Adopted by special resolution dated 13 May
2020
BURFORD CAPITAL LIMITED
ARTICLES OF INCORPORATION
Contents
|
1
|
PRELIMINARY
|
1
|
|
2
|
INTERPRETATION
|
1
|
|
3
|
SHARE CAPITAL
|
3
|
|
4
|
PRE-EMPTION RIGHTS
|
6
|
|
5
|
CERTIFICATES
|
7
|
|
6
|
LIEN
|
8
|
|
7
|
CALLS IN RESPECT OF SHARES AND FORFEITURE
|
8
|
|
8
|
TRANSFER OF SHARES
|
10
|
|
9
|
TRANSMISSION OF SHARES
|
12
|
|
10
|
ALTERATION OF SHARE CAPITAL
|
13
|
|
11
|
GENERAL MEETINGS
|
14
|
|
12
|
NOTICE OF GENERAL MEETINGS
|
14
|
|
13
|
PROCEEDINGS AT GENERAL MEETINGS
|
18
|
|
14
|
VOTES OF MEMBERS
|
20
|
|
15
|
CORPORATIONS OR OTHER LEGAL ENTITIES ACTING BY REPRESENTATIVES
|
22
|
|
16
|
RESOLUTIONS IN WRITING
|
23
|
|
17
|
NUMBER OF DIRECTORS
|
23
|
|
18
|
ALTERNATE DIRECTORS
|
23
|
|
19
|
POWERS OF DIRECTORS
|
23
|
|
20
|
DELEGATION OF DIRECTORS' POWERS
|
24
|
|
21
|
APPOINTMENT AND RETIREMENT OF DIRECTORS
|
24
|
|
22
|
DISQUALIFICATION AND REMOVAL OF DIRECTORS
|
25
|
|
23
|
REMUNERATION OF DIRECTORS
|
26
|
|
24
|
DIRECTORS' EXPENSES
|
26
|
|
25
|
DIRECTORS' APPOINTMENTS AND INTERESTS
|
26
|
|
26
|
DIRECTORS' GRATUITIES AND PENSIONS
|
27
|
|
27
|
PROCEEDINGS OF DIRECTORS
|
27
|
|
28
|
SECRETARY
|
29
|
|
29
|
MINUTES AND OTHER SECRETARIAL DUTIES
|
29
|
|
30
|
SEALS
|
29
|
|
31
|
DIVIDENDS AND DISTRIBUTIONS
|
30
|
|
32
|
CAPITALISATION OF PROFITS
|
32
|
|
33
|
ACCOUNTS AND AUDIT
|
32
|
|
34
|
BORROWING POWERS
|
33
|
|
35
|
NOTICES
|
33
|
|
36
|
WINDING UP
|
35
|
|
37
|
INDEMNITY
|
35
|
|
38
|
INSPECTION OF RECORDS
|
36
|
|
39
|
AMENDMENT
|
36
|
|
40
|
FORUM
|
37
|
THE COMPANIES (GUERNSEY) LAW, 2008, AS AMENDED
COMPANY LIMITED BY SHARES
ARTICLES OF INCORPORATION
OF
BURFORD CAPITAL LIMITED
Exclusion of
standard articles
Standard articles as may be
prescribed from time to time pursuant to the Companies Law shall not apply to the Company.
|
|
2.1
|
In these Articles, the following words shall have the following meanings if not inconsistent with
the subject or the context:
|
Articles means the articles
of incorporation of the Company in force from time to time;
Authorised Operator
means the authorised operator (as defined in the Regulations) of an Uncertificated System;
board means the board
of directors of the Company;
Companies Law means
the Companies (Guernsey) Law, 2008, as amended, extended or replaced from time to time and any ordinance, statutory instrument,
rule or regulation made thereunder;
Company means Burford
Capital Limited;
directors means the
directors of the Company for the time being or, as the case may be, the directors assembled as a board;
Document has the meaning
set out in Article 35.2;
DTR means the Disclosure
Guidance and Transparency Rules issued by the FCA, being in force in the United Kingdom, as amended from time to time;
eligible members has
the meaning given in the Companies Law;
equity securities means
Shares or a right to subscribe for or to convert securities into Shares;
executed includes any
mode of execution;
FCA means the Financial
Conduct Authority of the United Kingdom;
Group Company means
the Company and any of its subsidiary undertakings from time to time;
holder or member
in relation to Shares means the member whose name is entered in the register of members as the holder of the Shares;
Memorandum means the
memorandum of incorporation of the Company in force from time to time;
office means the registered
office of the Company from time to time;
ordinary resolution means
a resolution of the Company adopted as an ordinary resolution in accordance with the Companies Law;
Ordinary Shares means
Shares other than Shares that, in respect of dividends and/or capital, carry the right to participate only up to a specified amount;
Regulations means The
Uncertificated Securities (Guernsey) Regulations, 2009, as amended, extended or replaced from time to time;
Rules means the rules,
including any manuals, issued from time to time by an Authorised Operator governing the admission of securities to and the operation
of the Uncertificated System managed by such Authorised Operator;
secretary means the
secretary of the Company or other person appointed to perform the duties of the secretary of the Company including a joint, assistant
or deputy secretary;
Shares means shares
in the capital of the Company;
special resolution means
a resolution of the Company adopted as a special resolution in accordance with the Companies Law;
subsidiary undertakings
has the meaning given in section 1162 of the United Kingdom's Companies Act 2006, as amended, extended or replaced from time
to time;
uncertificated means
a unit of a Guernsey security title to which is recorded on the relevant register of securities as being held in uncertificated
form and title to which may be transferred by means of an Uncertificated System in accordance with the Regulations and the Rules,
if any; and certificated means a unit of a security which is not an uncertificated unit;
Uncertificated System
means any computer based system and its related facilities and procedures that are provided by an Authorised Operator and by means
of which title to units of a security (including Shares) can be evidenced and transferred in accordance with the Regulations without
a written certificate or instrument;
|
|
2.2
|
The headings in these Articles do not affect the interpretation of these Articles.
|
|
|
2.3
|
Unless the context otherwise requires words or expressions contained in these Articles bear the
same meaning as in the Companies Law.
|
|
|
2.4
|
"in writing" and "written" includes the reproduction of words and figures in
any visible form whether sent or supplied by electronic form or otherwise, including, for the avoidance of doubt, and where permitted
under law, email.
|
|
|
2.5
|
Words importing the singular number only shall include the plural number and vice versa.
|
|
|
2.6
|
Words importing a particular gender only shall include any other gender.
|
|
|
2.7
|
Words importing persons shall include corporations and other entities.
|
|
|
2.8
|
References to "Shareholders" shall be construed as references to holders for the time
being of Shares.
|
|
|
2.9
|
A reference to a meeting shall not be taken as requiring more than one person to be present if
any quorum requirement can be satisfied by one person.
|
|
|
3.1
|
Subject to these Articles, the Company may issue an unlimited number of Shares of any par value
and/or no par value or a combination of both. Shares may be denominated in any currency and different classes of Shares may be
denominated in different currencies (or no currency in the case of Shares of no par value).
|
|
|
3.2
|
Subject to the provisions of the Companies Law and without prejudice to any rights attached to
any existing Shares or to the provisions of these Articles, any Share in the Company may be issued with or have attached thereto
such preferred, deferred, conversion or other rights or restrictions as the Company may from time to time by ordinary resolution
determine or, subject to or in default or absence of any such determination, as the directors may determine.
|
|
|
3.3
|
The Company may issue fractions of Shares and any such fractional Shares shall rank pari passu
in all respects with the other Shares of the same class issued by the Company.
|
|
|
3.4
|
The Company may acquire its own Shares (including any redeemable Shares) in any manner in accordance
with the Companies Law. Any Shares acquired by the Company may be cancelled or may be held as treasury shares, subject to and in
accordance with the Companies Law.
|
|
|
3.5
|
Subject to the provisions of the Companies Law, the Company may give financial assistance, as defined
in the Companies Law, directly or indirectly for the purpose of or in connection with the acquisition of its Shares.
|
|
|
3.6
|
The Company may issue Shares which are, or at the option of the Company or the Shareholder are,
liable to be redeemed and convert all or any class of its Shares into redeemable Shares.
|
|
|
3.7
|
The Company may issue Shares which do not entitle the holder to voting rights in any general meeting
or entitle the holder to restricted voting rights in any general meeting.
|
|
|
3.8
|
Subject to applicable law and regulation, the directors may permit the holding of Shares or any
class of Shares in uncertificated form and the transfer of title to Shares in that class by means of a relevant system and may
determine that any class of Shares shall cease to be a participating security for the purposes of any regulations issued under
applicable law or regulation authorising the transfer of Shares in dematerialised form.
|
|
|
3.9
|
Whenever the capital of the Company is divided into different classes of Shares the rights attached
to any class of Shares may (subject to the terms of issue of the Shares of that class) be varied or abrogated, either whilst the
Company is a going concern or during or in contemplation of a winding-up:
|
|
|
(a)
|
with the consent in writing of the holders of a majority of the issued Shares of that class; or
|
|
|
(b)
|
with the sanction of an ordinary resolution passed at a separate meeting of the holders of the
Shares of that class.
|
|
|
3.10
|
All the provisions of these Articles relating to general meetings of the Company or to the proceedings
thereat shall, mutatis mutandis, apply to every such separate meeting except that:
|
|
|
(a)
|
the necessary quorum shall be one or more persons present holding or representing by proxy at least
one-third of the voting rights of the class (provided that if any such meeting is adjourned for lack of a quorum, the quorum at
the reconvened meeting shall be those holders of Shares of the class present in person or by proxy) provided always that where
the class has only one member, that member shall constitute the necessary quorum; and
|
|
|
(b)
|
any holder of Shares of the class in question may demand a poll.
|
|
|
3.11
|
The special rights conferred upon the holders of any Shares or class of Shares issued with preferred,
deferred or other rights shall (unless otherwise expressly provided by the conditions of issue of such Shares) be deemed not to
be varied by the creation or issue of further Shares ranking pari passu therewith or by the exercise of any power under
the disclosure provisions requiring Shareholders to disclose an interest in the Company's Shares pursuant to Article 3.15.
|
|
|
3.12
|
Subject to the provisions of the Companies Law, these Articles, and any resolution of the Company,
the directors:
|
|
|
(a)
|
have such authority to allot, issue (with or without conferring rights of renunciation), grant
options over, offer or otherwise deal with or dispose of unissued Shares of the Company or rights to subscribe or convert any security
into Shares as may from time to time be authorised by the Company by ordinary resolution (subject to the duration and limitations
specified in such resolution) but are not otherwise authorised to allot, issue (with or without conferring rights of renunciation),
grant options over, offer or otherwise deal with or dispose of unissued Shares of the Company or rights to subscribe or convert
any security into Shares;
|
|
|
(b)
|
have general and unconditional authority, unlimited as to number or aggregate value, to sell, transfer
or cancel any treasury shares held by the Company, in any such case to such persons, at such times and on such terms and conditions
as the directors may determine; and
|
|
|
(c)
|
subject to Article 3.2, may designate the unissued Shares upon issue as Ordinary Shares or such
other class or classes of Shares or as Shares with special or other rights as the directors may then determine.
|
|
|
3.13
|
The Company may exercise the powers of paying commissions and in such an amount or at such a percentage
rate as the directors may determine. Subject to the provisions of the Companies Law any such commission may be satisfied by the
payment of cash or, subject to Article 3.6, by the issue of fully or partly paid Shares or partly in one way and partly in the
other. The Company may also on the issue of Shares pay such brokerage as may be lawful.
|
|
|
3.14
|
Except as required by law, no person shall be recognised by the Company as holding any Share upon
any trust and (except as otherwise provided by these Articles or by law) the Company shall not be bound by or recognise (even when
having notice thereof) any interest in any Share other than an absolute right of the registered holder to the entirety of a Share
or fraction thereof.
|
|
|
3.15
|
The Company may, by notice in writing (a Disclosure Notice) require a person whom the Company
knows to be or has reasonable cause to believe is or, at any time during the 3 years immediately preceding the date on which the
Disclosure Notice is issued, to have been interested in any Shares:
|
|
|
(a)
|
to confirm that fact or (as the case may be) to indicate whether or not it is the case; and
|
|
|
(b)
|
to give such further information as may be required in accordance with Article 3.16.
|
|
|
3.16
|
A Disclosure Notice may (without limitation) require the person to whom it is addressed:
|
|
|
(a)
|
to give particulars of his own past or present direct, indirect or derivative interest in any Shares
(held by him at any time during the 3 year period specified in Article 3.15);
|
|
|
(b)
|
to disclose the identity of any other person who has a past or present direct, indirect or derivative
interest in the Shares held by him and to give the particulars of that interest;
|
|
|
(c)
|
where the interest is a present interest and any other interest in any Shares subsisted during
that 3 year period at any time when his own interest subsisted, to give (so far as is within his knowledge) such particulars with
respect to that other interest as may be required by the Disclosure Notice; and
|
|
|
(d)
|
where his interest is a past interest to give (so far as is within his knowledge) like particulars
of the identity of the person who held that interest immediately upon his ceasing to hold it and any other
particulars (so far as is within his knowledge) as may be required by the Disclosure Notice.
|
|
|
3.17
|
Any Disclosure Notice shall require any information in response to such notice to be given within
the prescribed period (which is 28 days after service of the notice or 14 days if the Shares concerned represent 0.25 per cent.
or more in number of the issued Shares of the relevant class) or such other reasonable period as the directors may determine.
|
|
|
3.18
|
If any member is in default in supplying to the Company the information required by the Company
within the prescribed period or such other reasonable period as the directors determine, the directors in their absolute discretion
may serve a direction notice on the member. The direction notice may direct that in respect of the Shares in respect of which the
default has occurred (the Default Shares) the member shall not be entitled to vote in general meetings or class meetings.
Where the Default Shares represent at least 0.25 per cent. in number of the class of Shares concerned the direction notice may
additionally direct that dividends on such Shares will be retained by the Company (without interest) and that no transfer of the
Default Shares (other than a transfer authorised under the Articles) shall be registered until the default is rectified.
|
|
|
3.19
|
Notwithstanding the provisions of the Companies Law, a Shareholder shall notify the Company of
the percentage of voting rights which he/she/it holds in respect of the Shares or through any direct or indirect holding of financial
instruments (or through a combination of such holdings) which he/she/it would be required to notify to the Company if DTR 5 applied.
For this purpose financial instruments shall have the meaning ascribed in the glossary to the FCA's Handbook of rules and
guidance and the Company shall be deemed to be an issuer (as such term is defined in Rule 5.1.1 of DTR 5). Such a notification
shall include the information provided for in DTR 5 and be made within two trading days. If a Shareholder fails to comply with
this Article 3.19, the Shares of such Shareholder shall be treated as if they were Default Shares for the purposes of Article 3
and the board may impose on the Shares of such Shareholder all or any of the restrictions mentioned in Article 3.18 until such
time as the board is satisfied that the Shareholder has fully complied with this Article 3.19.
|
|
|
4.1
|
Subject to Article 4.4, the Company shall not allot equity securities to a person on any terms
unless:
|
|
|
(a)
|
it has made an offer to each person who holds Ordinary Shares to allot to him on the same or more
favourable terms a proportion of those securities that is as nearly as practicable equal to the proportion in number held by him
of all the issued Ordinary Shares; and
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(b)
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the period, which shall not be less than 14 days, during which any offer referred to in
Article 4.1(a) may be accepted has expired or the Company has received notice of the acceptance or refusal of every offer so
made, provided that securities the
Company has offered to allot to a holder of Ordinary Shares may be allotted to him, or anyone in whose favour he has renounced
his right to their allotment, without contravening this Article 4.1.
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4.2
|
References in this Article 4 to the allotment of equity securities include the sale of Ordinary
Shares that immediately before the sale were held by the Company as treasury shares.
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4.3
|
An offer by the directors referred to in Article 4.1 shall be made to a holder of equity securities
in accordance with Articles 35.1, 35.2, 35.3, 35.7, 35.8, 35.9, 35.10, 35.11 and 35.12 as if such offer was a notice as referred
to therein and the provisions therein relating to service shall apply, mutatis mutandis.
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4.4
|
Article 4.1 shall not apply to a particular allotment of equity securities:
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(a)
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if these are, or are to be, wholly or partly paid up otherwise than in cash; or
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(b)
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made under a power conferred on the directors for the purposes of Article 4.5(a); or
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(c)
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in respect of which the provisions of Article 4.1 have been dis-applied pursuant to Article 4.5(b).
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4.5
|
Where the directors are authorised for the purposes of Article 3.6:
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(a)
|
they may be given power by special resolution of the Company to allot equity securities pursuant
to that authorisation as if the provisions of Article 4.1: (i) did not apply to the allotment, or (ii) applied to the allotment
with such modifications as the directors may determine;
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(b)
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the Company may resolve by special resolution that the provisions of Article 4.1 do not apply to
a specified allotment of equity securities to be made pursuant to that authorisation.
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4.6
|
A special resolution pursuant to Article 4.5 ceases to have effect when the authorisation to which
it relates (i) is revoked or (ii) would (if not renewed) expire, provided that, if the authorisation is renewed, the power may
also be renewed, for a period not longer than that for which the authorisation is renewed, by special resolution of the Company.
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5.1
|
The directors shall not be obliged to issue share certificates but if the directors elect to issue
share certificates every member, upon becoming the holder of any Shares, shall be entitled, without payment, to one certificate
for all the Shares of each class held by him (and upon transferring a part of his holding of Shares of any class to a certificate
for the balance of such holding) or several certificates each for one or more of his Shares upon payment, for every certificate
after the first, of such reasonable sum as the directors may determine. Every certificate shall be signed by the Company in such
manner as the directors deem appropriate and shall specify the number, class and distinguishing numbers (if any) of the Shares
to which it relates and the amount or respective amounts paid up thereon. The Company shall not
be bound to issue more than one certificate for Shares held jointly by several persons and delivery
of a certificate to one joint holder shall be a sufficient delivery to all of them.
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5.2
|
If a share certificate is defaced, worn out, lost or destroyed it may be renewed on such terms
(if any) as to evidence and indemnity and payment of the liability and expenses reasonably incurred by the Company in investigating
evidence as the directors may determine but otherwise free of charge and (in the case of defacement or wearing out) on delivery
up of the old certificate.
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6.1
|
The Company shall have a first and paramount lien on every Share (not being a fully paid Share)
for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that Share. The directors may
at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The Company's lien on a Share
shall extend to any amount payable in respect of it.
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6.2
|
The Company may sell in such manner as the directors determine any Shares on which the Company
has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen days after notice
has been given to the holder of the Share or to the person entitled to it in consequence of the death or bankruptcy of the holder,
demanding payment and stating that if the notice is not complied with the Shares may be sold.
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6.3
|
To give effect to a sale the directors may authorise any person to execute an instrument of transfer
of the Shares sold to or in accordance with the directions of the purchaser. The title of the transferee to the Shares shall not
be affected by any irregularity in or invalidity of the proceedings in reference to the sale.
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6.4
|
The net proceeds of the sale after payment of the costs shall be applied in payment of so much
of the sum for which the lien exists as is presently payable and any residue shall (upon surrender to the Company for cancellation
of the certificate for the Shares sold and subject to a like lien for any moneys not presently payable as existed upon the Shares
before the sale) be paid to the person entitled to the Shares at the date of the sale.
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7
|
CALLS IN RESPECT OF SHARES AND FORFEITURE
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7.1
|
Subject to the terms of allotment the directors may make calls upon any member in respect of (but
limited to) any moneys unpaid in respect of that member's Shares (whether in respect of nominal value or premium) and each member
shall (subject to receiving at least fourteen days' notice specifying when and where payment is to be made) pay to the Company
as required by the notice the amount called in respect of his Shares. A call may be required to be paid by instalments. A call
may, before receipt by the Company of any sum due thereunder, be revoked in whole or part and payment of a call may be postponed
in whole or part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent
transfer of the Shares in respect whereof the call was made.
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7.2
|
A call shall be deemed to have been made at the time when the resolution of the directors authorising
the call was passed.
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7.3
|
The joint holders of a Share shall be jointly and severally liable to pay all calls in respect
thereof without the benefit of any right conferred by the droit de division and/or the droit de discussion.
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7.4
|
If a call remains unpaid after it has become due and payable the person from whom it is due and
payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid; either at the rate fixed
by the terms of allotment of the Share or in the notice of the call or at such rate not exceeding fifteen per cent. per annum as
the directors may determine. The directors may waive payment of the interest wholly or in part.
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7.5
|
An amount payable in respect of a Share on allotment or at any fixed date, whether in respect of
nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the provisions of these
Articles shall apply as if that amount had become due and payable by virtue of a call. The Company may accept from a member the
whole or a part of the amount remaining unpaid on any Shares held by him although no part of that amount has been called up.
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7.6
|
Subject to the terms of allotment, the directors may make arrangements on the issue of Shares to
distinguish between members as to the amounts and times of payment of calls in respect of their Shares.
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7.7
|
If a call remains unpaid after it has become due and payable the directors may give to the person
from whom it is due not less than fourteen days' notice requiring payment of the amount unpaid together with any interest which
may have accrued and any expenses which may have been incurred by the Company in respect thereof. The notice shall name the place
where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was
made will be liable to be forfeited.
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7.8
|
If a notice referred to in the preceding Article is not complied with any Share in respect of which
it was given may at any time thereafter before the payment required by the notice has been made be forfeited by a resolution of
the directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited Shares and not
paid before the forfeiture.
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7.9
|
A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such a
manner as the directors determine either to the person who was before the forfeiture the holder or to any other person and at any
time before sale re-allotment or other disposition the forfeiture may be cancelled on such terms as the directors think fit. Where
for the purposes of its disposal a forfeited Share is to be transferred to any person, the directors may authorise some person
to execute an instrument of transfer of the Share to that person.
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7.10
|
A person any of whose Shares have been forfeited shall cease to be a member in respect of them
and shall surrender to the Company for cancellation the certificate, if any, for the Shares forfeited but shall remain liable to
the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those Shares
with interest at the rate at which interest was payable on those moneys before the forfeiture or at such rate as the directors
may determine from the date of forfeiture and all expenses until payment but the directors may waive payment wholly or in part
or enforce payment without any allowance for the
value of the Shares at the time of forfeiture or for any consideration received on their disposal.
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7.11
|
A declaration under oath by a director or the secretary that a Share has been forfeited on a specified
date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share and the
declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the Share and
the person to whom the Share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall
his title to the Share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal
of the Share.
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8.1
|
Subject to the Regulations, the Rules and applicable law, the directors shall have power to implement
such arrangements as they may, in their absolute discretion, think fit in order for any class of Shares to be admitted to settlement
by means of an Uncertificated System. Where they do so, Articles 8.2 to 8.6 (inclusive) shall commence to have effect immediately
prior to the time at which the Authorised Operator admits the class of Shares to settlement by means of the Uncertificated System.
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8.2
|
In relation to any class of Shares which, for the time being, the Authorised Operator has admitted
to settlement by means of the Uncertificated System, and for so long as such class remains so admitted, no provision of these Articles
shall apply or have effect to the extent that it is in any respect inconsistent with:
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(a)
|
the holding of Shares of that class in uncertificated form;
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(b)
|
the transfer of title to Shares of that class by means of an Uncertificated System; or
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(c)
|
the Regulations, the Rules and applicable law.
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8.3
|
Where any class of Shares is for the time being admitted to settlement by means of the Uncertificated
System, such securities may be issued in uncertificated form in accordance with and subject to the Regulations and the Rules.
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8.4
|
Shares may be changed from uncertificated to certificated form and from certificated to uncertificated
form in accordance with and subject to the Regulations and the Rules.
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8.5
|
If under these Articles or the Companies Law or the rules made or practices instituted by the Authorised
Operator the Company is entitled to dispose of, forfeit, enforce a lien or sell or otherwise procure the sale of any Shares which
are held in uncertificated form, such entitlement (to the extent permitted by the Regulations and the Rules) shall include the
right to:
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(a)
|
request or require the deletion of any computer-based entries in the Uncertificated System relating
to the hold of such Shares in uncertificated form;
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(b)
|
require any holder of any uncertificated Shares which are the subject of any exercise by the
Company of any such entitlement or require the Authorised Operator in respect of any such Shares, by notice in writing to the
holder concerned or to the Authorised Operator,
to change that Share from uncertificated to certificated form within such period as may be specified in the notice and keep it
as a certificated Share for as long as the board requires or direct the holder or the Authorised Operator to take such steps, by
instructions given by means of an Uncertificated System or otherwise, as may be necessary to sell or transfer such Shares;
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(c)
|
appoint any person to take such other steps, by instructions given by means of an Uncertificated
System or otherwise, in the name of the holder of such Share as may be required to effect the transfer of such Shares and such
steps shall be as effective as if they had been taken by the registered holder of the uncertificated Shares concerned;
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(d)
|
transfer any uncertificated Shares which are the subject of any exercise by the Company of any
such entitlement by entering the name of the transferee in the register of members in respect of that Share as a transferred Share;
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(e)
|
otherwise rectify or change the register of members in respect of that Share in such manner as
may be appropriate; and/or
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(f)
|
take such other actions as may be necessary to enable those Shares to be registered in the name
of the person to whom the Shares have been sold or disposed of as directed by him.
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8.6
|
Uncertificated Shares of a class are not to be regarded as forming a separate class from certificated
Shares of that class. Unless the directors otherwise determine, Shares held by the same holder or joint holder in both certificated
form and uncertificated form shall be treated as separate holdings.
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8.7
|
Subject to such of the restrictions of these Articles as may be applicable:
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(a)
|
any member may transfer all or any of his uncertificated Shares by means of an Uncertificated System
authorised by the directors in such manner provided for, and subject to the Regulations and the Rules, no provision of these Articles
shall apply in respect of an uncertificated Share to the extent that it requires or contemplates the effecting of a transfer by
an instrument in writing or the production of a certificate for the Shares to be transferred;
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(b)
|
any member may transfer all or any of his certificated Shares by an instrument of transfer in any
usual form or in any other form which the directors may approve; and
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(c)
|
an instrument of transfer of a certificated Share shall be executed by or on behalf of the transferor
and, unless the Share is fully paid, by or on behalf of the transferee. An instrument of transfer of a certificated Share need
not be under seal.
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8.8
|
Every instrument of transfer of a certificated Share shall be left at the office or such other
place as the directors may prescribe with the certificate of every Share to be transferred and such other evidence as the directors
may reasonably require to prove the title of the transferor or his right to
transfer the Shares. A new certificate shall be delivered free of charge to the transferee after the transfer is completed and
registered on his application and when necessary a balance certificate shall be delivered if required by him in writing.
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8.9
|
The directors may, in their absolute discretion and without giving a reason, refuse to transfer,
convert or register any transfer of any Share in certificated form or uncertificated form (subject to Article 8.10 below) which
is not fully paid or on which the Company has a lien, provided in the case of a listed or quoted Share that this would not prevent
dealings in the Share from taking place on an open and proper basis on any investment exchange on which they are so listed or quoted
(the Relevant Exchange). In addition, the directors may refuse to register a transfer of Shares if:
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(a)
|
it is in respect of more than one class of Shares;
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(b)
|
it is in favour of more than four joint transferees; or
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|
8.10
|
in relation to a Share in certificated form, having been delivered for registration to the office
or such other place as the directors may decide, it is not accompanied by the certificate for the Shares to which it relates and
such other evidence as the directors may reasonably require to prove title of the transferor and the due execution by him of the
transfer or, if the transfer is executed by some other person on his behalf, the authority of that person to do so. The directors
may only decline to register a transfer of an uncertificated Share in the circumstances set out in the Regulations and the Rules,
including, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated Share is to be transferred
exceeds four.
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8.11
|
If the directors refuse to register a transfer of a Share they shall, within two months after the
date on which the instrument of transfer was lodged with the Company, send to the transferor and the transferee notice of the refusal.
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8.12
|
Subject to such restrictions (if any) as may be imposed by the Regulations and/or the Rules, the
registration of transfers of Shares or of transfers of any class of Shares may be suspended by giving such notices as may be required
by the Regulations and the Rules at such times and for such periods (not exceeding thirty days in any year) as the directors may
determine.
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8.13
|
No fee shall be charged for the registration of any instrument of transfer or, subject as otherwise
provided in these Articles, any other document relating to or affecting the title to any Share.
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8.14
|
The Company shall be entitled to retain any instrument of transfer of a certificated Share which
is registered but any instrument of transfer which the directors refuse to register shall be returned to the person lodging it
when notice of the refusal is given.
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9.1
|
If a member dies, the survivor or survivors where he was a joint holder, and his personal representatives
where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having
any title to his interest; but nothing contained in these Articles
shall release the estate of a deceased member from any liability in respect of any Share which had been jointly held by him.
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9.2
|
A person becoming entitled to a Share in consequence of the death, bankruptcy or incapacity of
a member may, upon such evidence being produced as the directors may properly require, elect either to become the holder of the
Share or to make such transfer thereof as the deceased, bankrupt or incapacitated member could have made. If he elects to become
the holder he shall give notice to the Company to that effect. If he elects to transfer the Share he shall execute an instrument
of transfer of the Share to the transferee. All of the Articles relating to the transfer of Shares shall apply to the notice or
instrument of transfer as if it were an instrument of transfer executed by the member and the death, bankruptcy or incapacity of
the member had not occurred.
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9.3
|
A person becoming entitled to a Share in consequence of the death, bankruptcy or incapacity of
a member shall have the rights to which he would be entitled if he were the holder of the Share except that he shall not before
being registered as the holder of the Share be entitled in respect of it to attend or vote at any meeting of the Company or at
any separate meeting of the holders of any class of Shares in the Company.
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10
|
ALTERATION OF SHARE CAPITAL
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|
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10.1
|
The Company may by ordinary resolution:
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|
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(a)
|
consolidate and divide all or any of its share capital into Shares of larger amounts than its existing
Shares;
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(b)
|
sub-divide all its Shares, or any of them, into Shares of smaller amount, so, however, that in
the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same
as it was in the case of the Share from which the reduced Share is derived;
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(c)
|
cancel any Shares which at the date of the passing of the resolution have not been taken up or
agreed to be taken up by any person and diminish the amount of its Share capital by the amount of the Shares so cancelled;
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(d)
|
convert all or any of its Shares, denominated in a particular currency or former currency into
Shares denominated in a different currency, the conversion being effected at the rate of exchange (calculated to not less than
three significant figures) current on the date of the resolution or on such other dates as may be specified therein;
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(e)
|
where its share capital is expressed in a particular currency or former currency, denominate or
redenominate it, whether by expressing its amount in units or subdivisions of that currency or former currency, or otherwise.
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10.2
|
Whenever as a result of a consolidation or division of Shares any members would become entitled
to fractions of a Share, the directors may, in their absolute discretion, on behalf of those members, sell (or appoint any other
person to sell) the Shares representing the fractions for the best price reasonably obtainable to any person (including, subject
to the provisions of the Companies
Law, the Company) and distribute the proceeds of sale (net of costs and expenses) in due proportion among those members. The transferee
shall not be bound to see to the application of any purchase money nor shall its title to the Shares be affected by any irregularity
in or invalidity of the proceedings in reference to the sale.
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11.1
|
All general meetings other than annual general meetings shall be called extraordinary general meetings.
All general meetings may be held at any place in Guernsey or elsewhere.
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|
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11.2
|
A meeting of members may be held notwithstanding that such members may not be in the same place
if a member is, by any means, in communication with one or more other members so that each member participating in the communication
can hear or read what is said or communicated by each of the others, each member so participating is deemed to be present at a
meeting with the other members so participating and any such meeting shall be deemed to be held in the place in which the chairman
of the meeting is present.
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|
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11.3
|
The board may call general meetings and on the requisition of members pursuant to the provisions
of the Companies Law shall forthwith proceed to convene a general meeting within twenty-one days after the receipt of the requisition
in accordance with the Companies Law to be held on a date not more than 28 days after the date of the notice convening the meeting.
If there are not sufficient directors to call a general meeting, any director or any member of the Company may call such a meeting.
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12
|
NOTICE OF GENERAL MEETINGS
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|
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12.1
|
Any general meeting shall be called by at least ten calendar days' notice. A general meeting may
be deemed to have been duly called by shorter notice if it is so agreed by all the members entitled to attend and vote thereat.
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|
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12.2
|
The notice shall, in addition to any other requirement of the Companies Law, specify the day, time
and place of the meeting, the business to be transacted, and the terms of any resolution to be proposed, at the meeting and, in
the case of an annual general meeting, shall specify the meeting as such.
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|
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12.3
|
The business and resolutions to be transacted at an annual general meeting of the Company shall,
to the extent permitted by law, be limited to those brought properly before such meeting in compliance with these Articles. To
be properly brought before an annual general meeting, nominations or such other business must be:
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(a)
|
specified in the notice of meeting (or any supplement thereto) given by or at the direction of
the board or any committee thereof;
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(b)
|
brought before an annual general meeting by or at the direction of the board or any committee thereof;
or
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|
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(c)
|
brought before an annual general meeting by a member who is an eligible member at the time such
notice of meeting is delivered and who complies with the notice procedures set out in this Article.
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|
|
12.4
|
Any proposal of business at an annual general meeting (other than the nomination of persons for
election to the board) must be a proper matter for shareholder action. For business (including, but not limited to, director nominations)
to be properly brought before an annual general meeting by a member pursuant to Article 12.3(c), the member of record intending
to propose the business (the Proposing Member) must have given timely notice thereof in writing to the secretary of the
Company even if such matter is already the subject of any notice to the members or other disclosure, such notice being required
to comply with the requirements set out in Article 12.5 and Article 12.6 (as applicable), the Companies Law and any other applicable
law or regulation. To be timely, a Proposing Member's notice must be received at the registered office of the Company not later
than the close of business on the 90th day, nor earlier than the close of business on the 120th day in advance of the anniversary
of the previous year's annual general meeting if such meeting is to be held on a day which is not more than 30 days in advance
of the anniversary of the previous year's annual general meeting or not later than 60 days after the anniversary of the previous
year's annual general meeting. In no event shall the disclosure of an adjournment or postponement of an annual general meeting
commence a new notice time period (or extend any notice time period).
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|
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12.5
|
For the nomination of any person or persons for election to the board, a Proposing Member's notice
to the secretary of the Company shall set forth or include (i) the name, age, business address and residential address of each
nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the class and number of
Shares which are owned of record and beneficially by each such nominee (if any), (iv) such other
information concerning each such nominee as would be required to be disclosed in a notice of meeting for the election of such nominee
as a director in an election contest (even if an election contest is not involved) or any other document required to be
delivered by the Company to holders of Shares by applicable securities or other applicable laws in connection with such meeting,
(v) a written questionnaire with respect to the background and qualification of such proposed nominee (which questionnaire shall
be provided by the secretary of the Company upon written request), and a written statement and agreement executed by each such
nominee acknowledging that such person (A) consents to being named in the Company's notice of meeting as a nominee and to serving
as a director if elected, (B) intends to serve as a director for the full term for which such person is standing for election,
and, (C) makes the following representations: (1) that the director nominee has read and agrees to adhere to the Company's policies
or guidelines applicable to directors, including with regard to the protection of confidential and privileged information and with
regard to securities trading, all of which shall be provided by the secretary of the Company upon written request, and (2) that
the director nominee is not and will not become a party to any agreement, arrangement, or understanding with, and has not given
any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Company, will act or
vote on any issue or question (a Voting Commitment) that has not been disclosed to the Company or any Voting Commitment
that could limit or interfere with such person's ability to comply, if elected as a director of the Company, with such person's
fiduciary and other duties under applicable law, (3) that the director nominee is not and will not become a party to any agreement,
arrangement, or understanding with any person or entity other than the Company with respect to any direct or indirect compensation,
reimbursement, or indemnification in connection with such person's nomination for director or service as a director that has not
been disclosed to the Company, and (4) that the director nominee consents to being a
director and is not a person who is subject to a disqualification order under Part XXV of the Companies Law or section 67A of the
Companies (Guernsey) Law, 1994, or a person who is disqualified by reason of misconduct, or unfitness, from acting as a director
under the law of a district, territory or place outside Guernsey, and (vi) as to the Proposing Member: (A) the name and address
of the Proposing Member as they appear on the Company's books and of the beneficial owner, if any, on whose behalf the nomination
is being made, (B) the class and number of Shares that are owned by the Proposing Member (beneficially and of record) and owned
by the beneficial owner, if any, on whose behalf the nomination is being made, as of the date of the Proposing Member's notice,
and a representation that the Proposing Member will notify the Company in writing of the class and number of such Shares owned
of record and beneficially as of the record date for the meeting within five business days after the record date for such meeting,
(C) a description of any agreement, arrangement, or understanding with respect to such nomination between or among the Proposing
Member or the beneficial owner, if any, on whose behalf the nomination is being made and any of their affiliates or associates,
and any others (including their names) acting in concert with any of the foregoing, and a representation that the Proposing Member
will notify the Company in writing of any such agreement, arrangement, or understanding in effect as of the record date for the
meeting within five business days after the record date for such meeting, (D) a description of any agreement, arrangement, or understanding
(including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that
has been entered into as of the date of the Proposing Member's notice by, or on behalf of, the Proposing Member or the beneficial
owner, if any, on whose behalf the nomination is being made and any of their affiliates or associates, the effect or intent of
which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of such
person or any of their affiliates or associates with respect to shares of stock of the Company, and a representation that the Proposing
Member will notify the Company in writing of any such agreement, arrangement, or understanding in effect as of the record date
for the meeting within five business days after the record date for such meeting, (E) a representation that the Proposing Member
is a holder of record of Shares entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice, and (F) a representation whether the Proposing Member intends to deliver a form
of proxy to holders of at least the percentage of the Company's issued voting share capital required to approve the nomination
and/or otherwise to solicit proxies from members in support of the nomination. The Company may require any proposed nominee to
furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an
independent director of the Company or that could be material to a reasonable member's understanding of the independence, or lack
thereof, of such nominee.
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|
|
12.6
|
For all business to be proposed at an annual general meeting other than director nominations, a
Proposing Member's notice to the secretary of the Company shall set forth as to each matter the Proposing Member proposes to bring
before the annual general meeting:
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|
|
(a)
|
a brief description of the business desired to be brought before the annual general meeting;
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|
|
(b)
|
the reasons for conducting such business at the annual general meeting;
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|
|
(c)
|
the text of any proposal or business (including the text of any resolutions proposed for consideration
and in the event that such business includes a proposal to amend these Articles, the language of the proposed amendment);
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|
|
(d)
|
any substantial interest, direct or indirect, by security holdings or otherwise, in such business
of the Proposing Member and the beneficial owner, if any, on whose behalf the business is being proposed;
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|
|
(e)
|
any other information relating to such member and the beneficial owner, if any, on whose behalf
the proposal is being made, required to be disclosed in any document required to be delivered by the Company to holders of Shares
by applicable securities or other applicable laws in connection with such meeting;
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|
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(f)
|
a description of all agreements, arrangements, or understandings between or among such member,
the beneficial owner, if any, on whose behalf the proposal is being made, any of their affiliates or associates, and any other
person or persons (including their names) in connection with the proposal of such business and any material interest of such member,
beneficial owner, or any of their affiliates or associates, in such business, including any anticipated benefit therefrom to such
member, beneficial owner, or their affiliates or associates; and
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|
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(g)
|
the information required by Article 12.5 (vi) (A) to (F) above.
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|
12.7
|
Subject to the Companies Law, only such business shall be conducted at an extraordinary general
meeting as shall have been brought before the meeting pursuant to the Company's notice of meeting. In the event that the Company
calls an extraordinary general meeting for the purpose of electing one or more directors to the board, any member entitled to vote
in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified
in the Company’s notice of meeting, if such member delivers a member’s notice that complies with the requirements of
Article 12.5 to the secretary of the Company at its principal executive offices not later than the close of business on the tenth
day following the day on which the date of the extraordinary general meeting and of the nominees proposed by the board to be elected
to such meeting is publicly announced or disclosed.
|
The
chairman of the meeting shall have the power and duty to determine whether a nomination or any other business proposed to be
brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this
Article 12. If any proposed nomination was not made or proposed in compliance with this Article 12 or other business was not
made or proposed in compliance with this Article, then except as otherwise provided by law, the chairman of the meeting shall
have the power and duty to declare that such nomination shall be disregarded or that such proposed other business shall not
be transacted. Notwithstanding anything in these Articles to the contrary, unless otherwise required by law, if a Proposing
Member intending to propose business or make nominations at a meeting pursuant to this Article does not provide the
information required under this Article to the Company, including the updated information required by Article 12.5(vi)(B),
Article 12.5 (vi)(C) and Article 12.5(vi)(D) within five business days after the record date for such meeting, or the
Proposing Member (or a qualified representative of the Proposing Member) does not appear at the meeting to present the
proposed business or nominations, such business or nominations shall not be considered, notwithstanding that proxies in
respect of such business or nominations may have been received by the Company.
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|
12.8
|
Subject to the provisions of these Articles and to any restrictions imposed on any Shares the notice
shall be given to all the members, to all persons entitled to a Share in consequence of the death, bankruptcy or incapacity of
a member where the Company has been notified of his entitlement and to every director and the auditors (if any).
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|
|
12.9
|
The notice of meeting may also specify a time (which shall not be more than 48 hours before the
time fixed for the meeting not taking into account non-working days) by which a person must be entered on the register of members
in order to have the right to attend or vote at the meeting or appoint a proxy to do so. Changes to entries on the register of
members after the time so specified in the notice shall be disregarded in determining the rights of any person to so attend or
vote.
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|
|
12.10
|
The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting
by, any person entitled to receive notice shall not invalidate the proceedings at the meeting.
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|
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13
|
PROCEEDINGS AT GENERAL MEETINGS
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|
|
13.1
|
No business, other than the appointment of a chairman, may be transacted at any meeting unless
the requisite quorum is present in accordance with the Companies Law, save that, for the avoidance of doubt, a single person holding
or representing Shares by proxy of more than one Shareholder shall solely for the purposes of determining a quorum under the Companies
Law be counted as a person in respect of each different Shareholder represented or proxy held (save that persons appointed as proxies
of the same Shareholder shall not be counted as two separate persons, solely for the purposes of calculating the quorum).
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|
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13.2
|
If such a quorum is not present within half an hour from the time appointed for the meeting, or
if during a meeting such a quorum ceases to be present, the meeting, if convened by or upon the requisition of members, shall be
dissolved. If otherwise convened, it shall stand adjourned to such day, time and place as the chairman may determine or as otherwise
may be specified in the original notice of meeting and, if at such adjourned meeting a quorum is not present within five minutes
from the time appointed for the holding of the meeting, those members present in person or by proxy shall be a quorum.
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|
|
13.3
|
At any general meeting, the chairman of the board or, if he is absent or unwilling, one of the
other directors who is appointed for that purpose by the board or (failing appointment by the board) by the members present, shall
preside as chairman of the meeting. If none of the directors are present or are present but unwilling to preside, the members present
and entitled to vote shall choose one of their number to preside as chairman of the meeting.
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|
|
13.4
|
The chairman may, with the consent of a meeting at which a quorum is present (and shall, if so
directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall
be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment
not taken place. When a meeting is adjourned for fourteen days or more, at least seven days' notice shall be given specifying the
day, time and place of the adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be
necessary to give any such notice.
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|
|
13.5
|
A resolution put to the vote of a meeting shall be decided on a show of hands unless before or
on the declaration of the result of the show of hands a poll is duly demanded. Subject to the provisions of the Law, a poll may
be demanded:
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|
|
(b)
|
by at least two members having the right to vote on the resolution; or
|
|
|
(c)
|
by a member or members representing not less than one tenth of the total voting rights of all the
members having the right to vote on the resolution;
|
and a demand by a person as
proxy for a member shall be the same as a demand by the member.
|
|
13.6
|
Unless a poll is duly demanded (and not subsequently withdrawn) a declaration by the chairman that
a resolution has or has not been passed or has been passed with a particular majority or an entry to that effect in the minutes
of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour
of or against the resolution.
|
|
|
13.7
|
The demand for a poll may be withdrawn before the poll is taken but only with the consent of the
chairman; a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand
was made.
|
|
|
13.6
|
A poll shall be taken as the chairman directs and he may appoint scrutineers (who need not be members)
and fix a day, time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution
of the meeting at which the poll was demanded.
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|
|
13.7
|
Notwithstanding any provision to the contrary in the Companies Law, in the case of an equality
of votes, whether on a show of hands or on a poll, the chairman shall not be entitled to a casting vote in addition to any other
vote he may have.
|
|
|
13.8
|
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith.
A poll demanded on any other question shall be taken either forthwith or at such day, time and place as the chairman directs not
being more than thirty days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration
of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made.
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|
|
13.9
|
No notice need be given of a poll not taken forthwith if the day, time and place at which it is
to be taken are announced at the meeting at which it is demanded. In any other case at least seven days' notice shall
be given specifying the day, time and place at which the poll is to be taken.
|
|
|
14.1
|
Subject to any rights or restrictions attached to any Shares and to the provisions of the Articles:
|
|
|
(a)
|
on a show of hands every member who is present in person (or in the case of corporations or other
entities, present by a duly authorised representative) or by proxy shall have one vote; and
|
|
|
(b)
|
on a poll every member present in person (or in the case of corporations or other entities, present
by a duly authorised representative) or by proxy shall have one vote for every Share of which he is the holder.
|
|
|
14.2
|
There shall be no requirement to make available for inspection at any time during a meeting a list
of names, addresses and shareholdings of members.
|
|
|
14.3
|
In the case of joint holders the vote of the senior who tenders a vote, whether in person or by
proxy, shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order
in which the names of the holders stand in the register of members in respect of the relevant Share.
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|
|
14.4
|
A member in respect of whom an order has been made by any court having jurisdiction (whether in
Guernsey or elsewhere) in matters concerning mental disorder may vote, whether by a show of hands or by a poll, by his receiver,
curator or other person authorised in that behalf appointed by that court, and any such receiver, curator or other person may vote
by proxy. Evidence to the satisfaction of the board of the authority of the person claiming to exercise the right to vote shall
be deposited at the office, or at such other place as is specified in accordance with the Articles for the deposit of instruments
of proxy, before the time appointed for holding the meeting or adjourned meeting or the holding of a poll at which the right to
vote is to be exercised and in default the right to vote shall not be exercisable.
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|
|
14.5
|
Unless the board otherwise decides, no member shall be entitled to vote at any general meeting
or at any separate meeting of the holders of any class of Shares in the Company, either in person or by proxy, in respect of any
Share held by him unless all calls and other sums presently payable by him in respect of that Share have been paid.
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|
|
14.6
|
No member of the Company shall, if the directors so determine, be entitled in respect of any Share
held by him to attend or vote (either personally or by representative or by proxy) at any general meeting or separate class meeting
of the Company or to exercise any other right conferred by membership in relation to any such meeting if he or any other person
appearing to be interested in such Shares has failed to comply with a Disclosure Notice within 14 days, in a case where the Shares
in question represent at least 0.25 per cent. of their class, or within 28 days, in any other case, from the date of such Disclosure
Notice. These restrictions will continue until the information required by the notice is supplied to the Company or until the Shares
in question are transferred or sold in circumstances specified for this purpose in these Articles.
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|
|
14.7
|
No objection shall be raised to the entitlement of any person to vote as he did except at the meeting
or adjourned meeting or poll at which the vote objected to is or may be tendered, and every vote not disallowed at the meeting
or poll shall be valid for all purposes. Any such objection made in due time shall be referred to the chairman of the meeting whose
decision shall be final and conclusive.
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|
|
14.8
|
A member may appoint another person as his proxy to exercise all or any of his rights to attend
and to speak and vote at a meeting of the Company. A proxy need not be a member. A member may appoint more than one proxy to attend
on the same occasion, provided that each proxy is appointed to exercise the rights attached to a different share or shares held
by him. Where two or more valid but differing appointments of proxy are delivered or received for the same Share for use at the
same meeting, the one which is last validly delivered or received (regardless of its date or the date of its execution) shall be
treated as replacing and revoking the other or others as regards that Share. If the Company is unable to determine which appointment
was last validly delivered or received, none of them shall be treated as valid in respect of that Share unless the directors otherwise
determine. Delivery or receipt of an appointment of proxy does not prevent a member attending and voting in person at the meeting
or an adjournment of the meeting or on a poll.
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|
|
14.9
|
An instrument appointing a proxy shall be in writing in any usual common form, or as approved by
the directors, including in electronic form, and shall be executed by or on behalf of the appointor or in either case otherwise
authenticated in such manner as the directors may determine, including by electronic means. The directors may require such evidence
as they consider necessary to determine and verify (a) the identity of the member and the proxy; and (b) where the proxy is appointed
by a person acting on behalf of the member, the authority of that person to make the appointment.
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|
|
14.10
|
The instrument appointing a proxy and any reasonable evidence required by the directors under 14.8
above, shall:
|
|
|
(a)
|
subject to Articles 14.10 (c) and (d), in the case of an instrument of proxy in hard copy form,
be delivered to the office or such other place as is specified for that purpose in the notice of meeting or in the instrument of
proxy sent by the Company in relation to the meeting (a "proxy notification address") by at least the minimum
time prior to the relevant meeting or adjourned meeting (or, in the case of a poll, by at least 48 hours prior to the time appointed
for taking the poll), as is provided in the Companies Law, and in default the instrument of proxy shall not be treated as valid;
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|
|
(b)
|
subject to Articles 14.10 (c) and (d), the case of an instrument of proxy sent by electronic means,
where the Company has given an electronic address (a ‘proxy notification electronic address’) in the notice
calling the meeting or in the instrument of proxy be received at such proxy notification electronic address by at least 48 hours
prior to the time for holding the meeting or adjourned meeting at which the person named in the form of appointment of proxy proposes
to vote;
|
|
|
(c)
|
in the case of a poll taken more than 48 hours after it is demanded, be delivered or received to
a proxy notification address or a proxy notification electronic address by at least 24 hours before the time appointed for the
holding of the adjourned meeting or the taking of the poll; or
|
|
|
(d)
|
in the case of a poll which is not taken at the meeting at which it is demanded but is taken 48
hours or less after it is demanded, or in the case of an adjourned meeting to be held 48 hours or less after the time fixed for
holding the original meeting, be delivered to or received:
|
|
|
(i)
|
at the proxy notification address or a proxy notification electronic address in accordance with
Articles 14.10(a) or (b);
|
|
|
(ii)
|
by the chairman of the meeting at which the poll is demanded or, as the case may be, at the original
meeting; or
|
|
|
(iii)
|
at a proxy notification address or a proxy notification electronic address by such time as the
chairman of the meeting may direct at the meeting at which the poll is demanded.
|
|
|
14.11
|
In calculating the periods in this Article, no account shall be taken of any part of a day which
is not a working day.
|
|
|
14.12
|
The directors may decide either generally or in a specific case, to treat a proxy appointment as
valid notwithstanding that the appointment or any information required under Article 14.9 has not been received in accordance with
the requirements of these Articles. Subject to the foregoing, if the proxy appointment and any of the information required under
Article 14.9 is not received in the manner set out in Article 14.9, the appointee shall not be entitled to vote in respect of the
Shares in question.
|
|
|
14.13
|
A vote given or poll demanded by proxy or by the duly authorised representative of a body corporate
shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice
of the determination was received by the Company at the office or at such other place as has been appointed for the deposit of
instruments of proxy before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded
or (in the case of a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking
the poll.
|
|
|
15
|
CORPORATIONS OR OTHER LEGAL ENTITIES ACTING BY REPRESENTATIVES
|
Any corporation or other legal
entity which is a member of the Company may, by resolution of its board or other governing body, authorise such person or persons
as it thinks fit to act as its representative at any meeting of the Company or at any meeting of any class of members of the Company,
and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation or other entity which he
represents as that corporation or entity could exercise if it were an individual member of the Company. A corporation or entity
present at any meeting by such representative shall be deemed for the purposes of these Articles to be present in person.
|
|
16
|
RESOLUTIONS IN WRITING
|
|
|
16.1
|
Anything that may, in accordance with the provisions of the Companies Law, be done by resolution
passed at a general meeting of the Company or at a meeting of the holders of any class of Shares in the Company may be done by
resolution in writing signed by or on behalf of each member who, on the date when a copy of the resolution is sent to members (or
if a copy of the resolution is sent to members on different days, the first of those days), would be entitled to vote on the resolution
if it were proposed at a meeting. A resolution in writing may be executed in one or more counterparts.
|
|
|
16.2
|
Subject to the Companies Law, a resolution proposed as a written resolution by the directors of
the Company shall be put to members in such a manner as the directors may determine, provided that a copy of the resolution is
accompanied by a statement informing each member how to signify agreement to the resolution in accordance with the Companies Law
and the date by which the resolution must be passed, which may be determined by the directors in their absolute discretion, provided
that in the absence of any such decision, the written resolution shall lapse after 28 days from the date the resolution is first
circulated.
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|
|
16.3
|
Subject to the Companies Law a resolution proposed as a written resolution may specify a date and
time (whether greater or lesser than any period for the time being specified by the Companies Law) by which the proposed written
resolution lapses if it has not been passed by the requisite majority of eligible members. No instrument received or signature
appended thereto after such time shall be counted.
|
|
|
16.4
|
The accidental omission to give notice of any proposed resolution in writing to, or the non-receipt
of notice of a resolution in writing by, any person entitled to receive notice shall not invalidate any resolution or any proposed
resolution.
|
The number
of directors shall not be subject to any maximum or minimum.
|
|
18.1
|
A director shall not be entitled to appoint any other director or person to be an alternate director.
|
|
|
19.1
|
Subject to the provisions of the Companies Law, the Memorandum and the Articles and to any directions
given by special resolution, the business of the Company shall be managed by the directors who may exercise all the powers of the
Company in any part of the world. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior
act of the directors which would have been valid if that alteration had not been made or that direction had not been given. The
powers given by this Article shall not be limited by any special power given to the directors by these Articles and a meeting of
directors at which a quorum is present may exercise all the powers exercisable by the directors. Where a director is the sole director
of the Company, he shall have and may exercise all the powers and authorities in and over
the affairs of the Company as by these Articles are conferred on the directors.
|
|
|
19.2
|
The directors may, by power of attorney signed by any one or more persons duly authorised, appoint
any person, either generally or in respect of any specific matter, to represent the Company, act in its name and execute documents
on its behalf.
|
|
|
20
|
DELEGATION OF DIRECTORS' POWERS
|
|
|
20.1
|
Subject to Article 20.2, the directors may delegate any of their powers to any committee consisting
of one or more directors and (if thought fit) one or more other persons. They may also delegate to any director or employee of
a Group Company such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject
to any conditions the directors may impose, and either collaterally with or to the exclusion of their own powers and may be revoked
or altered. Subject to any such conditions, the proceedings of a committee shall be governed by the Articles regulating the proceedings
of directors so far as they are capable of applying.
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|
|
20.2
|
A committee established pursuant to Article 20.1 may not be composed of (a) a majority of the persons
resident in the United Kingdom for tax purposes or (b) persons all resident in the United States for tax purposes.
|
|
|
20.3
|
A meeting of a committee established pursuant to Article 20.1 may be held at any place in Guernsey
or elsewhere, save that meetings shall be held in the United Kingdom or the United States of America only in rare and exceptional
circumstances and in any event no more than one such meeting may be held in the United Kingdom or the United States of America
in any calendar year.
|
|
|
20.4
|
Any committee member enabled to participate in the proceedings of a meeting by means of a communication
device (including a telephone) which allows all of the other members of the committee present at such meeting to hear or read what
is said or communicated by such committee member at all times and such committee member to hear or read what is said or communicated
by all other members present at such meeting at all times (in each case whether in person or by means of such type of communication
device) shall, save for any committee member participating from the United Kingdom or the United States of America, be deemed to
be present at such meeting and shall be counted when reckoning a quorum and be entitled to vote. For the avoidance of doubt any
committee member participating from the United Kingdom or the United States of America shall be deemed not to be present at such
meeting, shall not be counted when reckoning a quorum and shall not be entitled to vote.
|
|
|
21
|
APPOINTMENT AND RETIREMENT OF DIRECTORS
|
|
|
21.1
|
Subject to the Companies Law and these Articles, the directors shall have power at any time, and
from time to time, without sanction of the Company in general meeting, to appoint any person to be a director, to fill a casual
vacancy. Irrespective of the terms of his appointment, a director so appointed shall hold office only until the first annual general
meeting notice of which is first given after his appointment and shall not be taken into account in determining the
directors who are to retire by rotation at the meeting. If not re-appointed at such annual general meeting, he shall vacate office
at its conclusion.
|
|
|
21.2
|
Subject to the Companies Law and these Articles, the Company may by ordinary resolution:
|
|
|
(a)
|
appoint any person as a director; and
|
|
|
(b)
|
remove any person from office as a director.
|
There shall
be no requirement for the appointment or removal of two or more directors to be considered separately.
|
|
21.3
|
A person must not be appointed a director unless he has in writing consented to being a director
of the Company and declared that he is not ineligible under the Companies Law.
|
|
|
21.4
|
A director may resign from office as a director by giving notice in writing to that effect to the
Company at its office, which notice shall be effective upon such date as may be specified in the notice, failing which upon delivery
to the registered office.
|
|
|
21.5
|
Subject to Article 21.6, at every annual general meeting, commencing at the annual general meeting
of the Company in 2021, each of the directors shall retire from office.
|
|
|
21.6
|
A director who retires at an annual general meeting may, if willing to act, be re-appointed. If
he is not re-appointed, he shall retain office until the meeting appoints someone in his place, or if it does not do so, until
the end of the meeting.
|
|
|
21.7
|
There is no age limit at which a director is required to retire.
|
|
|
21.8
|
A person may not be appointed as a director if it would result in (a) a majority of the directors
being resident in the United Kingdom for tax purposes or (b) all of the directors being resident in the United States of America
for tax purposes.
|
|
|
22
|
DISQUALIFICATION AND REMOVAL OF DIRECTORS
|
|
|
22.1
|
A director shall not be required to hold any qualification Shares.
|
|
|
22.2
|
The office of a director shall be vacated if:
|
|
|
(a)
|
he ceases to be a director by virtue of any provision of the Companies Law or he ceases to be eligible
to be a director in accordance with the Companies Law; or
|
|
|
(b)
|
he has his affairs declared en désastre, becomes bankrupt or makes any arrangement
or composition with his creditors generally or otherwise has any judgment executed on any of his assets; or
|
|
|
(c)
|
he becomes of unsound mind or incapable or an order is made by a court having jurisdiction (whether
in Guernsey or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator
or other person to exercise powers with respect to his property or affairs; or
|
|
|
(d)
|
he shall have absented himself from meetings of the directors for a consecutive period of 12 months
and the directors resolve that his office shall be vacated; or
|
|
|
(f)
|
he resigns his office by written notice to the Company; or
|
|
|
(g)
|
the Company so resolves by ordinary resolution.
|
|
|
23
|
REMUNERATION OF DIRECTORS
|
|
|
23.1
|
The directors shall be remunerated for their services as directors at such rate as the directors
shall determine.
|
|
|
23.2
|
The directors may grant special remuneration to any director who, being so called upon, shall be
willing to render any special or extra services to the Company. Such special remuneration may be made payable to such director
in addition to or in substitution for his ordinary remuneration as a director and may be made payable by a lump sum or by way of
salary or commission or by any or all of those models or otherwise.
|
The directors may be paid:
|
|
(a)
|
all reasonable travelling, hotel and other out of pocket expenses properly incurred by them in
connection with their attendance at meetings of directors or committees of directors or general meetings or separate meetings of
the holders of any class of Shares or of debentures of the Company or otherwise in connection with the discharge of their duties;
and
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(b)
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all reasonable expenses properly incurred by them in seeking independent professional advice on
any matter that concerns them in the furtherance of their duties as a director of the Company.
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25
|
DIRECTORS' APPOINTMENTS AND INTERESTS
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25.1
|
Subject to the provisions of the Companies Law, the directors may appoint one or more of their
number to any executive office in the Company and may enter into an agreement or arrangement with any director for his employment
by the Company or for the provision by him of any services outside the scope of the ordinary duties of a director. Any such appointment,
agreement or arrangement may be made upon such terms as the directors determine and they may remunerate any such director for his
services as they determine.
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25.2
|
Subject to and in accordance with the Companies Law, a director must, immediately after becoming
aware of the fact that he is interested in a transaction or proposed transaction with the Company, disclose that fact to the directors.
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25.3
|
For the purposes of the preceding Article a general disclosure given to the directors to the effect
that a director has an interest (as director, officer, employee, member or otherwise) in a party and is to be regarded as interested
in any transaction which may after the date of the disclosure be entered
into with that party shall be deemed to be sufficient disclosure of his interest in any such transaction or arrangement.
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25.4
|
Subject to the provisions of the Companies Law, and provided that he has disclosed his interests
in accordance with the preceding two Articles, a director notwithstanding his office:
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(a)
|
may hold any other office or place of profit under the Company (other than the office of auditor)
in conjunction with his office of director on such terms as to the tenure of office and otherwise as the directors may determine;
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(b)
|
may be a party to, or otherwise interested in, any transaction or arrangement with the Company
or in which the Company is otherwise interested;
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(c)
|
may be a director or other officer of, or employed by, or a party to any transaction or arrangement
with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested;
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(d)
|
shall not, by reason of his office, be accountable to the Company for any remuneration or benefit
which he derives from any such office or employment or from any such transaction or arrangement or from any interest in any such
body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit;
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(e)
|
may act by himself or his firm in a professional capacity for the Company, other than as auditor,
and he or his firm shall be entitled to remuneration for professional services as though he were not a director of the Company;
and
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(f)
|
may, be counted in the quorum present at any meeting where he or any other director is appointed
to hold any such office or place of profit under the Company, or where the terms of appointment are arranged and he may vote on
any such appointment or arrangement other than his own appointment or the terms thereof.
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26
|
DIRECTORS' GRATUITIES AND PENSIONS
|
The directors may provide benefits,
whether by the payment of gratuities or pensions or by insurance or otherwise, for any director who has held but no longer holds
any executive office or employment with the Company or with any body corporate which is or has been a subsidiary undertaking of
the Company or a predecessor in business of the Company or of any such subsidiary undertaking, and for any member of his family
(including a spouse and a former spouse) or any person who is or who was dependent on him, and may (as well before as after he
ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit.
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27
|
PROCEEDINGS OF DIRECTORS
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27.1
|
Subject to the provisions of these Articles, the directors may regulate their proceedings as they
think fit.
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27.2
|
A director may, and the secretary at the request of a director shall, call a meeting of the directors.
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27.3
|
A meeting of the directors may be held at any place in Guernsey or elsewhere, save that meetings
may only be held in the United Kingdom or the United States of America in rare and exceptional circumstances and in any event no
more than one meeting of the directors may be held in the United Kingdom or the United States of America in any calendar year.
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27.4
|
Questions arising at a meeting of the directors shall be decided by a majority of eligible votes.
In the case of an equality of votes the chairman of the meeting shall have a second or casting vote.
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27.5
|
The quorum for the transaction of the business of the directors may be fixed by the directors and
unless so fixed at any other number shall be one; provided, however, that in the case of a quorum of one, it may not consist of
a director who at such time is physically present in the United Kingdom or the United States of America; in the case of a quorum
of two, it may not be consist of directors present (i) wholly in the United Kingdom or (ii) wholly in the United States of America;
and in any case, subject to Articles 27.3 and 27.6 and other relevant provisions of these Articles.
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27.6
|
Any director enabled to participate in the proceedings of a meeting by means of a communication
device (including a telephone) which allows all of the other directors present at such meeting to hear or read what is said or
communicated by such director at all times and such director to hear or read what is said or communicated by all other directors
present at such meeting at all times (in each case whether in person or by means of such type of communication device) shall, save
for any director participating from the United Kingdom or the United States of America, be deemed to be present at such meeting
and shall be counted when reckoning a quorum and be entitled to vote. For the avoidance of doubt any director participating from
the United Kingdom or the United States of America shall be deemed not to be present at such meeting, shall not be counted when
reckoning a quorum and shall not be entitled to vote.
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27.7
|
The continuing directors or the only continuing director may act notwithstanding any vacancies
in their number, but, if the number of directors is less than the number fixed as the quorum, the continuing directors or director
may act only for the purpose of filling vacancies or of calling a general meeting.
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27.8
|
The directors may appoint one of their number to be the chairman of the board and may at any time
remove him from that office. Unless he is unwilling to do so or is participating in a meeting from the United Kingdom or the United
States of America, the director so appointed shall preside at every meeting of directors at which he is present. But if there is
no director holding that office, or if the director holding it is unwilling to preside or is not present within five minutes after
the time appointed for the meeting, the directors present may appoint one of their number to be chairman of the meeting. No director
participating in a meeting from the United Kingdom or the United States of America shall be appointed as chairman of the applicable
meeting.
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27.9
|
All acts done by a meeting of directors, or of a committee of directors, or by a person acting
as a director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any director
or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be as valid as
if every such person had been duly appointed and was
qualified and had continued to be a director and had been entitled to vote.
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27.10
|
A meeting of directors may be held notwithstanding that such directors may not be in the same place
if a director is, by any means, in communication with one or more other directors so that each director participating in the communication
can hear or read what is said or communicated by each of the others and any such meeting shall be deemed to be held in the place
in which the chairman of the meeting is present (which, for the avoidance of doubt, shall be the director elected by such meeting
to be chairman of that meeting, provided that such chairman shall not be in the United Kingdom or the United States of America).
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27.11
|
A resolution in writing signed by all the directors entitled to receive notice of a meeting of
directors or of a committee of directors shall be as valid and effectual as if it had been passed at a meeting of directors or
(as the case may be) a committee of directors duly convened and held and may consist of several documents in the like form each
signed by one or more directors. No such resolution shall be valid if a majority of the directors sign the resolution in the United
Kingdom or the United States of America.
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|
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27.12
|
Subject to other provisions of these Articles, a director may vote in respect of any transaction,
arrangement or proposed transaction or arrangement in which he has an interest but, provided he has disclosed his interest in accordance
with these Articles and the Companies Law, and he shall be counted towards a quorum at any meeting of the directors at which any
such transaction or arrangement or proposed transaction or arrangement shall come before the directors for consideration.
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27.13
|
Where proposals are under consideration concerning the appointment of two or more directors to
offices or employment with the Company or any body corporate in which the Company is interested the proposals may be divided and
considered in relation to each director separately and (provided he is not for another reason precluded from voting) each of the
directors concerned shall be entitled to vote and be counted in the quorum in respect of each resolution except that concerning
his own appointment.
|
Subject to the provisions of
the Companies Law, a secretary shall be appointed by the directors for such term, at such remuneration and upon such conditions
as they may think fit and any secretary so appointed may be removed by them.
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29
|
MINUTES AND OTHER SECRETARIAL DUTIES
|
The secretary shall cause minutes
to be made in books kept for the purpose in accordance with the Companies Law and shall carry out all other duties of company secretaries
set out in the Companies Law.
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30.1
|
The common seal (if any) shall only be used by the authority of the directors or of a committee
of directors authorised by the directors.
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30.2
|
Subject to the provisions of the Companies Law the directors may determine to have an official
seal for use in any country, territory or place outside the Island of Guernsey, which shall be a facsimile of the common seal of
the Company. Any such official seal shall in addition bear the name of every territory, district or place in which it is to be
used.
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30.3
|
The directors may determine who shall sign any instrument to which the common seal or any official
seal is affixed and, in respect of the common seal, unless otherwise so determined such instrument shall be signed by a director
and by the secretary or by a second director. A person affixing the common seal or any official seal to any instrument shall certify
thereon the date upon which and the place at which it is affixed.
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31
|
DIVIDENDS AND DISTRIBUTIONS
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31.1
|
The Company may reduce its share capital by way of distribution of amounts standing to any capital
account of the Company or otherwise as the directors may determine.
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31.2
|
Subject to the provisions of the Companies Law, the Company may by ordinary resolution declare
a dividend and/or distribution to be paid to members according to their respective rights and interests but no dividend or distribution
shall exceed the amount recommended by the directors.
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31.3
|
Subject to the provisions of the Companies Law, the directors may if they think fit from time to
time pay an interim dividend or distribution if it appears to them that it is justified by the assets of the Company.
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If the share
capital of the Company is divided into different classes, the directors may pay interim dividends or distributions on Shares which
confer deferred or non-preferred rights with regard to dividends or distributions as well as on Shares which confer preferential
rights with regard to dividends or distributions, but no interim dividend or distribution shall be paid on Shares carrying deferred
or non-preferred rights if, at the time of payment, any preferential dividend or distribution is in arrears.
The directors
may also pay, at intervals settled by them, any dividend or distribution payable at a fixed rate if it appears to them that the
assets of the Company justify the payment.
The directors
may determine or direct that an interim dividend or distribution shall be satisfied wholly or partly by the transfer, distribution
or dividend of assets and, where any difficulty arises in regard to the transfer, distribution or dividend, the directors may settle
the same and in particular may issue fractional certificates and fix the value for the transfer, distribution or dividend of any
assets and may determine that cash shall be paid to any member at the value so fixed in order to adjust the rights of members and
may vest any assets in trustees.
Provided
the directors act in good faith, they shall not incur any liability to the holders of Shares conferring preferred rights for any
loss they may suffer by the lawful payment of an interim dividend or distribution on any Shares having deferred or non-preferred
rights.
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|
31.4
|
Except as otherwise provided by the rights attached to Shares, all dividends or distributions shall
be declared and paid according to the amounts paid up on the Shares on which the dividend or distribution is
paid. All dividends or distributions shall be apportioned and paid proportionately to the to the amounts paid up on the Shares
during any portion or portions of the period in respect of which the dividend or distribution is paid, but, if any Share is issued
on terms providing that it shall rank for dividend or distribution as from a particular date, that Share shall rank for dividend
or distribution accordingly.
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31.5
|
The Company may, by ordinary resolution or by resolution of its board, fix any date as the record
date for any dividends and/or distributions, which may be on or at any time before or after any date on which the dividends and/or
distributions are declared, paid or made.
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|
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31.6
|
Dividends and distributions may be declared and paid in any currency or currencies that the board
shall determine. The board may also determine the exchange rate and the relevant date for determining the value of the dividend
or distribution in any currency.
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|
31.7
|
A general meeting declaring a dividend or distribution may, upon the recommendation of the directors,
direct that it shall be satisfied wholly or partly by the transfer, distribution or dividend of assets and, where any difficulty
arises in regard to the transfer, distribution or dividend, the directors may settle the same and in particular may issue fractional
certificates and fix the value for the transfer, distribution or dividend of any assets and may determine that cash shall be paid
to any member at the value so fixed in order to adjust the rights of members and may vest any assets in trustees.
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31.8
|
If a dividend or distribution shall be determined, declared or directed to be satisfied wholly
or partly by the transfer, distribution or dividend of assets the directors may for that purpose value any assets and determine
how the transfer, distribution or dividend shall be carried out as between the members or different classes of members and may
vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as they may determine, but
no member shall be compelled to accept any assets upon which there is a liability.
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|
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31.9
|
Any dividend or distribution or other moneys payable in respect of a Share may be paid by electronic
transfer or cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of
the Share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of the one
of those persons who is first named in the register of members or to such person and to such address as the person or persons entitled
may in writing direct (and in default of which direction to that one of the persons jointly so entitled as the directors shall
in their absolute discretion determine). Every cheque shall be made payable to the order of the person or persons entitled or to
such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to
the Company. Any joint holder or other person jointly entitled to a Share as aforesaid may give receipts for any dividend or distribution
or other moneys payable in respect of the Share.
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|
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31.10
|
The directors may deduct from any dividend or distribution, or other moneys, payable to any member
on or in respect of a Share, all sums of money (if any) presently payable by him to the Company on account of calls or otherwise
in relation to the Shares of the Company.
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|
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31.11
|
No dividend or distribution or other moneys payable in respect of a Share shall bear interest against
the Company unless otherwise provided by the rights attached to the Share.
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|
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31.12
|
All unclaimed dividends or distributions may be invested or otherwise made use of by the directors
for the benefit of the Company until claimed and the Company shall not be constituted a trustee thereof. Any dividend or distribution
which has remained unclaimed after a period of twelve years from the date when it became due for payment shall, if the directors
so resolve, be forfeited and cease to remain owing by the Company.
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31.13
|
The directors are empowered to create reserves before recommending or declaring any dividend or
distribution. The directors may also carry forward any profits or other assets of the Company which they think prudent not to divide
or distribute.
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32
|
CAPITALISATION OF PROFITS
|
The directors may with the
authority of an ordinary resolution of the Company:
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|
(a)
|
subject as hereinafter provided, resolve to capitalise any undistributed assets of the Company
not required for paying any preferential dividend or distribution;
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|
(b)
|
appropriate the sum resolved to be capitalised to the members in proportion to the amounts of the
Shares (whether or not fully paid) held by them respectively which would entitle them to participate in a dividend or distribution
of that sum if the Shares were fully paid and the sum were distributable and apply such sum on their behalf either in or towards
paying up the amounts (if any) for the time being unpaid on any Shares held by them respectively, or in paying up in full unissued
Shares or debentures of the Company in an amount equal to that sum, and allot the Shares or debentures credited as fully paid to
those members, or as they may direct, in those proportions, or partly in one way and partly in the other;
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|
(c)
|
make such provision by the issue of fractional certificates or by payment in cash or otherwise
as they determine in the case of Shares or debentures becoming distributable under this Article in fractions; and
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|
(d)
|
authorise any person to enter on behalf of all the members concerned into an agreement with the
Company providing for the allotment to them respectively, credited as fully paid, of any Shares or debentures to which they are
entitled upon such capitalisation, any agreement made under such authority being binding on all such members.
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|
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33.1
|
No member shall (as such) have any right of inspecting any accounting records or other book or
document of the Company except as conferred by the Companies Law or authorised by the directors or by these Articles.
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|
|
33.2
|
The Company may appoint auditors to examine the accounts and report thereon in accordance with
the Companies Law.
|
The directors
may exercise all the powers of the Company to borrow and to give guarantees, mortgage, hypothecate, pledge or charge all or part
of its undertaking, property (present and future) or assets or uncalled capital and to issue debentures and other securities whether
outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
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|
35.1
|
Any notice or report to be given to or by any person pursuant to the Articles shall be in writing
except that a notice calling a meeting of the directors or a committee of directors need not be in writing.
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|
|
35.2
|
The Company may send, deliver, give or serve any notice, account, report or other document (each
a Document) to a member either:
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|
|
(b)
|
by sending it by post in a prepaid envelope addressed to the member at his registered address or
by leaving it at that address; or
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|
|
(c)
|
by transmitting it by facsimile to the facsimile number last notified to the Company by the member;
or
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|
|
(d)
|
by transmitting it by electronic means (other than by transmission by facsimile) to that member's
relevant electronic address from time to time held by the Company for that member or by means of a website in accordance with the
Companies Law, a member is deemed to agree to the sending of documents by electronic means in any particular electronic form and
to the sending of documents by means of a website; or
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|
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(e)
|
if service cannot be effected in accordance with paragraphs (a) to (d) inclusive above, in any
other manner permitted by the Companies Law.
|
|
|
35.3
|
In the case of joint holders of a Share, all Documents shall be given to the joint holder whose
name stands first in the register of members in respect of the joint holding and Documents so given shall be sufficient disclosure
to all the joint holders.
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|
|
35.4
|
A member present, either in person or by proxy, at any meeting of the Company or of the holders
of any class of Shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes
for which it was called.
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|
|
35.5
|
Every person who becomes entitled to a Share shall be bound by any notice in respect of that Share
which, before his name is entered in the register of members, has been duly given to a person from which he derives his title.
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|
|
35.6
|
Service of any Document by post shall be proved by showing the date of posting, the address thereon
and the fact of prepayment. A Document sent by post shall, unless the contrary is shown, be deemed to have been received:
|
|
|
(a)
|
in the case of a Document sent to an address in the United Kingdom, the Channel Islands or the
Isle of Man, on the second day after the day of posting;
|
|
|
(b)
|
in the case of a Document sent elsewhere, on the third day after the day of posting; and
|
excluding
in each case any day which is a Saturday, Sunday, Good Friday, Christmas Day, a bank holiday in Guernsey or a day appointed as
a day of public thanksgiving or public mourning in Guernsey.
|
|
35.7
|
Any Document not sent by post, but which is left at a registered address or at an address for services
is deemed to be given on the day it is left.
|
|
|
35.8
|
Any Document sent by facsimile or by other electronic means shall be deemed to be received immediately
after it was transmitted, unless the contrary is shown. . In proving service of a Document sent by facsimile or by electronic means
it shall be sufficient to show that:
|
|
|
(a)
|
in the case of a Document sent by facsimile, the facsimile was properly addressed to the facsimile
number last notified to the Company by the member and that a transmission report was generated by the sender's facsimile machine
recording a message from the recipient's facsimile machine that all pages were successfully transmitted;
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|
|
(b)
|
in the case of a notice sent by other electronic means, the electronic message was properly addressed
to the electronic address from time to time held by the Company for that member, and that no error message has been received in
relation to the electronic message or the Document by the Company.
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|
|
35.9
|
Any Document served by an advertisement or notice published in a newspaper or La Gazette Officielle
is deemed to be given to all members and other persons entitled to receive it at noon on the day when the advertisement or notice
appears or, where an advertisement or notice is given by more than one advertisement or notice and the advertisements or notices
appear on different days, at noon on the last of the days when the advertisements or notices appear.
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|
|
35.10
|
Any Document served or delivered by the Company by any other means is deemed to be served when
the Company has taken the action it has been authorised to take for that purpose.
|
|
|
35.11
|
A Document may be given by the Company to the persons entitled to a Share in consequence of the
death, bankruptcy or incapacity of a member by sending or delivering it, in any manner authorised by these Articles for the giving
of Documents to a member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt
or curator of the member or by any like description at the address, if any, supplied for that purpose by the persons claiming to
be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given
if the death, bankruptcy or incapacity had not occurred. If more than one person would be entitled to receive a notice in consequence
of the death, bankruptcy or incapacity of a member, notice given to any
one of such persons shall be sufficient notice to all such persons.
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|
|
36.1
|
If the Company shall be wound up, the Company may, with the sanction of a special resolution and
any other sanction required by the Companies Law, divide the whole or any part of the assets of the Company among the members in
specie, and the liquidator or, where there is no liquidator, the directors, may for that purpose value any assets and determine
how the division shall be carried out as between the members or different classes of members and, with the like sanction, may vest
the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he or they may determine, but
no member shall be compelled to accept any assets upon which there is a liability.
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|
|
36.2
|
Where the Company is proposed to be or is in the course of being wound up and the whole or part
of its business or property is proposed to be transferred or sold to another company the liquidator may, with the sanction of an
ordinary resolution, receive in compensation shares, policies or other like interests for distribution or may enter into any other
arrangements whereby the members may, in lieu of receiving cash, shares, policies or other like interests, participate in the profits
of or receive any other benefit from the transferee.
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|
|
37.1
|
Without prejudice to any indemnity to which he may otherwise be entitled, every person who is or
was a director, alternate director, secretary, resident agent, other officer or auditor of the Company, and their respective heirs
and executors (each an Indemnified Person) shall be fully indemnified in so far as the Companies Law allows, out of the
assets and profits of the Company from and against all actions, suits, proceedings, expenses and liabilities (Indemnification
Matters) which they or their respective heirs or executors may incur by reason of any contract entered into or any act or omission
in or about the execution of their respective offices or trusts (including, without prejudice to the generality of the foregoing,
against any costs, charges, expenses, losses or liabilities suffered or incurred by such persons in respect of any act or omission
in the actual or purported execution and/or discharge of their duties and/or the exercise or purported exercise of their powers
and discretions and/or otherwise in relation to or in connection with their duties, powers or offices in relation to the Company),
except such (if any) as would otherwise attach to them in connection with any negligence, default, breach of duty or breach of
trust in relation to the Company and none of them shall be answerable for the acts, receipts, neglects or defaults of the others
of them or for joining in any receipt for the sake of conformity or for any bankers or other person with whom any moneys or assets
of the Company may be lodged or deposited for safe custody or for any bankers or other persons into whose hands any money or assets
of the Company may come or for any defects of title of the Company to any property purchased or for insufficiency or deficiency
of, or defect in, title of the Company to any security upon which any moneys of the Company shall be placed out or invested or
for any loss, misfortune or damage resulting from any such cause as aforesaid or which may happen in or about the execution of
their respective offices or trusts except should the same happen by or through their own negligence, default, breach of duty or
breach of trust in relation to the Company, provided that this Article shall be deemed not to provide for, or entitle any
person to, indemnification to the extent that it would cause this Article, or any part of it, to be treated as void under the Companies
Law.
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|
|
37.2
|
The Company shall pay the expenses (including lawyers’ fees) actually and reasonably incurred
by an Indemnified Person in defending any Indemnification Matter in advance of its final disposition, upon receipt of a written
undertaking by or on behalf of such person to promptly repay all amounts advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses
under Article 37.1 or otherwise. Payment of such expenses actually and reasonably incurred by such person, may be made by the Company,
subject to such terms and conditions as the directors in their discretion deem appropriate.
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|
|
37.3
|
Without prejudice to any other provisions of the Articles, the directors may exercise all the powers
of the Company to purchase and maintain insurance (including, subject to applicable law, from an associated Company or a Group
Company) for the benefit of a person who is or was a director, alternate director, secretary, resident agent, other officer or
auditor of the Company or of a company which is or was a subsidiary undertaking of the Company or in which the Company has or had
an interest (whether direct or indirect), indemnifying him against liability for negligence, default, breach of duty or breach
of trust or other liability which may lawfully be insured against by the Company, (including, without prejudice to the generality
of the foregoing, insurance against any costs, charges, expenses, losses or liabilities suffered or incurred by such persons in
respect of any act or omission in the actual or purported execution and/or discharge of their duties and/or the exercise or purported
exercise of their powers and discretions and/or otherwise in relation to or in connection with their duties, powers or offices
in relation to the Company or any such other body).
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|
|
38.1
|
Subject to the Companies Law, a director shall be entitled at any time to inspect the register
of members, the minutes of proceedings at general meetings, the minutes of proceedings at directors' meetings, the register of
annual returns, the register of directors, the register of secretaries, the index of members (if any), copies of all resolutions
of members passed otherwise than at general meetings and the accounting records.
|
|
|
38.2
|
Subject to the Companies Law, a member shall be entitled to inspect the register of members, the
minutes of proceedings at general meetings, the register of annual returns, the register of annual returns, the register of directors,
any register of secretaries and the index of members (if any) and copies of all resolutions of members passed otherwise than at
general meetings.
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38.3
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The rights of inspection shall be exercisable during ordinary business hours only.
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These Articles may be amended
from time to time in accordance with the Companies Law.
Unless the Company consents
in writing to the selection of an alternative forum, the Courts of Guernsey shall, to the fullest extent permitted by law, be the
sole and exclusive forum for the resolution of any member complaint asserting a cause of action arising under the Companies Law
or these Articles. The Company shall be entitled to security for costs in connection with any proceeding brought against it. Any
person or entity purchasing or otherwise acquiring or holding any interest in Shares shall be deemed to have notice of and to have
consented to this Article.
Exhibit 1.2
THE COMPANIES (GUERNSEY) LAW, 2008 (AS
AMENDED)
COMPANY LIMITED BY SHARES
MEMORANDUM
OF INCORPORATION
of
BURFORD CAPITAL LIMITED
Registered this 11th day of
September 2009
Ogier
Ogier House
St Julian’s Avenue
St Peter Port
Guernsey
GY1 1WA
THE COMPANIES
(GUERNSEY) LAW, 2008 (AS AMENDED)
(the “Law”)
COMPANY
LIMITED BY SHARES
MEMORANDUM
OF INCORPORATION
of
BURFORD CAPITAL LIMITED
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1.
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The name of the Company is: “BURFORD CAPITAL LIMITED”.
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2.
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The registered office of the Company is situated in Guernsey.
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3.1
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The Company is a non-cellular company within the meaning of section 2(1) of the Law.
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3.2
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The Company is a company with liability limited by shares within the meaning of section 2(2) of
the Law.
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4.
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The objects of the Company are unrestricted.
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5.
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The liability of the members is limited to the amount for the time being remaining unpaid on the
shares held by each of them respectively.
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6.
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The Company may issue shares of no par value.
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7.
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Subject to the Law, any provision of this memorandum of incorporation may be amended by special
resolution of the Company.
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8.
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The signature of the Company may be either:
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(a)
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“BURFORD CAPITAL LIMITED”
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with the addition of the signature(s)
of one or more person(s) authorised generally or specifically for such purpose, or such other persons as the Directors may from
time to time appoint; or
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(b)
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if the Directors resolve that the Company shall have
a common seal, the common seal of the Company affixed in such manner as the articles of incorporation of the Company may from
time to time provide;
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as the Directors may from time to time determine either generally or in any particular case.
I, the subscriber to
this memorandum of incorporation wish to form a company pursuant to this memorandum and I agree to take the number of shares shown
opposite my name.
Name and address of founder
member
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Number of shares
taken by founder
member
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Aggregate
value of those
shares
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Amount (if
any) paid up
and the
amount
unpaid on
those shares
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Hirzel Limited
Regency Court
Glategny Esplanade
St. Peter Port
Guernsey
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1 ordinary share
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Nil
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£1.00 paid up
Nil unpaid
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Authorised signatory
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Dated this 11th day of September 2009
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Witness to the above signature: _______________________________
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Regency Court
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Glategny Esplanade
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St. Peter Port
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Guernsey
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Exhibit 4.1
TRUST
DEED
DATED
12 FEBRUARY 2018
BURFORD
CAPITAL FINANCE LLC
and
BURFORD
CAPITAL LIMITED
and
BURFORD CAPITAL PLC
and
U.S.
BANK TRUSTEES LIMITED
constituting
$180,000,000
6.125
per cent.
Bonds due 2025
jointly
and severally, unconditionally and irrevocably guaranteed by
Burford
Capital Limited and Burford Capital PLC
CONTENTS
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Clause
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Page
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1.
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Definitions
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3
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2.
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Covenant to Repay and to Pay Interest
on the Bonds
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10
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3.
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Trustees Requirements Regarding
Paying Agents
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11
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4.
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Further Issues
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12
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5.
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Form and Issue of Bonds
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12
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6.
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Fees, Duties and Taxes
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13
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7.
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Covenant of Compliance
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13
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8.
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Cancellation of Bonds and Records
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14
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9.
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Guarantee
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14
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10.
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Enforcement
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17
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11.
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Action, Proceedings and Indemnification
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18
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12.
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Application of Moneys
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18
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13.
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Notice of Payments
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19
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14.
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Investment by Trustee
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19
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15.
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Partial Payments
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19
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16.
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Covenants by the Issuer and the
Guarantors
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19
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17.
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Remuneration and Indemnification
of Trustee
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23
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18.
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Supplement to Trustee Acts
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25
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19.
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Trustee's Liability
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30
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20.
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Trustee Contracting with the Issuer
and the Guarantors
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30
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21.
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Waiver, Authorisation and Determination
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31
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22.
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Modification
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31
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23.
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Breach
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32
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24.
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Entitlement to treat Holder as
Absolute Owner
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32
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25.
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Substitution
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32
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26.
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Currency Indemnity
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33
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27.
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New Trustee and Seprate and
Co-Trustees
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33
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28.
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Trustee's Retirement and
Removal
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34
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29.
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Trustee's Powers to be Additional
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34
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30.
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Notices
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34
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31.
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Confidentiality Undertaking
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36
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32.
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Governing Law
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36
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33.
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Submission to Jurisdiction
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37
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34.
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Counterparts
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37
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35.
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Contracts (Rights of Third
Parties) Act 1999
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37
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Schedule
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1.
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Form of Global Certificate
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38
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2.
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Form of Definitive Certificate
and Conditions of the Bonds
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42
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Part 1 Form of Definitive
Certificate
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42
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Part 2 Conditions
of the Bonds
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45
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3.
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Register and Transfer of Bonds
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65
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4.
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Provisions for Meetings of
Bondholders
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67
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5.
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Form of Directors'/Officers’
Certificate
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76
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6.
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Form of Material Subsidiaries
Certificate
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77
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7.
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Form of Supplemental Deed
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78
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Signatories
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88
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THIS TRUST DEED
is made on 12 February 2018
BETWEEN:
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(1)
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BURFORD
CAPITAL FINANCE LLC, a limited liability company incorporated and registered under
the laws of the State of Delaware, United States, whose registered office is at 292 Madison
Avenue, New York, NY 10017 (the Issuer);
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(2)
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BURFORD
CAPITAL LIMITED, a company incorporated under the laws of Guernsey with company number
50877, whose registered office is at Regency Court, Glategny Esplanade, St Peter Port
GY1 1WW, Guernsey (BCL);
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(3)
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BURFORD
CAPITAL PLC, a company incorporated under the laws of England and Wales with registered
number 09077893, whose registered office is at 24 Cornhill, London EC3V 3ND (BCP);
and
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(4)
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U.S.
BANK TRUSTEES LIMITED, a limited liability company registered in England and Wales
with company number 02379632 having its registered office at 125 Old Broad Street, Fifth
Floor, London EC2N 1AR (the Trustee, which expression shall, wherever the context
so admits, include such company and all other persons or companies for the time being
the trustee or trustees of these presents) as trustee for the Bondholders (each as defined
below).
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WHEREAS:
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(A)
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By
a written resolution of the manager of the Issuer pursuant to Section 18-404 of the Delaware
Limited Liability Company Act passed on 16 January 2018 the Issuer has resolved to issue $180,000,000
6.125 per cent. Bonds due 2025 to be constituted by this Trust Deed.
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(B)
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By
resolutions of the Board of Directors of BCL passed on 16 January 2018 and of the Board
of Directors of BCP passed on 12 January 2018, the Guarantors have agreed to jointly
and severally guarantee the said Bonds and to enter into certain covenants as set out
in this Trust Deed.
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(C)
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The
said Bonds in definitive form will be in registered form without coupons attached.
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(D)
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The
Trustee has agreed to act as trustee of these presents for the benefit of the Bondholders
upon and subject to the terms and conditions of these presents.
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NOW THIS TRUST
DEED WITNESSES AND IT IS AGREED AND DECLARED as follows:
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1.1
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Terms
defined in the Conditions and not otherwise defined herein shall have the same meaning
in this Trust Deed. In these presents unless there is anything in the subject or context
inconsistent therewith the following expressions shall have the following meanings:
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Agency
Agreement means the agreement appointing the initial Paying Agents, Registrar and/or Transfer Agents in relation to the Bonds
and any other agreement for the time being in force appointing Successor paying agents, successor registrars and/or transfer agents
in relation to the Bonds, or in connection with their duties, the terms of which have previously been approved in writing by the
Trustee, together with any agreement for the time being in force amending or modifying with the prior written approval of the
Trustee any of the aforesaid agreements in relation to the Bonds;
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Appointee
means any attorney, manager, agent, delegate, nominee, custodian or other person appointed by the Trustee under these presents;
Auditors
means the independent auditors for the time being of the Issuer, or (as the case may be) the relevant Guarantor or, in the
event of their being unable or unwilling promptly to carry out any action requested of them pursuant to the provisions of these
presents, such other firm of accountants or such financial advisors as may be nominated or approved by the Trustee for the purposes
of these presents;
Basic Terms Modification
means any proposal to:
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(a)
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reduce
or cancel the amount payable or, where applicable, modify, except where such modification
is in the opinion of the Trustee bound to result in an increase, the method of calculating
the amount payable or modify the date of payment or, where applicable, the method of
calculating the date of payment in respect of any principal or interest in respect of
the Bonds;
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(b)
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alter
the currency in which payments under the Bonds are to be made;
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(c)
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alter
the majority required to pass an Extraordinary Resolution;
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(d)
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sanction
any such scheme or proposal or substitution as is described in paragraphs 19(i) and 19(j)
of Schedule 4;
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(e)
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alter
the proviso to paragraph 7 of Schedule 4 or the proviso to paragraph 9 of Schedule 4;
or
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(f)
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alter
the definition of a Basic Terms Modification;
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Bondholders
means the several persons who are for the time being holders of the Bonds (being the several persons whose names are entered
in the register of holders of the Bonds as the holders thereof) save that, for so long as such Bonds or any part thereof are represented
by the Global Certificate deposited with a common depositary for Euroclear and Clearstream, Luxembourg or, in respect of Bonds
in definitive form held in an account with Euroclear or Clearstream, Luxembourg, each person who is for the time being shown in
the records of Euroclear or Clearstream, Luxembourg (other than Clearstream, Luxembourg, if Clearstream, Luxembourg shall be an
accountholder of Euroclear, and Euroclear, if Euroclear shall be an accountholder of Clearstream, Luxembourg) as the holder of
a particular principal amount of the Bonds shall be deemed to be the holder of such principal amount of such Bonds (and the registered
holder of the relevant Bond shall be deemed not to be the holder) for all purposes of these presents other than with respect to
the payment of principal or interest on such principal amount of such Bonds, the rights to which shall be vested, as against the
Issuer and the Trustee, solely in such common depositary and for which purpose such common depositary shall be deemed to be the
holder of such principal amount of such Bonds in accordance with and subject to its terms and the provisions of these presents;
and the words holder and holders and related expressions shall (where appropriate) be construed accordingly;
Bonds
means the bonds in registered form comprising the said $180,000,000 6.125 per cent. Bonds due 2025 of the Issuer hereby constituted
or the principal amount thereof for the time being outstanding or, as the context may require, a specific number thereof and includes
any replacements for Bonds issued pursuant to Condition 13 (Replacement of Certificates) and (except for the purposes of
clause 4.1(d)) the Global Certificate;
Certificate means
a Global Certificate or a Definitive Certificate;
Clearstream, Luxembourg
means Clearstream Banking S.A.;
Conditions
means the Conditions in the form set out in Schedule 2 as the same may from time to time be modified in accordance with these
presents and any reference in these presents to a particular specified Condition or paragraph of a Condition shall in relation
to the Bonds be construed accordingly;
Confidential
Information means the legal name, legal or business address or any incorporation details or constitutive documents relating
to a Material Subsidiary or any other information that would enable a third party to determine any of the foregoing and that may
be given to the Trustee by the Issuer or any Guarantor pursuant to the provisions of these presents, provided that the Issuer
or the relevant Guarantor, as the case may be, has identified such information (other than the legal names of the Material Subsidiaries
and any such information that the Trustee may itself obtain from publicly available sources from the legal names of such Material
Subsidiaries) as “Confidential Information” at the time it is given to the Trustee.
Definitive Certificates
has the meaning set out in subclause 5.1;
Directors means
the or, as the case may be, Board of Directors of the relevant Guarantor, and
Director means
any of them;
Euroclear means
Euroclear Bank SA/NV;
Event
of Default means any of the conditions, events or acts provided in Condition 11.1 (Events of Default) to be events
upon the happening of which the Bonds would, subject only to notice by the Trustee as therein provided, become immediately due
and repayable;
Extraordinary Resolution
has the meaning set out in paragraph 1 of Schedule 4;
Existing Issuances
means each of:
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(i)
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the
£90,000,000 6.50 per cent. bonds due 2022 issued by Burford Capital PLC and constituted
by a trust deed dated 19 August 2014;
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(ii)
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the
£100,000,000 6.125 per cent. bonds due 2024 issued by Burford Capital PLC and constituted
by a trust deed dated 26 April 2016; and
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(iii)
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the
£175,000,000 5.0 per cent. bonds due 2026 issued by Burford Capital PLC and constituted
by a trust deed dated 1 June 2017;
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Global
Certificate means the global certificate in respect of the Bonds to be issued pursuant to subclause 5.1 in the form or substantially
in the form set out in Schedule 1;
Guarantee has
the meaning ascribed to it in Condition 4.1 (Guarantee);
Guarantors means:
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(i)
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each
Original Guarantor; and
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(ii)
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any
Subsidiary Guarantor,
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and the term Guarantor
means any of them;
Liability
means any loss, damage, cost, fee, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever
(including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added
tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;
Material Subsidiary
means at any time a Subsidiary (other than an Excluded Subsidiary) of BCL:
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(a)
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whose
gross assets (consolidated in the case of a Subsidiary which itself has Subsidiaries)
represent (or, in the case of a Subsidiary acquired after the end of the financial period
to which the then latest audited consolidated accounts of BCL and its Subsidiaries relate,
are equal to) not less than 5 per cent. of the consolidated gross assets of the Group,
all as calculated respectively by reference to the then latest Directors’ Certificate
relating to such Subsidiary delivered to the Trustee in accordance with clause 16(s)
below and the then latest audited consolidated accounts of BCL and its Subsidiaries,
provided that:
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(i)
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in
the event that the relevant Subsidiary itself has Subsidiaries which are Excluded Subsidiaries,
the gross assets of such Excluded Subsidiaries are excluded from the calculation of the
consolidated gross assets of such Subsidiary;
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(ii)
|
the
gross assets of all Excluded Subsidiaries are excluded from the calculation of the consolidated
gross assets of the Group; and
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(iii)
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in
the case of a Subsidiary of BCL acquired after the end of the financial period to which
the then latest audited consolidated accounts of BCL and its Subsidiaries relate, the
reference to the then latest audited consolidated accounts of BCL and its Subsidiaries
for the purposes of the calculation above shall, until consolidated accounts for the
financial period in which the acquisition is made have been prepared and audited as aforesaid,
be deemed to be a reference to such first- mentioned accounts as if such Subsidiary had
been shown in such accounts by reference to the then latest Directors’ Certificate
relating to such Subsidiary delivered to the Trustee in accordance with clause 16(s)
below, adjusted as deemed appropriate by BCL;
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(b)
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to
which is transferred the whole or substantially the whole of the undertaking and assets
of a Subsidiary of BCL which immediately prior to such transfer is a Material Subsidiary,
provided that the transferor Subsidiary shall upon such transfer forthwith cease to be
a Material Subsidiary and the transferee Subsidiary shall cease to be a Material Subsidiary
pursuant to this subparagraph (b) on the date on which the consolidated accounts of BCL
and its Subsidiaries for the financial period current at the date of such transfer have
been prepared and audited as aforesaid but so that such transferor Subsidiary or such
transferee Subsidiary may be a Material Subsidiary on or at any time after the date on
which such consolidated accounts have been prepared and audited as aforesaid by virtue
of the provisions of subparagraph (a) above or, prior to or after such date, by virtue
of any other applicable provision of this definition; or
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(c)
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to
which is transferred an undertaking or assets which, taken together with the undertaking
or assets of the transferee Subsidiary, represent (or, in the case of the transferee
Subsidiary being acquired after the end of the financial period to which the then latest
audited consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less
than 5 per cent. of the consolidated gross assets of the Group, all as calculated as
referred to in subparagraph (a) above, provided that the transferor Subsidiary (if a
Material Subsidiary) shall upon such transfer forthwith cease to be a Material Subsidiary
unless immediately following such transfer its undertaking and assets represent (or,
in the case aforesaid are equal to) not less than 5 per cent. of the consolidated gross
assets of the Group, all as calculated as referred to in subparagraph (a) above, and
the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to this subparagraph
(c) on the date on which the consolidated accounts of BCL and its Subsidiaries for the
financial period current at the date of such transfer have been prepared and audited
but so that such transferor Subsidiary or such transferee Subsidiary may be a Material
Subsidiary on or at any time after the date on which
such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or,
prior to or after such date, by virtue of any other applicable provision of this definition.
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A
report by two Directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their
opinion a Subsidiary of BCL is or is not or was or was not at any particular time or throughout any specified period a Material
Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall in
the absence of manifest error, be conclusive and binding on all parties;
Officers means
the authorised officers of the Issuer;
Official List
has the meaning set out in Section 103 of the Financial Services and Markets Act 2000;
Original Guarantor
means each of BCL and BCP;
outstanding means
in relation to the Bonds all the Bonds issued other than:
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(a)
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those
Bonds which have been redeemed pursuant to these presents;
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(b)
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those
Bonds in respect of which the date for redemption in accordance with the Conditions has
occurred and the redemption moneys (including all interest payable thereon) have been
duly paid to the Trustee or to the Principal Paying Agent in the manner provided in the
Agency Agreement (and where appropriate notice to that effect has been given to the Bondholders
in accordance with Condition 14 (Notices)) and remain available for payment (against
presentation of the relevant Bond, if required);
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(c)
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those
Bonds which have been purchased and cancelled in accordance with Condition 8 (Redemption
and Purchase);
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(d)
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those
Bonds which have become void under Condition 10 (Prescription);
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(e)
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those
mutilated or defaced Bonds which have been surrendered and cancelled and in respect of
which replacements have been issued pursuant to Condition 13 (Replacement of Certificates);
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(f)
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(for
the purpose only of ascertaining the principal amount of the Bonds outstanding and without
prejudice to the status for any other purpose of the relevant Bonds) those Bonds which
are alleged to have been lost, stolen or destroyed and in respect of which replacements
have been issued pursuant to Condition 13 (Replacement of Certificates); and
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(g)
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the
Global Certificate to the extent that it shall have been exchanged for Bonds in definitive
form pursuant to its provisions;
|
PROVIDED THAT for
each of the following purposes, namely:
|
|
(i)
|
the
right to attend and vote at any meeting of the Bondholders or any of them, an Extraordinary
Resolution in writing or an Extraordinary Resolution by way of electronic consents given
through the relevant Clearing System(s) as envisaged by paragraph 1 of Schedule 4 and
any direction or request by the holders of the Bonds;
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(ii)
|
the
determination of how many and which Bonds are for the time being outstanding for the
purposes of subclause 11.1, Conditions 11 (Events of Default), 12 (Enforcement)
and 16 (Meeting
of Bondholders, Modification, Waiver, Authorisation and Determination) and paragraphs 4, 7 and 9 of Schedule 4;
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(iii)
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any
discretion, power or authority (whether contained in these presents or vested by operation
of law) which the Trustee is required, expressly or impliedly, to exercise in or by reference
to the interests of the Bondholders or any of them; and
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(iv)
|
the
determination by the Trustee whether any event, circumstance, matter or thing is, in
its opinion, materially prejudicial to the interests of the Bondholders or any of them,
|
those
Bonds (if any) which are for the time being held by or on behalf of or for the benefit of the Issuer, any Guarantor, any other
Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding company, in each case
as beneficial owner, shall (unless and until ceasing to be so held) be deemed not to remain outstanding;
Paying
Agents means the several institutions (including where the context permits the Principal Paying Agent) at their respective
specified offices initially appointed as paying agents in relation to the Bonds by the Issuer and the Guarantors pursuant to the
Agency Agreement and/or, if applicable, any Successor paying agents in relation to such Bonds;
Potential
Event of Default means any condition, event or act which, with the lapse of time and/or the issue, making or giving of any
notice, certification, declaration, demand, determination and/or request and/or the taking of any similar action and/or the fulfilment
of any similar condition, would constitute an Event of Default;
Principal
Paying Agent means the institution at its specified office initially appointed as principal paying agent in relation to such
Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement or, if applicable, any Successor principal paying agent
in relation to such Bonds;
Registrar
means the institution at its specified office initially appointed as the registrar in relation to the Bonds by the Issuer
and the Guarantors pursuant to the Agency Agreement or, if applicable, any Successor registrar in relation to such Bonds;
Relevant
Date has the meaning set out in Condition 9 (Taxation);
repay,
redeem and pay shall each include both the others and cognate expressions shall be construed accordingly;
Subsidiary
means any company which is for the time being a subsidiary (within the meaning of Section 1159 of the Companies Act 2006);
Subsidiary
Guarantor means each Subsidiary of BCL that enters into a deed supplemental to the Trust Deed (or in such other form as may
be necessary or appropriate to comply with any applicable law, rule or regulation, including the law of any jurisdiction outside
England and Wales where that Subsidiary is organised or carries on business) for the purpose of giving a joint and several guarantee
(in the same terms, mutatis mutandis, as the Guarantee) in accordance with Condition 4.3 (Guarantee – Addition
of Subsidiary Guarantors) and Clause 9.11, and, which has not been released or discharged from its obligations as a Subsidiary
Guarantor in accordance with Condition 4.4 (Guarantee – Release of Subsidiary Guarantors);
Successor means,
in relation to the Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents, any successor to
any one or more of them in relation to the Bonds which shall become such pursuant to the provisions of these presents or the
Agency Agreement and/or such other or further principal paying agent, paying agents, registrar and/or transfer agents (as the
case may be) in relation to such Bonds as may (with the prior approval of, and on terms previously approved by, the Trustee
in writing) from time to time be appointed as such, and/or, if applicable, such other or further specified offices (in the
former case being within the same place as those for which they are substituted) as may from time to time be nominated, in
each case by the Issuer and, if applicable, the Guarantors, and (except in the case of the initial appointments and specified
offices made under and specified in the Conditions and/or the Agency Agreement, as the case may be) notice of whose
appointment or, as the case may be, nomination has been given to the Bondholders pursuant to subclause 16(m) in accordance
with Condition 14 (Notices);
the
London Stock Exchange means the London Stock Exchange plc or any successor thereto;
these
presents means this Trust Deed and the Schedules and any trust deed supplemental hereto and the Schedules (if any) thereto
and the Bonds and the Conditions, all as from time to time modified in accordance with the provisions herein or therein contained;
Transfer
Agents means the institutions at their respective specified offices initially appointed as transfer agents in relation to
the Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement and/or, if applicable, any Successor transfer agents
in relation to such Bonds;
Trust
Corporation means a corporation entitled by rules made under the Public Trustee Act 1906 or entitled pursuant to any other
comparable legislation applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee;
Trustee
Acts means the Trustee Act 1925 and the Trustee Act 2000;
UK Listing Authority
means the Financial Conduct Authority in its capacity as competent authority under the Financial Services and Markets Act
2000;
words denoting
the singular shall include the plural and vice versa;
words denoting one gender only shall include the other genders;
and
words denoting persons only shall include firms and corporations and vice versa.
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1.2
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(a)
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All references in these presents to principal and/or interest in respect of the Bonds
or to any moneys payable by the Issuer and/or the Guarantors under these presents shall
be deemed to include, in the case of amounts of principal payable, a reference to any
specific redemption price (as defined in the relevant Conditions), any premium which
may be payable under or in respect of the Bonds and, in any case, a reference to any
additional amounts which may be payable under Condition 9 (Taxation).
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(b)
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All
references in these presents to dollars, Dollars, U.S. Dollars or
the sign $ shall be construed as references to the lawful currency for the time
being of the United States of America.
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(c)
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All
references in these presents to pounds sterling, Pounds Sterling or the
sign £ shall be construed as references to the lawful currency for the time
being of the United Kingdom.
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(d)
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All
references in these presents to any statute or any provision of any statute shall be
deemed also to refer to any statutory modification or re-enactment thereof or any statutory
instrument, order or regulation made thereunder or under any such modification or re-
enactment.
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(e)
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All
references in these presents to guarantees or to an obligation being guaranteed shall
be deemed to include respectively references to indemnities or to an indemnity being
given in respect thereof.
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(f)
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All
references in these presents to any action, remedy or method of proceeding for the enforcement
of the rights of creditors shall be deemed to include, in respect of any jurisdiction
other than England, references to such action, remedy or method of proceeding for the
enforcement of the rights of creditors available or appropriate in such jurisdiction
as shall most nearly approximate to such action, remedy or method of proceeding described
or referred to in these presents.
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(g)
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All
references in these presents to taking proceedings against the Issuer and/or any Guarantor
shall be deemed to include references to proving in the winding up of the Issuer and/or
such Guarantor (as the case may be).
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(h)
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All
references in these presents to Euroclear and/or Clearstream, Luxembourg shall be deemed
to include references to any other clearing system as is approved by the Trustee.
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(i)
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Unless
the context otherwise requires words or expressions used in these presents shall bear
the same meanings as in the Companies Act 2006.
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(j)
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In
this Trust Deed references to Schedules, clauses, subclauses, paragraphs and subparagraphs
shall be construed as references to the Schedules to this Trust Deed and to the clauses,
subclauses, paragraphs and subparagraphs of this Trust Deed respectively.
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(k)
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In
these presents tables of contents and clause headings are included for ease of reference
and shall not affect the construction of these presents.
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(l)
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Any
reference in these presents to a written notice, consent or approval being given by the
Trustee shall, for the avoidance of doubt, be deemed to include such notice, consent
or approval being given by e-mail.
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(m)
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All
references in these presents to Bonds being listed or having a listing shall,
in relation to the London Stock Exchange, be construed to mean that such Bonds have been
admitted to the Official List by the UK Listing Authority and to trading on the London
Stock Exchange's market for listed securities and all references in these presents to
listing or listed shall include references to quotation and quoted,
respectively.
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(n)
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Any
references to the records of Euroclear and Clearstream, Luxembourg shall be to the records
that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflects
the amount of such customers' interests in the Bonds.
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2.
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COVENANT TO REPAY AND TO PAY
INTEREST ON THE BONDS
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2.1
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The
aggregate principal amount of the Bonds is limited to $180,000,000.
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2.2
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The
Issuer covenants with the Trustee that it will, in accordance with these presents, on
the due date for the final maturity of the Bonds provided for in the Conditions, or on
such earlier date as the same or any part thereof may become due and repayable thereunder,
pay or procure to be paid unconditionally to or to the order of the Trustee in U.S. Dollars
in New York same day funds the principal amount of the Bonds repayable on that date and
shall in the meantime and until such date (both before and after any judgment or other
order of a court of competent jurisdiction) pay or procure to be paid unconditionally
to or to the order of the Trustee as aforesaid interest (which shall accrue from day
to day) on the principal amount of the Bonds at rates calculated from time to time in accordance with Condition
6 (Interest) and on the dates provided for in the Conditions PROVIDED THAT:
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(a)
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every
payment of principal or interest in respect of the Bonds to or to the account of the
Principal Paying Agent in the manner provided in the Agency Agreement shall operate in
satisfaction pro tanto of the relative covenant by the Issuer in this clause except
to the extent that there is default in the subsequent payment thereof in accordance with
the Conditions to the Bondholders;
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(b)
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in
any case where payment of principal is not made to the Trustee or the Principal Paying
Agent on or before the due date, interest shall continue to accrue on the principal amount
of the Bonds (both before and after any judgment or other order of a court of competent
jurisdiction) at the rate aforesaid up to and including the date which the Trustee determines
to be the date on and after which payment is to be made to the Bondholders in respect
thereof as stated in a notice given to the Bondholders in accordance with Condition 14
(Notices) (such date to be not later than seven days after the day on which the
whole of such principal amount, together with an amount equal to the interest which has
accrued and is to accrue pursuant to this proviso up to and including that date, has
been received by the Trustee or the Principal Paying Agent); and
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(c)
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in
any case where payment of the whole or any part of the principal amount of any Bond is
improperly withheld or refused (other than in circumstances contemplated by proviso (b)
above and provided that the relevant Bond is duly presented (if required)) interest shall
accrue on that principal amount payment of which has been so withheld or refused (both
before and after any judgment or other order of a court of competent jurisdiction) at
the rate aforesaid from and including the date of such withholding or refusal up to and
including the date on which (upon further presentation of the relevant Bond, if required)
payment of the full amount (including interest as aforesaid) in U.S. Dollars payable
in respect of such Bond is made or (in respect of the payment of the principal amount
and if earlier) the seventh day after notice is given to the relevant Bondholder (either
individually or in accordance with Condition 14 (Notices)) that the full amount
(including interest as aforesaid) in U.S. Dollars payable in respect of such Bond is
available for payment, provided that, upon further presentation thereof being duly made,
such payment is made.
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The Trustee
will hold the benefit of this covenant on trust for the Bondholders and itself in accordance with these presents.
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3.
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TRUSTEES REQUIREMENTS REGARDING
PAYING AGENTS
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3.1
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At
any time after an Event of Default or a Potential Event of Default shall have occurred
or if there is failure to make payment of any amount in respect of any Bond when due
or the Trustee shall have received any money which it proposes to pay under clause 12
to the Bondholders, the Trustee may:
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(a)
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by
notice in writing to the Issuer, any Guarantor, the Principal Paying Agent and the other
Paying Agents require the Principal Paying Agent and the other Paying Agents pursuant
to the Agency Agreement:
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(i)
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to
act thereafter as Principal Paying Agent and Paying Agents respectively of the Trustee
in relation to payments to be made by or on behalf of the Trustee under the provisions
of these presents mutatis mutandis on the terms provided in the Agency Agreement
(with such consequential amendments as the Trustee shall deem necessary and save that
the Trustee's liability under any provisions thereof for the indemnification, remuneration
and payment of out-of-pocket expenses of the Paying Agents shall be limited to the amounts
for the time being held by the Trustee on the trusts
of these presents relating to the Bonds and available for such purpose) and thereafter to hold all Bonds and all sums, documents
and records held by them in respect of the Bonds on behalf of the Trustee; or
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(ii)
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to
deliver up all Bonds and all sums, documents and records held by them in respect of the
Bonds to the Trustee or as the Trustee shall direct in such notice provided that such
notice shall be deemed not to apply to any documents or records which the relative Paying
Agent is obliged not to release by any law or regulation; and/or
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(b)
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by
notice in writing to the Issuer and the Guarantors require each of them to make all subsequent
payments in respect of the Bonds to or to the order of the Trustee and not to the Principal
Paying Agent; with effect from the issue of any such notice to the Issuer and the Guarantors
and until such notice is withdrawn proviso (a) to subclause 2.2 of this clause relating
to the Bonds shall cease to have effect.
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4.1
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(a)
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The Issuer shall be at liberty from time to time (but subject always to the provisions
of these presents) without the consent of the Bondholders to create and issue further
notes or bonds (whether in bearer or registered form) either (i) ranking pari passu
in all respects (or in all respects save for the first payment of interest thereon),
and so that the same shall be consolidated and form a single series, with the Bonds and/or
the further notes or bonds of any series or (ii) upon such terms as to ranking, interest,
conversion, redemption and otherwise as the Issuer may at the time of issue thereof determine.
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(b)
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Any
further notes or bonds which are to be created and issued pursuant to the provisions
of paragraph 4.1(a) above so as to form a single series with the Bonds and/or the further
notes or bonds of any series shall be constituted by a trust deed supplemental to this
Trust Deed and any other further notes or bonds which are to be created and issued pursuant
to the provisions of paragraph 4.1(a) above may (subject to the consent of the Trustee)
be constituted by a trust deed supplemental to this Trust Deed. In any such case the
Issuer and the Guarantors shall prior to the issue of any further notes or bonds to be
so constituted execute and deliver to the Trustee a trust deed supplemental to this Trust
Deed (in relation to which all applicable stamp duties or other documentation fees, duties
or taxes have been paid and, if applicable, duly stamped or denoted accordingly) containing
a covenant by the Issuer in the form mutatis mutandis of subclause 2.2 in relation
to the principal and interest in respect of such further notes or bonds and such other
provisions (whether or not corresponding to any of the provisions contained in this Trust
Deed) as the Trustee shall require including making such consequential modifications
to this Trust Deed as the Trustee shall require in order to give effect to such issue
of further notes or bonds.
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(c)
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A
memorandum of every such supplemental trust deed shall be endorsed by the Trustee on
this Trust Deed and by the Issuer and the Guarantors on their duplicates of this Trust
Deed.
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(d)
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Whenever
it is proposed to create and issue any further notes or bonds the Issuer shall give to
the Trustee not less than 14 days' notice in writing of its intention so to do stating
an indicative amount of further notes or bonds proposed to be created and issued.
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5.
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FORM AND ISSUE OF BONDS
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5.1
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The
Bonds shall be represented initially by the Global Certificate which the Issuer shall
issue to a common depositary for Euroclear and Clearstream, Luxembourg on terms that
such common depositary shall hold the same for the account of the persons who would otherwise
be entitled to receive
the Bonds in definitive form (Definitive Certificates) and the successors in title to such persons as appearing in the
records of Euroclear and Clearstream, Luxembourg for the time being.
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5.2
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The
Global Certificate shall be printed or typed in the form or substantially in the form
set out in Schedule 1 and may be a facsimile. The Global Certificate shall be in the
aggregate principal amount of $180,000,000 and shall be signed manually or in facsimile
by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated
by or on behalf of the Principal Paying Agent. The Global Certificate so executed and
authenticated shall be a binding and valid obligation of the Issuer and title thereto
shall pass by registration of transfer in respect thereof in accordance with the provisions
of these presents.
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5.3
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The
Issuer shall issue the Definitive Certificates in exchange for the Global Certificate
in accordance with the provisions thereof.
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5.4
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The
Bonds in definitive form shall be in registered form and shall be issued in the form
or substantially in the form set out in Schedule 2 in the denomination and transferable
in units of $100 each, shall be serially numbered and shall be endorsed with a Form of
Transfer in the form or substantially in the form also set out in Schedule 2 and with
the Conditions. Title to the Bonds in definitive form shall pass upon the registration
of transfers in respect thereof in accordance with the provisions of these presents.
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5.5
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The
Definitive Certificates shall be signed manually or in facsimile by two of the Officers
of the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the
Principal Paying Agent.
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5.6
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The
Issuer may use the facsimile signature of any person who at the date such signature is
affixed is a person duly authorised by the Issuer or is a Director of the Issuer as referred
to in subclauses 5.2 and 5.5 above notwithstanding that at the time of issue of the Global
Certificate or any of the Definitive Certificates, as the case may be, he may have ceased
for any reason to be so authorised or to be the holder of such office. The Definitive
Certificates so signed shall be binding and valid obligations of the Issuer.
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6.
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FEES, DUTIES AND TAXES
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The
Issuer will pay any stamp, issue, registration, documentary and other fees, duties and taxes, including interest and penalties,
payable in any relevant jurisdiction on or in connection with (a) the execution and delivery of these presents, (b) the constitution
and issue of the Bonds and (c) any action taken by or on behalf of the Trustee or (where permitted under these presents so to
do) any Bondholder to enforce, or to resolve any doubt concerning, or for any other purpose in relation to, these presents.
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7.
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COVENANT OF COMPLIANCE
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Each
of the Issuer and the Guarantors severally covenants with the Trustee that it will comply with and perform and observe all the
provisions of these presents which are expressed to be binding on it. The Conditions shall be binding on the Issuer, the Guarantors
and the Bondholders. The Trustee shall be entitled to enforce the obligations of the Issuer and the Guarantors under the Bonds
as if the same were set out and contained in the trust deeds constituting the same, which shall be read and construed as one document
with the Bonds. The Trustee will hold the benefit of this covenant upon trust for itself and the Bondholders according to its
and their respective interests.
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8.
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CANCELLATION OF BONDS AND RECORDS
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8.1
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The
Issuer shall procure that all Bonds (a) redeemed or (b) purchased and surrendered for
cancellation by or on behalf of the Issuer, the Guarantors or any member of the Group
or (c) which, being mutilated or defaced, have been surrendered and replaced pursuant
to Condition 13 (Replacement of Certificates) or (d) exchanged as provided in
these presents shall forthwith be cancelled by or on behalf of the Issuer and a certificate
stating:
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(a)
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the
aggregate principal amount of Bonds which have been redeemed;
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(b)
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the
serial numbers of such Bonds in definitive form;
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(c)
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the
aggregate amount of interest paid (and the due dates of such payments) on the Bonds;
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(d)
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the
aggregate principal amount of Bonds (if any) which have been purchased by or on behalf
of the Issuer, BCL or any member of the Group and cancelled and the serial numbers of
such Bonds in definitive form; and
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(e)
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the
aggregate principal amounts of Bonds which have been so exchanged or surrendered and
replaced and the serial numbers of such Bonds in definitive form,
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shall
be given to the Trustee by or on behalf of the Issuer as soon as possible and in any event within four months after the date of
any such redemption, purchase, payment, exchange or replacement (as the case may be) takes place. The Trustee may accept such
certificate as conclusive evidence of redemption, purchase, exchange or replacement pro tanto of the Bonds or payment of
interest thereon respectively and of cancellation of the relative Bonds.
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8.2
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The Issuer shall procure (i) that the
Principal Paying Agent shall keep a full and complete record of all Bonds and of their redemption, cancellation, payment or
exchange (as the case may be) and of all replacement notes issued in substitution for lost, stolen, mutilated, defaced or
destroyed Bonds and (ii)
that such records shall be made available to the Trustee at all reasonable times.
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9.1
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The
Original Guarantors hereby jointly and severally, irrevocably and unconditionally, and
notwithstanding the release of any other guarantor or any other person under the terms
of any composition or arrangement with any creditors of the Issuer or any other Subsidiary
of the Guarantors, guarantees to the Trustee:
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(a)
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the
due and punctual payment in accordance with the provisions of these presents of the principal
of and interest on the Bonds and of any other amounts payable by the Issuer under these
presents; and
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(b)
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the
due and punctual performance and observance by the Issuer of each of the other provisions
of these presents on the Issuer's part to be performed or observed.
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9.2
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If
the Issuer fails for any reason whatsoever punctually to pay any such principal, interest
or other amount, the Original Guarantors shall cause each and every such payment to be
made as if the Original Guarantor instead of the Issuer were expressed to be the primary
obligor under these presents and not merely as surety (but without affecting the nature
of the Issuer's obligations) to the intent that the holder of the relevant Bond or the
Trustee (as the case may be) shall receive the same amounts in respect of principal,
interest or such other amount as would have been receivable had such payments been made
by the Issuer.
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9.3
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If
any payment received by the Trustee or any Bondholder under the provisions of these presents
shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of
the Issuer or, without limitation, on any other event) be avoided or set aside for any
reason, such payment shall not be considered as discharging or diminishing the liability
of the Original Guarantors and this guarantee shall continue to apply as if such payment
had at all times remained owing by the Issuer and each Original Guarantor shall indemnify
the Trustee and the Bondholders in respect thereof PROVIDED THAT the obligations of the
Issuer and/or the Original Guarantors under this subclause shall, as regards each payment
made to the Trustee or any Bondholder which is avoided or set aside, be contingent upon
such payment being reimbursed to the Issuer or other persons entitled through the Issuer.
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9.4
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The
Original Guarantors hereby agree that their obligations under this Clause 9 (Guarantee)
shall be unconditional and that each Original Guarantor shall be fully liable irrespective
of the validity, regularity, legality or enforceability against the Issuer of, or of
any defence or counter-claim whatsoever available to the Issuer in relation to, its obligations
under these presents, whether or not any action has been taken to enforce the same or
any judgment obtained against the Issuer, whether or not any of the other provisions
of these presents have been modified, whether or not any time, indulgence, waiver, authorisation
or consent has been granted to the Issuer by or on behalf of the Bondholders or the Trustee,
whether or not any determination has been made by the Trustee pursuant to subclause 0,
whether or not there have been any dealings or transactions between the Issuer, any of
the Bondholders or the Trustee, whether or not the Issuer has been dissolved, liquidated,
merged, consolidated, bankrupted or has changed its status, functions, control or ownership,
whether or not the Issuer has been prevented from making payment by foreign exchange
provisions applicable at its place of registration or incorporation and whether or not
any other circumstances have occurred which might otherwise constitute a legal or equitable
discharge of or defence to a guarantor. Accordingly the validity of this guarantee shall
not be affected by reason of any invalidity, irregularity, illegality or unenforceability
of all or any of the obligations of the Issuer under these presents and this guarantee
shall not be discharged nor shall the liability of the Original Guarantors under these
presents be affected by any act, thing or omission or means whatever whereby their liability
would not have been discharged if it had been the principal debtor.
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9.5
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Without
prejudice to the provisions of subclause 11.1 the Trustee may determine from time to
time whether or not it will enforce this guarantee which it may do without making any
demand of or taking any proceedings against the Issuer and may from time to time make
any arrangement or compromise with the Original Guarantors in relation to this guarantee
which the Trustee may consider expedient in the interests of the Bondholders.
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9.6
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The
Original Guarantors waive diligence, presentment, demand of payment, filing of claims
with a court in the event of dissolution, liquidation, merger or bankruptcy of the Issuer,
any right to require a proceeding first against the Issuer, protest or notice with respect
to these presents or the indebtedness evidenced thereby and all demands whatsoever and
covenant that this guarantee shall be a continuing guarantee, shall extend to the ultimate
balance of all sums payable and obligations owed by the Issuer under these presents,
shall not be discharged except by complete performance of the obligations in these presents
and is additional to, and not instead of, any security or other guarantee or indemnity
at any time existing in favour of any person, whether from the Original Guarantors or
otherwise.
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9.7
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If
any moneys shall become payable by the Original Guarantors under this guarantee, no Original
Guarantor shall, so long as the same remain unpaid, without the prior written consent
of the Trustee:
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(a)
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in
respect of any amounts paid by it under this guarantee, exercise any rights of subrogation
or contribution or, without limitation, any other right or remedy which may accrue to
it in respect of or as a result of any such payment; or
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(b)
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in
respect of any other moneys for the time being due to the Original Guarantors by the
Issuer, claim payment thereof or exercise any other right or remedy;
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(including
in either case claiming the benefit of any security or right of set-off or, on the liquidation of the Issuer, proving in competition
with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer, any payment
or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be received by
an Original Guarantor before payment in full of all amounts payable under these presents shall have been made to the Bondholders
and the Trustee, such payment or distribution shall be received by the relevant Original Guarantor on trust to pay the same over
immediately to the Trustee for application in or towards the payment of all sums due and unpaid under these presents in accordance
with clause 12.
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9.8
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Until
all amounts which may be or become payable by the Issuer under these presents have been
irrevocably paid in full, the Trustee may:
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(a)
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refrain
from applying or enforcing any other moneys, security or rights held or received by the
Trustee in respect of those amounts, or apply and enforce the same in such manner and
order as it sees fit (whether against those amounts or otherwise), and the Original Guarantors
shall not be entitled to the benefit of the same; and
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(b)
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hold
in a suspense account any moneys received from any Original Guarantor or on account of
the relevant Original Guarantor’s liability under this guarantee, without liability
to pay interest on those moneys.
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9.9
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If
any sum which, although expressed to be payable by the Issuer under these presents or
the Bonds, is for any reason (whether or not now existing and whether or not now known
or becoming known to the Issuer, the Original Guarantors, the Trustee or any Bondholder)
not recoverable from an Original Guarantor on the basis of a guarantee then (a) it will
nevertheless be recoverable from it as if it were the sole principal debtor and will
be paid by it to the Trustee on demand and (b) as a separate and additional liability
under these presents each Original Guarantor agrees, as a primary obligation and on a
joint and several basis, to indemnify each of the Trustee and each Bondholder in respect
of such sum by way of a full indemnity in the manner and currency as is provided for
in the Bonds or these presents (as the case may be) and to indemnify each Bondholder
against all losses, claims, costs, charges and expenses to which it may be subject or
which it may incur in recovering such sum.
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9.10
|
The
obligations of each Original Gurantor under these presents constitute direct, unconditional
and (subject to the provisions of Condition 5.1 (Negative Pledges)) unsecured
obligations of the relevant Original Guarantor and (subject as aforesaid) rank and will
rank pari passu with all other outstanding unsecured and unsubordinated obligations
of the relevant Original Guarantor, present and future, but, in the event of insolvency,
only to the extent permitted by applicable laws relating to creditors' rights.
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9.11
|
In
connection with the proposed admission of any Subsidiary of BCL as a Subsidiary Guarantor
pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors),
no such admission shall be effective until the Trustee shall have received:
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(a)
|
a
duly executed deed supplemental to this Trust Deed and the Agency Agreement (or in such
other form as may be necessary or appropriate to comply with any applicable law, rule
or regulation, including the law of any jurisdiction outside England and Wales where
that Subsidiary is organised or carries on business) containing a joint and several guarantee
(in the same terms, mutatis mutandis, as the Guarantee) and otherwise in form
and manner satisfactory to the Trustee pursuant to which such Subsidiary agrees to be
bound by the provisions of these presents and the Agency Agreement as fully as if such
Subsidiary had been named
in these presents and the Agency Agreement as a Guarantor on the date hereof; and
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(b)
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such
legal opinion(s) as the Trustee shall require from legal advisers satisfactory to the
Trustee and in a form and with substance satisfactory to the Trustee as to the enforceability
under the laws of all relevant jurisdictions of the guarantee to be given by such Subsidiary
and all other obligations to be assumed by such Subsidiary in the agreements described
in paragraph (a) above,
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and
such Subsidiary and the Issuer shall have complied with such other requirements to assure more fully that the agreements in paragraph
(a) above are enforceable as the Trustee may direct in the interests of the Bondholders.
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9.12
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If
any Subsidiary Guarantor ceases to be a Subsidiary Guarantor under the Bonds pursuant
to Condition 4.4 (Guarantee –Release of Subsidiary Guarantors), such Subsidiary
Guarantor will be deemed to be released simultaneously from all of its future obligations
under these presents, without prejudice to any obligations which may have accrued prior
to that time.
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9.13
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All
the provisions of this Trust Deed relating to an Original Guarantor and the Guarantors
shall apply to a Subsidiary Guarantor which gives a guarantee pursuant to Condition 4.3
(Guarantee – Addition of Subsidiary Guarantors) and to the guarantee given
by such Subsidiary Guarantor in all respects as if the Subsidiary Guarantor had been
a party to this Trust Deed and references herein to the Original Guarantors or a Guarantor
or Guarantors had included the Subsidiary Guarantor.
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9.14
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The
Issuer and each Guarantor shall be deemed to have consented to the admission of any company
as a Subsidiary Guarantor and shall be deemed to be jointly and severally liable with
any new Subsidiary Guarantor by virtue of the giving by any Subsidiary Guarantor of a
guarantee without the necessity for the Issuer or any Guarantor to concur in or consent
to any deed admitting any Subsidiary Guarantor.
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9.15
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BCL,
excluding any express right contained in these presents, waives any existing or future
right which it may have:
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(a)
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to
require that any liability under or in connection with these presents be divided or apportioned
with any other person or reduced in any manner whatsoever, whether by virtue of the "droit
de division" or otherwise; and
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(b)
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to
require that recourse be had to the assets of any other person before any claim is enforced
against it in respect of the obligations assumed by it in or in connection with these
presents, whether by virtue of "droit de discussion" or otherwise.
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10.1
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The
Trustee may at any time, at its discretion and without notice, take such proceedings
and/or other steps or action (including lodging an appeal in any proceedings) as it may
think fit against or in relation to each of the Issuer and the Guarantors to enforce
their respective obligations under these presents or otherwise.
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10.2
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Proof
that as regards any specified Bond the Issuer or any Guarantor (as the case may be) has
made default in paying any amount due in respect of such Bond shall (unless the contrary
be proved) be sufficient evidence that the same default has been made as regards all
other Bonds in respect of which the relevant amount is due and payable.
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11.
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ACTION, PROCEEDINGS AND INDEMNIFICATION
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11.1
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The
Trustee shall not be bound to take any action in relation to these presents (including
but not limited to the giving of any notice pursuant to Condition 11.1 (Events of
Default) or the taking of any proceedings and/or other steps mentioned in subclause
10.1) unless respectively directed or requested to do so (a) by an Extraordinary Resolution
or (b) in writing by the holders of at least one- fifth in principal amount of the Bonds
then outstanding and in either case then only if it shall be indemnified and/or secured
and/or pre-funded to its satisfaction against all Liabilities to which it may render
itself liable or which it may incur by so doing.
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11.2
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The
Trustee may refrain from taking any action in any jurisdiction if the taking of such
action in that jurisdiction would, in its opinion based upon legal advice in the relevant
jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may
also refrain from taking such action if it would otherwise render it liable to any person
in that jurisdiction or if, in its opinion based upon such legal advice, it would not
have the power to take the relevant action in that jurisdiction by virtue of any applicable
law in that jurisdiction or if it is determined by any court or other competent authority
in that jurisdiction that it does not have such power.
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11.3
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Only
the Trustee may enforce the provisions of these presents. No Bondholder shall be entitled
to (i) take any steps or action against the Issuer or any Guarantor to enforce the performance
of any of the provisions of these presents or (ii) take any other proceedings (including
lodging an appeal in an proceedings) in respect of or concerning the Issuer or any Guarantor,
in each case unless the Trustee having become bound as aforesaid to take any such action,
steps or proceedings fails to do so within a reasonable period and such failure is continuing.
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11.4
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Notwithstanding
anything else contained in these presents, the Trustee shall not be required to take
any action prior to making any declaration that the Bonds are immediately due and payable
(save that it will procure notice to be given to the Bondholders of any Event of Default
of which it has actual knowledge or express notice) if such action would require the
Trustee to incur any expenditure or other financial liability or risk its own funds (including
obtaining any advice which it might otherwise have thought appropriate to obtain).
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12.
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APPLICATION OF MONEYS
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All moneys received
by the Trustee under these presents shall be held by the Trustee upon trust to apply them (subject to clause 14):
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(a)
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First,
in payment or satisfaction of all amounts then due and unpaid under clause 17 to the
Trustee and/or any Appointee;
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(b)
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Secondly,
in or towards retention of an amount which the Trustee considers necessary to pay any
amounts that may thereafter become due to be paid under clause 17 to it or any Appointee,
to the extent it considers that moneys received by it thereafter under these presents
may be insufficient and/or may not be received in time to pay such amounts;
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(c)
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Thirdly,
in or towards reimbursement pari passu and rateably of any amounts paid by any
Indemnifying Parties as contemplated by clause 17.7, together with interest thereon as
provided in clause 17.8;
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(d)
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Fourthly,
in or towards payment pari passu and rateably of all principal and interest then
due and unpaid in respect of the Bonds; and
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(e)
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Fifthly,
in payment of the balance (if any) to the Issuer (without prejudice to, or liability
in respect of, any question as to how such payment to the Issuer shall be dealt with
as between the Issuer, the Guarantors and any other person).
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Without
prejudice to this clause 12, if the Trustee holds any moneys which represent principal or interest in respect of Bonds which have
become void or in respect of which claims have been prescribed under Condition 10 (Prescription), the Trustee will hold
such moneys on the above trusts.
The
Trustee shall give notice to the Bondholders in accordance with Condition 14 (Notices) of the day fixed for any payment
to them under clause 12. Such payment may be made in accordance with Condition 7 (Payments) and any payment so made shall
be a good discharge to the Trustee.
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14.
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INVESTMENT BY TRUSTEE
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14.1
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The
Trustee may at its discretion and pending payment invest moneys at any time available
for the payment of principal and interest on the Bonds in some or one of the investments
hereinafter authorised for such periods as it may consider expedient with power from
time to time at the like discretion to vary such investments and to accumulate such investments
and the resulting interest and other income derived therefrom. The accumulated investments
shall be applied under clause 12. All interest and other income deriving from such investments
shall be applied first in payment or satisfaction of all amounts then due and unpaid
under clause 17 to the Trustee and/or any Appointee and otherwise held for the benefit
of and paid to the Bondholders.
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14.2
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Any
moneys which under the trusts of these presents ought to or may be invested by the Trustee
may be invested in the name or under the control of the Trustee in any investments or
other assets in any part of the world whether or not they produce income or by placing
the same on deposit in the name or under the control of the Trustee at such bank or other
financial institution and in such currency as the Trustee may think fit. If that bank
or institution is the Trustee or a subsidiary, holding or associated company of the Trustee,
it need only account for an amount of interest equal to the amount of interest which
would, at then current rates, be payable by it on such a deposit to an independent customer.
The Trustee may at any time vary any such investments for or into other investments or
convert any moneys so deposited into any other currency and shall not be responsible
for any loss resulting from any such investments or deposits, whether due to depreciation
in value, fluctuations in exchange rates or otherwise.
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Upon
any payment under clause 12 (other than payment in full against surrender of a Bond) the Bond in respect of which such payment
is made shall be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall or
shall cause such Paying Agent to enface thereon a memorandum of the amount and the date of payment but the Trustee may dispense
with such production and enfacement upon such indemnity being given as it shall think sufficient.
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16.
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COVENANTS BY THE ISSUER AND
THE GUARANTORS
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So
long as any of the Bonds remains outstanding (or, in the case of paragraphs (h), (i), (m), (n), (o) and (q), so long as any of
the Bonds remains liable to prescription each of the Issuer and the Guarantors severally (but in the case of paragraph 16(c),
the Issuer only) covenants with the Trustee that it shall:
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(a)
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promptly
give or procure to be given to the Trustee such opinions, certificates, information and
evidence as it shall reasonably require and in such form as it shall require (including without
limitation the procurement by the Issuer or the Guarantors (as the case may be) of all such certificates reasonably called for
by the Trustee pursuant to subclause 18(c)) for the purpose of the discharge or exercise of the duties, trusts, powers, authorities
and discretions vested in it under these presents or by operation of law except that the provision of any financial statements
or evidence and information relating to financial statements shall, for the avoidance of doubt, only extend to the provision of
financial statements for an accounting period prepared in relation to the Group (and in no circumstances shall extend to any specific
entity within the Group (other than the Issuer));
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(b)
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cause
to be prepared and certified by its Auditors in respect of each financial accounting
period accounts of the Issuer in such form as will comply with all relevant legal and
accounting requirements and all requirements for the time being of the London Stock Exchange;
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(c)
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at
all times keep and procure its Subsidiaries (if any) to keep proper books of account
and allow and procure such Subsidiaries to allow the Trustee and any person appointed
by the Trustee to whom the Issuer, the Guarantors or the relevant Subsidiary (as the
case may be) shall have no reasonable objection free access to such books of account
at all reasonable times during normal business hours except that the requirement for
Subsidiaries to keep proper books of account shall not, for the avoidance of doubt, in
any circumstances require such Subsidiary to prepare financial statements (for any accounting
period or otherwise);
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(d)
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send
to the Trustee (in addition to any copies to which it may be entitled as a holder of
any securities of the Issuer or any Guarantor) two copies in English of every balance
sheet, profit and loss account, report, circular and notice of general meeting and every
other document issued or sent to its shareholders together with any of the foregoing,
and every document issued or sent to holders of securities other than its shareholders
(including the Bondholders) as soon as practicable after the issue or publication thereof;
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(e)
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forthwith
give notice in writing to the Trustee of the coming into existence of any security interest
which would require any security to be given to the Bonds pursuant to Condition 5.1 (Negative
Pledges) or of the occurrence of any Event of Default or any Potential Event of Default;
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(f)
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give
to the Trustee (a) within seven days after demand by the Trustee therefor and (b) (without
the necessity for any such demand) promptly after the publication of its audited accounts
in respect of each financial period commencing with the financial period ending 31 December,
2017 and in any event not later than 180 days after the end of each such financial period
a certificate in or substantially in the form set out in Schedule 5 signed by two Officers
of the Issuer and either two Directors of BCL or a Director and the secretary of BCL
to the effect that as at a date not more than seven days before delivering such certificate
(the certification date) there did not exist and had not existed or happened since
the certification date of the previous certificate (or in the case of the first such
certificate the date hereof) any Event of Default or any Potential Event of Default (or
if such exists or existed or had happened specifying the same) and that during the period
from and including the certification date of the last such certificate (or in the case
of the first such certificate the date hereof) to and including the certification date
of such certificate each of the Issuer and each Guarantor has complied with all its obligations
contained in these presents or (if such is not the case) specifying the respects in which
it has not complied;
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(g)
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so
long as any of the Bonds remain outstanding BCL shall supply to the Trustee:
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(i)
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as
soon as they may become available, but in any event within six months of its most recent
financial year-end, a copy of its audited Consolidated Financial Statements
for such financial year, together with the report thereon of BCL’s Auditors;
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(ii)
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as soon as they may become available, but in any event within three months
of the end of the first half of each financial year, a copy of its unaudited Consolidated Financial Statements for such period;
and
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(iii)
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concurrently with the delivery of items (i) and (ii) above, a Directors’
Certificate confirming compliance with the covenant contained in Condition 5.2 (Financial Covenant) with respect to the
most recent Reference Date;
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(h)
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so far as permitted by applicable law, at all times execute and do all such
further documents, acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to these
presents except that the provision of any financial statements or evidence and information relating to financial statements shall,
for the avoidance of doubt, only extend to the provision of financial statements for an accounting period prepared in relation
to the Group (and in no circumstances shall extend to any specific entity within the Group (other than the Issuer));
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(i)
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at all times maintain Paying Agents, a Registrar and Transfer Agents in
accordance with the Conditions;
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(j)
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procure the Principal Paying Agent to notify the Trustee forthwith in the
event that the Principal Paying Agent does not, on or before the due date for any payment in respect of the Bonds or any of them,
receive unconditionally pursuant to the Agency Agreement payment of the full amount in the requisite currency of the moneys payable
on such due date on all such Bonds;
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(k)
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in the event of the unconditional payment to the Principal Paying Agent
or the Trustee of any sum due in respect of the Bonds or any of them being made after the due date for payment thereof forthwith
give or procure to be given notice to the Bondholders in accordance with Condition 14 (Notices) that such payment has been
made;
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(l)
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use reasonable endeavours to maintain the listing of the Bonds on the London
Stock Exchange or, if it is unable to do so having used reasonable or if the Trustee considers that the maintenance of such listing
is unduly onerous and the Trustee is of the opinion that to do so would not be materially prejudicial to the interests of the Bondholders,
use reasonable endeavours to obtain and maintain a quotation or listing of the Bonds on such other stock exchange or exchanges
or securities market or markets as the Issuer may (with the prior written approval of the Trustee) decide and shall also upon obtaining
a quotation or listing of the Bonds on such other stock exchange or exchanges or securities market or markets enter into a trust
deed supplemental to this Trust Deed to effect such consequential amendments to these presents as the Trustee may require or as
shall be requisite to comply with the requirements of any such stock exchange or securities market;
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(m)
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give notice to the Bondholders in accordance with Condition 14 (Notices)
of any appointment, resignation or removal of any Paying Agent, Registrar or Transfer Agent (other than the appointment of the
initial Paying Agents, Registrar and Transfer Agents) after having obtained the prior written approval of the Trustee thereto or
any change of any Paying Agent's, Registrar's or Transfer Agent's specified office and (except as provided by the Agency Agreement
or the Conditions) at least 30 days prior to such event taking effect; PROVIDED ALWAYS THAT so long as any of the Bonds remains
outstanding in the case of the termination of the appointment of the Registrar or a Transfer Agent or so long as any of the Bonds
remains liable to prescription in the case of the termination of the appointment of the Principal Paying
Agent no such termination shall take effect until a new Registrar, Transfer Agent or Principal Paying Agent (as the case may be)
has been appointed on terms previously approved in writing by the Trustee;
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(n)
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send to the Trustee, not less than seven Business Days prior to which any
such notice is to be given, the draft form of every notice to be given to the Bondholders in accordance with Condition 14 (Notices)
and obtain the prior written approval of the Trustee (such approval not to be unreasonably withheld or delayed) to, and promptly
give to the Trustee two copies of, the final form of every notice to be given to the Bondholders in accordance with Condition 14
(Notices) (such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial
Services and Markets Act 2000 of the United Kingdom (the FSMA) of a communication within the meaning of Section 21 of the
FSMA);
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(o)
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comply with and perform all its obligations under the Agency Agreement
and use its best endeavours to procure that the Paying Agents, the Registrar and the Transfer Agents comply with and perform all
their respective obligations thereunder and (in the case of the Paying Agents and the Registrar) any notice given by the Trustee
pursuant to subclause 3.1(a) and not make any amendment or modification to such Agreement without the prior written approval of
the Trustee and use all reasonable endeavours to make such amendments to such Agreement as the Trustee may require;
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(p)
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in order to enable the Trustee to ascertain the principal amount of Bonds
for the time being outstanding for any of the purposes referred to in the proviso to the definition of outstanding in clause
1, deliver to the Trustee forthwith upon being so requested in writing by the Trustee a certificate in writing signed by two Officers
of the Issuer two Directors of BCL or a Director and the secretary of BCL (as appropriate) setting out the total number and aggregate
principal amount of Bonds which:
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(i)
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up to and including the date of such certificate have been purchased by
the Issuer or any member of the Group and cancelled; and
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(ii)
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are at the date of such certificate held by, for the benefit of, or on
behalf of, the Issuer, any Guarantor, any Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary
of any such holding company;
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(q)
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procure its Subsidiaries to comply with all (if any) applicable provisions
of Condition 8 (Redemption and Purchase);
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(r)
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procure that each of the Paying Agents makes available for inspection by
Bondholders at its specified office copies of these presents, the Agency Agreement and the then latest audited balance sheets and
profit and loss accounts (consolidated if applicable) of the Group;
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(s)
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give to the Trustee (i) on the date hereof, (ii) within three Business Days
after a demand by the Trustee therefor and (iii) (without the necessity for such demand) within six months of BCL’s most
recent financial year-end commencing with the financial period ending 31 December 2017 and within three months of the end of the
first half of each financial year commencing with the financial period ending 30 June 2018, a certificate in or substantially in
the form set out in Schedule 6 signed by two Directors of BCL or a Director and the secretary of BCL (as appropriate) addressed
to the Trustee listing those Subsidiaries the relevant Guarantor which as at the date hereof, as at the date of the relevant certificate
or as at any specific date requested by the Trustee, were Material Subsidiaries for the purposes of Condition 11 (Events of
Default);
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(t)
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promptly give written notice signed by two Directors of such BCL or a Director
and the secretary of BCL (as appropriate) to the Trustee if any Subsidiary of such Guarantor, (other than an Excluded Subsidiary)
has Financial Indebtedness which in aggregate (without duplication) amounts to more than £2,000,000 (or its equivalent in
any other currency) and BCL covenants that it shall procure that such Subsidiary shall as soon as reasonably practicable, but in
any event no later than 60 days after the date on which it incurs such Financial Indebtedness, provide a Guarantee in respect of
these presents in accordance with Clause 9 above;
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(u)
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promptly give written notice signed by two directors of BCL or by a director
and the secretary of BCL to the Trustee if a Subsidiary Guarantor is to be automatically released from the Guarantee in accordance
with Condition 4.4 (Guarantee – Release of Subsidiary Guarantors);
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(v)
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prior to making any modification or amendment or supplement to these presents,
procure the delivery of (a) legal opinion(s) as to English and any other relevant law, addressed to the Trustee, dated the date
of such modification or amendment or supplement, as the case may be, and in a form acceptable to the Trustee from legal advisers
acceptable to the Trustee;
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(w)
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give notice to the Trustee of the proposed redemption of the Bonds at least
5 business days in London prior to the giving of any notice of redemption in respect of such Bonds pursuant to Condition 14 (Notices);
and
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(x)
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provide the Trustee with sufficient information so as to enable it to determine
whether or not it is obliged, in respect of any payments to be made by it pursuant to these presents, to make any withholding or
deduction pursuant to an agreement described in Section 1471(b) of the US Internal Revenue Code of 1986 (the Code) or otherwise
imposed pursuant to Sections 1471 through 1474 of the Code and any regulations or agreements thereunder or official interpretations
thereof (FATCA Withholding Tax).
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17.
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REMUNERATION AND INDEMNIFICATION OF TRUSTEE
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17.1
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The Issuer failing whom, the Guarantors shall pay to the Trustee remuneration
for its services as trustee as from the date of this Trust Deed, such remuneration to be at such rate and to be paid on such dates
as may from time to time be agreed between the Issuer and the Trustee. In the absence of any agreement to the contrary, such remuneration
shall be payable in advance on the first Interest Payment Date (as defined in Condition 6) in each year, the first such payment
to be made on the date hereof. Such remuneration shall accrue from day to day and be payable (in priority to payments to the Bondholders)
up to and including the date when, all the Bonds having become due for redemption, the redemption moneys and interest thereon to
the date of redemption have been paid to the Principal Paying Agent or, as the case may be, the Trustee PROVIDED THAT if upon due
presentation of any Bond (if required) or any cheque payment of the moneys due in respect thereof is improperly withheld or refused,
remuneration will commence again to accrue.
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17.2
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In the event of the occurrence of an Event of Default or a Potential Event
of Default the Issuer and the Guarantors hereby agree that the Trustee shall be entitled to be paid additional remuneration, which
may be calculated at its normal hourly rates in force from time to time (provided that such hourly rates are comparable to the
prevailing rates in the market at such time). In any other case, if the Trustee considers it expedient or necessary or is requested
by the Issuer or the Guarantors to undertake duties which the Trustee and the Issuer or, as the case may be, the relevant Guarantor
agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents the
Issuer, failing whom the Guarantors, shall pay to the Trustee such additional remuneration as shall be agreed between them (and
which may be calculated by reference to the Trustee's normal
hourly rates in force from time to time provided that such hourly rates are comparable to the prevailing rates in the market at
such time).
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17.3
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The Issuer, failing whom the Guarantors shall in addition pay to the Trustee
an amount equal to the amount of any value added tax or similar tax chargeable thereon in respect of its remuneration under these
presents.
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17.4
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In the event of the Trustee and the Issuer failing or, as the case may
be, the relevant Guarantor failing to agree:
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(a)
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(in a case to which subclause 17.1 above applies) upon the amount of the remuneration; or
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(b)
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(in a case to which subclause 17.2 above applies) upon whether such duties
shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents, or upon
such additional remuneration,
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such matters shall be
determined by a person (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing
such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society of England
and Wales (the expenses involved in such nomination and the fees of such person being payable by the Issuer) and the determination
of any such person shall be final and binding upon the Trustee and the Issuer.
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17.5
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Without prejudice to the right of indemnity by law given to trustees, the
Issuer and each Guarantor shall severally indemnify the Trustee and every Appointee and keep it or him indemnified against all
Liabilities to which it or he may be or become subject or which may be incurred by it or him in the preparation and execution or
purported execution of any of its or his trusts, powers, authorities and discretions under these presents or its or his functions
under any such appointment or in respect of any other matter or thing done or omitted in any way relating to these presents or
any such appointment (including all Liabilities incurred in disputing or defending any of the foregoing).
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17.6
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The Issuer, failing whom the Guarantors, shall also pay or discharge all
Liabilities incurred by the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance
of its duties under, and in any other manner relating to, these presents, including but not limited to travelling expenses and
any stamp, issue, registration, documentary and other taxes or duties paid or payable by the Trustee in connection with any action
taken or contemplated by or on behalf of the Trustee for enforcing these presents.
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17.7
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Where any amount which would otherwise be payable by the Issuer or the
Guarantors under subclause 17.5 or subclause 17.6 has instead been paid by any person or persons other than the Issuer or the Guarantors
(each, an Indemnifying Party), the Issuer or the Guarantors, as the case may be, shall pay to the Trustee an equal amount
for the purpose of enabling the Trustee to reimburse the Indemnifying Parties.
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17.8
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All amounts payable pursuant to subclause 17.5 and 17.6 above shall be payable
by the Issuer on the date specified in a demand by the Trustee and in the case of payments actually made by the Trustee prior to
such demand shall carry interest at a rate equal to the Trustee’s cost of borrowing from the date such demand is made, and
in all other cases shall (if not paid within 30 days after the date of such demand or, if such demand specifies that payment is
to be made on an earlier date, on such earlier date) carry interest at such rate from such thirtieth day of such other date specified
in such demand. All remuneration payable to the Trustee shall carry interest at such rate from the due date therefor. A certificate
from the Trustee as to the Trustee’s cost of borrowing on any particular date or during any particular period shall be conclusive
and binding on the Issuer and the Guarantors.
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17.9
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The Issuer hereby further undertakes to the Trustee that all monies payable
by the Issuer, failing which the Guarantors, to the Trustee under this clause shall be made without set-off, counterclaim, deduction
or withholding unless compelled by law in which event the Issuer, failing which the Guarantors, will pay such additional amounts
as will result in the receipt by the Trustee of the amounts which would otherwise have been payable by the Issuer, failing which
the Guarantors to the Trustee under this clause in the absence of any such set-off, counterclaim, deduction or withholding.
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17.10
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Unless otherwise specifically stated in any discharge of these presents
the provisions of this clause 17 shall continue in full force and effect notwithstanding such discharge.
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18.
|
SUPPLEMENT TO TRUSTEE ACTS
|
Section 1 of the Trustee
Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents. Where there are
any inconsistencies between the Trustee Acts and the provisions of these presents, the provisions of these presents shall, to the
extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of these presents
shall constitute a restriction or exclusion for the purposes of that Act. The Trustee shall have all the powers conferred upon
trustees by the Trustee Acts and by way of supplement thereto it is expressly declared as follows:
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(a)
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The Trustee may in relation to these presents act on the advice or opinion
of or any information (whether addressed to the Trustee or not) obtained from any lawyer, valuer, accountant, surveyor, banker,
broker, auctioneer or other expert whether obtained by the Issuer, any Guarantor, the Trustee or otherwise and shall not be responsible
for any Liability occasioned by so acting.
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(b)
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Any such advice, opinion or information may be sent or obtained by letter,
telex, telegram, facsimile transmission, electronic mail or cable and the Trustee shall not be liable for acting on any advice,
opinion or information purporting to be conveyed by any such letter, telegram, facsimile transmission, electronic mail or cable
although the same shall contain some error or shall not be authentic.
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(c)
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The Trustee may call for and shall be at liberty to accept as sufficient
evidence of any fact or matter or the expediency of any transaction or thing a certificate signed by any two Officers of the Issuer
and/or by any two Directors of BCL or a Director and the secretary of BCL (as appropriate) and the Trustee shall not be bound in
any such case to call for further evidence or be responsible for any Liability that may be occasioned by it or any other person
acting on such certificate.
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(d)
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The Trustee shall be at liberty to hold these presents and any other documents
relating thereto or to deposit them in any part of the world with any banker or banking company or company whose business includes
undertaking the safe custody of documents or lawyer or firm of lawyers considered by the Trustee to be of good repute and the Trustee
shall not be responsible for or required to insure against any Liability incurred in connection with any such holding or deposit
and may pay all sums required to be paid on account of or in respect of any such deposit.
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(e)
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The Trustee shall not be responsible for the receipt or application of
the proceeds of the issue of any of the Bonds by the Issuer, the exchange of the Global Certificate for Definitive Certificates
or the delivery of the Global Certificate or Definitive Certificates to the person(s) entitled to it or them.
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(f)
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The Trustee shall not be bound to give notice to any person of the execution
of any documents comprised or referred to in these presents or to take any steps to ascertain whether any Event of
Default or Potential Event of Default has happened and, until it shall have actual knowledge or express notice pursuant to these
presents to the contrary, the Trustee shall be entitled to assume that no Event of Default or Potential Event of Default has happened
and that the Issuer and each Guarantor is observing and performing all its obligations under these presents.
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(g)
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Save as expressly otherwise provided in these presents, the Trustee shall
have absolute and uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions
under these presents (the exercise or non-exercise of which as between the Trustee and the Bondholders shall be conclusive and
binding on the Bondholders) and shall not be responsible for any Liability which may result from their exercise or non-exercise
and in particular the Trustee shall not be bound to act at the request or direction of the Bondholders or otherwise under any provision
of these presents or to take at such request or direction or otherwise any other action under any provision of these presents,
without prejudice to the generality of subclause 11.1, unless it shall first be indemnified and/or secured and/or pre-funded to
its satisfaction against all Liabilities to which it may render itself liable or which it may incur by so doing and the Trustee
shall incur no liability for refraining to act in such circumstances.
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(h)
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The Trustee shall not be liable to any person by reason of having acted
upon any Extraordinary Resolution in writing or any Extraordinary Resolution purporting to have been passed at any meeting of Bondholders
in respect whereof minutes have been made and signed or any Extraordinary Resolution passed by way of electronic consents received
through the relevant Clearing System(s) in accordance with these presents or any direction or request of Bondholders even though
subsequent to its acting it may be found that there was some defect in the constitution of the meeting or the passing of the resolution
or (in the case of an Extraordinary Resolution in writing or a direction or a request) it was not signed by the requisite number
of Bondholders or (in the case of an Extraordinary Resolution passed by electronic consents received through the relevant Clearing
System(s)) it was not approved by the requisite number of Bondholders or that for any reason the resolution, direction or request
was not valid or binding upon such Bondholders.
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(i)
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The Trustee shall not be liable to any person by reason of having accepted
as valid or not having rejected any Bond purporting to be such and subsequently found to be forged or not authentic.
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(j)
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Any consent or approval given by the Trustee for the purposes of these
presents may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything
to the contrary in these presents may be given retrospectively. The Trustee may give any consent or approval, exercise any power,
authority or discretion or take any similar action (whether or not such consent, approval, power, authority, discretion or action
is specifically referred to in these presents) if it is satisfied that the interests of the Bondholders will not be materially
prejudiced thereby. For the avoidance of doubt, the Trustee shall not have any duty to the Bondholders in relation to such matters
other than that which is contained in the preceding sentence.
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(k)
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The Trustee shall not (unless and to the extent ordered so to do by a court
of competent jurisdiction) be required to disclose to any Bondholder any information (including, without limitation, information
of a confidential, financial or price sensitive nature) made available to the Trustee by the Issuer or the Guarantors or any other
person in connection with these presents and no Bondholder shall be entitled to take any action to obtain from the Trustee any
such information.
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(l)
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Where it is necessary or desirable for any purpose in connection with these
presents to convert any sum from one currency to another it shall (unless otherwise provided by these presents or required by law)
be converted at such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange,
as may be agreed by the Trustee in consultation with the Issuer or the Guarantor as relevant and any rate, method and date so agreed
shall be binding on the Issuer, the Guarantors, and the Bondholders.
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(m)
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The Trustee may certify that any of the conditions, events and acts set out in subparagraphs (b) to (d) inclusive
(other than the winding up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries), (e) to (g) inclusive
and (k) and (l) of Condition 11.1 (Events of Default) (each of which conditions, events and acts shall, unless in any case
the Trustee in its absolute discretion shall otherwise determine, for all the purposes of these presents be deemed to include the
circumstances resulting therein and the consequences resulting therefrom) is in its opinion materially prejudicial to the interests
of the Bondholders and any such certificate shall be conclusive and binding upon the Issuer, the Guarantors, and the Bondholders.
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(n)
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The Trustee as between itself and the Bondholders may determine all questions
and doubts arising in relation to any of the provisions of these presents. Every such determination, whether or not relating in
whole or in part to the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Bondholders.
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(o)
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In connection with the exercise by it of any of its trusts, powers, authorities
and discretions under these presents (including, without limitation, any modification, waiver, authorisation, determination or
substitution), the Trustee shall have regard to the general interests of the Bondholders as a class and shall not have regard to
any interests arising from circumstances particular to individual Bondholders (whatever their number) and, in particular but without
limitation, shall not have regard to the consequences of any such exercise for individual Bondholders (whatever their number) resulting
from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any
particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Bondholder
be entitled to claim, from the Issuer, the Guarantors, the Trustee or any other person any indemnification or payment in respect
of any tax consequence of any such exercise upon individual Bondholders except to the extent already provided for in Condition
9 (Taxation) and/or any undertaking given in addition thereto or in substitution therefor under these presents.
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(p)
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Any trustee of these presents being a lawyer, accountant, broker or other
person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for
business transacted and acts done by him or his firm in connection with the trusts of these presents and also his proper charges
in addition to disbursements for all other work and business done and all time spent by him or his firm in connection with matters
arising in connection with these presents.
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(q)
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The Trustee may whenever it thinks fit delegate by power of attorney
or otherwise to any person or persons or fluctuating body of persons (whether being a joint trustee of these presents or not)
all or any of its trusts, powers, authorities and discretions under these presents. Such delegation may be made upon such
terms (including power to sub-delegate) and subject to such conditions and regulations as the Trustee may in the interests of
the Bondholders think fit. The Trustee shall not be under any obligation to supervise the proceedings or acts of any such
delegate or sub-delegate or be in any way responsible for any Liability incurred by reason of any misconduct or default on
the part of any such delegate or sub-delegate. The Trustee shall
within a reasonable time after any such delegation or any renewal, extension or termination thereof give notice thereof to the
Issuer.
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(r)
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The Trustee may in the conduct of the trusts of these presents instead of
acting personally employ and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur
in transacting or conducting, any business and to do, or concur in doing, all acts required to be done in connection with these
presents (including the receipt and payment of money). The Trustee shall not be in any way responsible for any Liability incurred
by reason of any misconduct or default on the part of any such agent or be bound to supervise the proceedings or acts of any such
agent.
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(s)
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The Trustee may appoint and pay any person to act as a custodian or nominee
on any terms in relation to such assets of the trusts constituted by these presents as the Trustee may determine, including for
the purpose of depositing with a custodian these presents or any document relating to the trusts constituted by these presents
and the Trustee shall not be responsible for any Liability incurred by reason of the misconduct, omission or default on the part
of any person appointed by it hereunder or be bound to supervise the proceedings or acts of such person; the Trustee is not obliged
to appoint a custodian if the Trustee invests in securities payable to bearer.
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(t)
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The Trustee shall not be responsible for the execution, delivery, legality,
effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of these presents or any
other document relating or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence,
consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance,
enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto.
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(u)
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The Trustee may call for and shall be entitled to rely on any record, certificate
or other document to be issued by Euroclear or Clearstream, Luxembourg as to the principal amount of Bonds represented by the Global
Certificate standing to the account of any person. Any such record, certificate or other document shall, in the absence of manifest
error, be conclusive and binding for all purposes. Any such record, certificate or other document may comprise any form of statement
or print out of electronic records provided by the relevant clearing system (including Euroclear’s EUCLID or Clearstream,
Luxembourg's Creation Online system) in accordance with its usual procedures and in which the holder of a particular principal
amount of Bonds is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by
reason of having accepted as valid or not having rejected any such record, certificate or other document to such effect purporting
to be issued by Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic.
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(v)
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The Trustee shall not be responsible to any person for failing to request,
require or receive any legal opinion relating to the Bonds or for checking or commenting upon the content of any such legal opinion
and shall not be responsible for any Liability incurred thereby.
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(w)
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Subject to the requirements, if any, of the London Stock Exchange, any corporation
into which the Trustee shall be merged or with which it shall be consolidated or any company resulting from any such merger or
consolidation shall be a party hereto and shall be the Trustee under these presents without executing or filing any paper or document
or any further act on the part of the parties thereto.
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(x)
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The Trustee shall not be bound to take any action in connection with
these presents or any obligations arising pursuant thereto, including, without prejudice to the generality of the foregoing, forming any
opinion or employing any financial adviser, where it is not satisfied that it will be indemnified against all Liabilities which
may be incurred in connection with such action and may demand prior to taking any such action that there be paid to it in advance
such sums as it considers (without prejudice to any further demand) shall be sufficient so to indemnify it.
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(y)
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No provision of these presents shall require the Trustee to do anything
which may (i) be illegal or contrary to applicable law or regulation; or (ii) cause it to expend or risk its own funds or otherwise
incur any Liability in the performance of any of its duties or in the exercise of any of its rights, powers or discretions (including
obtaining any advice which it might otherwise have thought appropriate or desirable to obtain), if it shall believe that repayment
of such funds or adequate indemnity against such risk or Liability is not assured to it.
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(z)
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Unless notified to the contrary, the Trustee shall be entitled to assume
without enquiry (other than requesting a certificate pursuant to subclause 16(p)) that no Bonds are held by, for the benefit of,
or on behalf of, the Issuer, any Guarantor, any Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary
of any such holding company.
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(aa)
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The Trustee shall have no responsibility whatsoever to
the Issuer, the Guarantors, any Bondholder or any other person for the maintenance of or failure to maintain any rating of any
of the Bonds by any rating agency.
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(bb)
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Any certificate, advice, opinion or report of the Auditors
or any other expert or professional adviser called for by or provided to the Trustee (whether or not addressed to the Trustee)
in accordance with or for the purposes of these presents may be relied upon by the Trustee as sufficient evidence of the facts
stated therein notwithstanding that such certificate, advice, opinion or report and/or any engagement letter or other document
entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the Auditors or such
other expert or professional adviser in respect thereof and notwithstanding that the scope and/or basis of such certificate, advice,
opinion or report may be limited by any engagement or similar letter or by the terms of the certificate, advice, opinion or report
itself.
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(cc)
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The Trustee shall not be responsible for, or for investigating
any matter which is the subject of, any recital, statement, representation, warranty or covenant of any person contained in these
presents, or any other agreement or document relating to the transactions contemplated in these presents or under such other agreement
or document.
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(dd)
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The Trustee shall not be liable or responsible for any
Liabilities or inconvenience which may result from anything done or omitted to be done by it in accordance with the provisions
of these presents.
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(ee)
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The Trustee shall not incur any liability to the Issuer,
Bondholders or any other person in connection with any approval given by it pursuant to Clause 16(n) to any notice to be given
to Bondholders by the Issuer; the Trustee shall not be deemed to have represented, warranted, verified or confirmed that the contents
of any such notice are true, accurate or complete in any respects or that it may be lawfully issued or received in any jurisdiction.
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(ff)
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When determining whether an indemnity or any security
or pre-funding is satisfactory to it, the Trustee shall be entitled to evaluate its risk in any given circumstance by considering
the worst-case scenario and, for this purpose, it may take into account, without limitation, the potential costs of defending
or commencing proceedings in England or elsewhere and the risk, however remote, of any award of damages against it in England
or elsewhere.
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(gg)
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The Trustee shall be entitled to require that any indemnity
or security given to it by the Bondholders or any of them be given on a joint and several basis and be supported by evidence satisfactory
to it as to the financial standing and creditworthiness of each counterparty and/or as to the value of the security and an opinion
as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security.
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(hh)
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The Trustee shall not be responsible for monitoring whether
any notices to Bondholders are given in compliance with the requirements of the London Stock Exchange or with any other legal
or regulatory requirements.
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(ii)
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The Trustee shall be entitled to deduct FATCA Withholding
Tax, and shall have no obligation to gross-up any payment hereunder or to pay any additional amount as a result of such FATCA
Withholding Tax.
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(jj)
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Notwithstanding anything in these presents to the contrary,
the Trustee shall not do, or be authorised or required to do, anything which might constitute a regulated activity for the purpose
of the FSMA, unless it is authorised under the FSMA to do so. The Trustee shall have the discretion at any time (i) to delegate
any of the functions which fall to be performed by an authorised person under the FSMA to any agent or person which has the necessary
authorisations and licences and (ii) to apply for authorisation under the FSMA and perform any or all such functions itself if,
in its absolute discretion, it considers it necessary, desirable or appropriate to do so.
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19.1
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Nothing in these presents shall exempt the Trustee from or indemnify it
against any liability which by virtue of any rule of law would otherwise attach to it in respect of any gross negligence, wilful
default or fraud of which it may be guilty in relation to its duties under these presents where the Trustee has failed to show
the degree of care and diligence required of it as trustee having regard to the provisions of these presents conferring on it any
trusts, powers, authorities or discretions.
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19.2
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Notwithstanding any provision of these presents to the contrary, the Trustee
shall not in any event be liable for:
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(a)
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loss of profit, loss of business, loss of goodwill, loss of opportunity,
whether direct or indirect; and
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(b)
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special, indirect, punitive or consequential loss or damage of any kind whatsoever,
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whether or not foreseeable,
whether or not the Trustee can reasonably be regarded as having assumed responsibility at the time this Trust Deed is entered into,
even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss or damage is made in respect
of fraud on the part of the Trustee.
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20.
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TRUSTEE CONTRACTING WITH THE ISSUER AND THE GUARANTORS
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Neither the Trustee nor
any director or officer or holding company, Subsidiary or associated company of a corporation acting as a trustee under these presents
shall by reason of its or his fiduciary position be in any way precluded from:
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(a)
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entering into or being interested in any contract or financial or other
transaction or arrangement with the Issuer or any Guarantor or any person or body corporate associated with the Issuer or any Guarantor
(including without limitation any contract, transaction or arrangement of a banking or insurance nature or any contract, transaction
or arrangement in relation to the making
of loans or the provision of financial facilities or financial advice to, or the purchase, placing or underwriting of or the subscribing
or procuring subscriptions for or otherwise acquiring, holding or dealing with, or acting as paying agent in respect of, the Bonds
or any other bonds, notes stocks, shares, debenture stock, debentures or other securities of, the Issuer or any Guarantor or any
person or body corporate associated as aforesaid); or
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(b)
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accepting or holding the trusteeship of any other trust deed
constituting or securing any other securities issued by or relating to the Issuer or any Guarantor or any such person or body
corporate so associated or any other office of profit under the Issuer or any Guarantor or any such person or body corporate
so associated,
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and shall be entitled
to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such contract,
transaction or arrangement as is referred to in (a) above or, as the case may be, any such trusteeship or office of profit as is
referred to in (b) above without regard to the interests of the Bondholders and notwithstanding that the same may be contrary or
prejudicial to the interests of the Bondholders and shall not be responsible for any Liability occasioned to the Bondholders thereby
and shall be entitled to retain and shall not be in any way liable to account for any profit made or share of brokerage or commission
or remuneration or other amount or benefit received thereby or in connection therewith.
Where any holding company,
subsidiary or associated company of the Trustee or any director or officer of the Trustee acting other than in his capacity as
such a director or officer has any information, the Trustee shall not thereby be deemed also to have knowledge of such information
and, unless it shall have actual knowledge of such information, shall not be responsible for any loss suffered by Bondholders resulting
from the Trustee's failing to take such information into account in acting or refraining from acting under or in relation to these
presents.
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21.
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WAIVER, AUTHORISATION AND DETERMINATION
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The Trustee may without
the consent or sanction of the Bondholders and without prejudice to its rights in respect of any subsequent breach, Event of Default
or Potential Event of Default from time to time and at any time but only if and in so far as in its opinion the interests of the
Bondholders shall not be materially prejudiced thereby waive or authorise any breach or proposed breach by the Issuer or any Guarantor
of any of the covenants or provisions contained in these presents or the Agency Agreement or determine that any Event of Default
or Potential Event of Default shall not be treated as such for the purposes of these presents PROVIDED ALWAYS THAT the Trustee
shall not exercise any powers conferred on it by this clause in contravention of any express direction given by Extraordinary Resolution
or by a request under Condition 12 (Enforcement) but so that no such direction or request shall affect any waiver, authorisation
or determination previously given or made. Any such waiver, authorisation or determination may be given or made on such terms and
subject to such conditions (if any) as the Trustee may determine, shall be binding on the Bondholders and, if, but only if, the
Trustee shall so require, shall be notified by the Issuer to the Bondholders in accordance with Condition 14 (Notices) as
soon as practicable thereafter.
The Trustee may without
the consent or sanction of the Bondholders at any time and from time to time concur with the Issuer and the Guarantors in making
any modification (i) to these presents or the Agency Agreement (including, without limitation, any Basic Terms Modification) which
in the opinion of the Trustee it may be proper to make PROVIDED THAT the Trustee is of the opinion that such modification is not
materially prejudicial to the interests of the Bondholders or (ii) to these presents or the Agency Agreement if in the opinion
of the Trustee such modification is of a formal, minor or technical nature or to correct a manifest error or an error which is,
in the opinion of the Trustee, proven. Any such
modification may be made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding upon
the Bondholders and, unless the Trustee agrees otherwise, shall be notified by the Issuer to the Bondholders in accordance with
Condition 14 (Notices) as soon as practicable thereafter.
Any breach of or failure
to comply with any such terms and conditions as are referred to in clauses 21 and 22 shall constitute a default by the Issuer or
the relevant Guarantor (as the case may be) in the performance or observance of a covenant or provision binding on it under or
pursuant to these presents.
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24.
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ENTITLEMENT TO TREAT HOLDER AS ABSOLUTE OWNER
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The Issuer, the Guarantors,
the Trustee, the Paying Agents, the Registrar and the Transfer Agents may (to the fullest extent permitted by applicable laws)
deem and treat the holder of any Bond or of a particular principal amount of the Bonds as the absolute owner of such Bond or principal
amount for all purposes (whether or not such Bond or principal amount shall be overdue and notwithstanding any notice of ownership
thereof or of trust or other interest with regard thereto, any notice of loss or theft thereof or any writing thereon), and the
Issuer, the Guarantors, the Trustee, the Paying Agents, the Registrar and the Transfer Agents shall not be affected by any notice
to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective to satisfy
and discharge the liability for the moneys payable in respect of such Bond or principal amount.
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25.1
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(a)
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The Trustee may without the consent of the Bondholders at any time agree
with the Issuer and the Guarantors to the substitution in place of the Issuer (or of the previous substitute under this clause)
as the principal debtor under these presents of BCL or any of its other Subsidiaries (such substituted company being hereinafter
called the New Company) provided that a trust deed is executed or some other form of undertaking is given by the New Company
in form and manner satisfactory to the Trustee, agreeing to be bound by the provisions of these presents with any consequential
amendments which the Trustee may deem appropriate as fully as if the New Company had been named in these presents as the principal
debtor in place of the Issuer (or of the previous substitute under the clause) and provided further that each Guarantor (other
than a Guarantor substituted in place of the Issuer) continues to unconditionally and irrevocably guarantee all amounts payable
under these presents to the satisfaction of the Trustee.
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(b)
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The following further conditions shall apply to (a) above:
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(i)
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the Issuer, each Guarantor and the New Company shall comply with such other
requirements as the Trustee may direct in the interests of the Bondholders;
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(ii)
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without prejudice to the rights of reliance of the Trustee under the immediately
following paragraph (iii), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests
of the Bondholders; and
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(iii)
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if two Directors of the New Company (or other officers acceptable to the
Trustee) shall certify that the New Company is solvent both at the time at which the relevant transaction is proposed to be effected
and immediately thereafter (which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to
have regard to the financial condition, profits or prospects of the New Company or to compare the same with those of the Issuer
or the previous substitute under this clause as applicable.
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25.2
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Any such trust deed or undertaking shall, if so expressed, operate to release
the Issuer or the previous substitute as aforesaid from all of its obligations as principal debtor under these presents. Not later
than 14 days after the execution of such documents and compliance with such requirements, the New Company shall give notice thereof
in a form previously approved by the Trustee to the Bondholders in the manner provided in Condition 14 (Notices). Upon the
execution of such documents and compliance with such requirements, the New Company shall be deemed to be named in these presents
as the principal debtor in place of the Issuer (or in place of the previous substitute under this clause) under these presents
and these presents shall be deemed to be modified in such manner as shall be necessary to give effect to the above provisions and,
without limitation, references in these presents to the Issuer shall, unless the context otherwise requires, be deemed to be or
include references to the New Company.
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Each of the Issuer and
each of the Guarantors shall severally indemnify the Trustee, every Appointee and the Bondholders and keep them indemnified against:
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(a)
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any Liability incurred by any of them arising from the non-payment by the
Issuer or the Guarantors of any amount due to the Trustee or the Bondholders under these presents by reason of any variation in
the rates of exchange between those used for the purposes of calculating the amount due under a judgment or order in respect thereof
and those prevailing at the date of actual payment by the Issuer or the Guarantors; and
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(b)
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any deficiency arising or resulting from any variation in rates of exchange
between (i) the date as of which the local currency equivalent of the amounts due or contingently due under these presents (other
than this clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer or any Guarantor and
(ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency
shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any
distribution of assets in connection with any such bankruptcy, insolvency or liquidation.
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The above indemnities
shall constitute obligations of the Issuer and the Guarantors separate and independent from their obligations under the other provisions
of these presents and shall apply irrespective of any indulgence granted by the Trustee or the Bondholders from time to time and
shall continue in full force and effect notwithstanding the judgment or filing of any proof or proofs in any bankruptcy, insolvency
or liquidation of the Issuer or the Guarantors for a liquidated sum or sums in respect of amounts due under these presents (other
than this clause). Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Bondholders and no proof
or evidence of any actual loss shall be required by the Issuer or the Guarantors or their liquidator or liquidators.
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27.
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NEW TRUSTEE AND SEPRATE AND CO-TRUSTEES
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27.1
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The power to appoint a new trustee of these presents shall, subject
as hereinafter provided, be vested in the Issuer but no person shall be appointed who shall not previously have been approved
by an Extraordinary Resolution. One or more persons may hold office as trustee or trustees of these presents but such trustee
or trustees shall be or include a Trust Corporation. Whenever there shall be more than two trustees of these presents the
majority of such trustees shall be competent to execute and exercise all the duties, powers, trusts, authorities and
discretions vested in the Trustee by these presents provided that a Trust Corporation shall be included in such majority. Any
appointment of a new trustee of these presents
shall as soon as practicable thereafter be notified by the Issuer to the Principal Paying Agent, the Registrar, the Transfer Agents
and the Bondholders.
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27.2
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Notwithstanding the provisions of subclause 27.1 above, the Trustee may,
upon giving prior notice to the Issuer and the Guarantors (but without the consent of the Issuer, the Guarantors or the Bondholders),
appoint any person established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate
trustee or as a co-trustee jointly with the Trustee:
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(a)
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if the Trustee considers such appointment to be in the interests of the Bondholders;
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(b)
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for the purposes of conforming to any legal requirements, restrictions
or conditions in any jurisdiction in which any particular act or acts is or are to be performed; or
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(c)
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for the purposes of obtaining a judgment in any jurisdiction or the enforcement
in any jurisdiction of either a judgment already obtained or any of the provisions of these presents against the Issuer and/or
any Guarantor.
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The
Issuer and each of the Guarantors irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute
any such instrument of appointment. Such a person shall (subject always to the provisions of these presents) have such trusts,
powers, authorities and discretions (not exceeding those conferred on the Trustee by these presents) and such duties and obligations
as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any such
person. Such reasonable remuneration as the Trustee may pay to any such person, together with any attributable Liabilities incurred
by it in performing its function as such separate trustee or co-trustee, shall for the purposes of these presents be treated as
Liabilities incurred by the Trustee.
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28.
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TRUSTEE'S RETIREMENT AND REMOVAL
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A trustee of these presents
may retire at any time on giving not less than 90 days' prior written notice to the Issuer and the Guarantors without giving any
reason and without being responsible for any Liabilities incurred by reason of such retirement. The Bondholders may by Extraordinary
Resolution remove any trustee or trustees for the time being of these presents. The Issuer and each Guarantor undertake that in
the event of the only trustee of these presents which is a Trust Corporation (for the avoidance of doubt, disregarding for this
purpose any separate or co-trustee appointed under subclause 27.2) giving notice under this clause or being removed by Extraordinary
Resolution they will use their best endeavours to procure that a new trustee of these presents being a Trust Corporation is appointed
as soon as reasonably practicable thereafter. The retirement or removal of any such trustee shall not become effective until a
successor trustee being a Trust Corporation is appointed. If, in such circumstances, no appointment of such a new trustee has become
effective within 60 days of the date of such notice or Extraordinary Resolution, the Trustee shall be entitled to appoint a Trust
Corporation as trustee of these presents, but no such appointment shall take effect unless previously approved by an Extraordinary
Resolution.
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29.
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TRUSTEE'S POWERS TO BE ADDITIONAL
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The powers conferred upon
the Trustee by these presents shall be in addition to any powers which may from time to time be vested in the Trustee by the general
law or as a holder of any of the Bonds.
Any notice or demand to
the Issuer, BCL or the Trustee to be given, made or served for any purposes under these presents shall be given, made or served
by sending the same by pre-paid post (first class if inland, first class
airmail if overseas) or facsimile transmission or by delivering it by hand as follows:
to the Issuer: Burford
Capital Finance LLC
292 Madison Avenue
New York
NY 10017
United States of America
(Attention: Melissa
Sobel)
Facsimile No. +1 646 736 1986
to BCL: Burford Capital
Limited
Regency Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WW
(Attention: Mark Woodall)
Facsimile No. (0)1481716868
to BCP: Burford Capital
PLC
24 Cornhill
London EC3V 3ND
United Kingdom
(Attention: Leslie Paster)
Facsimile No. 020 70609977
to the Trustee: U.S. Bank Trustees Limited
125 Old Broad Street
Fifth Floor
London
EC2N 1AR
(Attention: Structured Finance Relationship Management)
Facsimile No. +44 (0)20 7354 2577
or to such other address
or facsimile number as shall have been notified (in accordance with this clause) to the other parties hereto and any notice or
demand sent by post as aforesaid shall be deemed to have been given, made or served two days in the case of inland post or seven
days in the case of overseas post after despatch and any notice or demand sent by facsimile transmission as aforesaid shall be
deemed to have been given, made or served at the time of despatch provided that in the case of a notice or demand given by facsimile
transmission a confirmation of transmission is received by the sending party and such notice or demand shall forthwith be confirmed
by post. The failure of the addressee to receive such confirmation shall not invalidate the relevant notice or demand given by
facsimile transmission.
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31.
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CONFIDENTIALITY UNDERTAKING
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31.1
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The Trustee undertakes that it, and each of its directors, officers and affiliates, will:
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(a)
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keep the Confidential Information confidential and not disclose it to any
person except as permitted under sub-clause 31.2 below or with the written consent of the Issuer; and
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(b)
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use the Confidential Information solely to perform its role of Trustee
pursuant to the provisions of these presents upon and subject to the terms and conditions of these presents.
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31.2
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The Trustee may disclose Confidential Information only in the following
circumstances and only if and to the extent that the Trustee reasonably determines that: (i) it is both relevant and necessary
to do so in the relevant circumstances and (ii) in the case of (d) and (f) below (and in the case of (e) below, to the extent it
relates to disclosure to the Bondholders), it is necessary for Bondholders to be aware of such Confidential Information when considering
any matter, making any relevant decision or when determining to give any relevant directions to the Trustee:
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(a)
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to its professional advisers or auditors, or to any separate or co-trustee
or Appointee, provided that the recipient is subject to professional obligations to maintain the confidentiality of the Confidential
Information or is otherwise bound by requirements of confidentiality (in mutatis mutandis the same form as this Clause 31)
in relation to the Confidential Information;
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(b)
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to comply with any court order or applicable law or regulation;
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(c)
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to defend itself (in legal proceedings or otherwise) against any allegations
of negligence, default or misconduct (howsoever described) where failure by the Trustee to disclose the Confidential Information
would otherwise materially prejudice the Trustee’s defence;
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(d)
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for the purpose of investigating the occurrence of any Event of Default
or Potential Event of Default (where it knows, or has reasonable grounds to suspect, that such an event has occurred);
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(e)
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for the purpose of enforcing any of its rights or the rights of the Bondholders
under these presents and/or the Bonds against the Issuer and/or any Guarantor (including, without limitation, in any court proceedings);
or
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(f)
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to enable it to seek directions from the Bondholders, in circumstances
where it determines that such directions are necessary or desirable.
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31.3
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To the extent permitted by applicable law, the Trustee agrees to inform
the Issuer of each disclosure of Confidential Information pursuant to paragraphs (b) to (f) of sub-clause 31.2 above as soon as
reasonably practicable after making its decision to disclose or upon becoming aware that Confidential Information has been disclosed
in breach of Clause 31.1.
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31.4
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The obligations in this Clause 31 are continuing and shall remain in full
force and effect notwithstanding redemption of the Bonds or termination of these presents.
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These presents and any non-contractual obligations
arising out of or in connection with them are governed by, and shall be construed in accordance with, English law.
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33.
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SUBMISSION TO JURISDICTION
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33.1
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Each of the Issuer and the Guarantors irrevocably agrees for the benefit
of the Trustee and the Bondholders that the courts of England are to have exclusive jurisdiction to settle any dispute which may
arise out of or in connection with these presents and accordingly submit to the exclusive jurisdiction of the English courts. Each
of the Issuer and the Guarantors waives any objection to the courts of England on the grounds that they are an inconvenient or
inappropriate forum. To the extent permitted by law, the Trustee and the Bondholders may take any suit, action or proceeding arising
out of or in connection with these presents (together referred to as Proceedings) against the Issuer and/or the Guarantors
in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions.
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33.2
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The Issuer and BCL irrevocably and unconditionally appoint BCP at its registered
office for the time being as its agent for service of process in England in respect of any Proceedings and undertakes that in the
event of it ceasing so to act it will appoint such other person as the Trustee may approve as its agent for that purpose. The Issuer
and BCL:
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(a)
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agree to procure that, so long as any of the Bonds remains liable to prescription,
there shall be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept
service as aforesaid;
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(b)
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agree that failure by any such person to give notice of such service of
process to the Issuer and/or BCL (as appropriate) shall not impair the validity of such service or of any judgment based thereon;
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(c)
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consent to the service of process in respect of any Proceedings by the airmailing
of copies, postage prepaid, to the Issuer and/or BCL (as appropriate) in accordance with clause 30; and
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(d)
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agree that nothing in these presents shall affect the right to serve process
in any other manner permitted by law.
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This Trust Deed and any
trust deed supplemental hereto may be executed and delivered in any number of counterparts, all of which, taken together, shall
constitute one and the same deed and any party to this Trust Deed or any trust deed supplemental hereto may enter into the same
by executing and delivering a counterpart.
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35.
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CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
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A person who is not a
party to these presents (other than an Appointee of the Trustee) has no rights under the Contracts (Rights of Third Parties) Act
1999 to enforce any term of these presents, but this does not affect any right or remedy of a third party which exists or is available
apart from that Act.
IN WITNESS whereof this Trust Deed has
been executed as a deed by the Issuer, each Original Guarantor and the Trustee and delivered on the date first stated on page 1.
SCHEDULE 1
FORM OF GLOBAL CERTIFICATE
[THIS GLOBAL CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS AND
THE ISSUER HAS NOT BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(THE 1940 ACT). NEITHER THIS GLOBAL CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND UNDER CIRCUMSTANCES WHICH DO NOT REQUIRE THE ISSUER TO REGISTER UNDER THE 1940 ACT.]
ISIN: XS1756325228
BURFORD CAPITAL FINANCE
LLC
(a limited liability
company formed under the laws of the State of Delaware)
GLOBAL CERTIFICATE
representing
$180,000,000 6.125
PER CENT.
BONDS DUE 2025
jointly and severally,
unconditionally and irrevocably guaranteed as to payment of principal and interest by
BURFORD CAPITAL LIMITED
(Incorporated with
limited liability under the laws of Guernsey with registered number 50877)
and any Subsidiary of
Burford Capital Limited which becomes a Guarantor from time to time
and
BURFORD CAPITAL PLC
(Incorporated with
limited liability under the laws of England and Wales with registered number 09077893)
and any Subsidiary of Burford
Capital PLC which becomes a Guarantor from time to time
Burford Capital Finance
LLC (the Issuer) hereby certifies that USB Nominees (UK) Limited is, at the date hereof, entered in the Register as the
holder of the aggregate principal amount of $180,000,000 of a duly authorised issue of Bonds (the Bonds) described above
of the Issuer. References herein to the Conditions (or to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in Schedule 2 to the Trust Deed referred to below. Words and expressions defined in the Conditions
shall bear the same meanings when used in this Global Certificate. This Global Certificate is issued subject to, and with the benefit
of, the Conditions and a Trust Deed dated 12 February 2018 and made between the Issuer and U.S. Bank Trustees Limited (the Trustee)
as trustee for the Bondholders.
The Issuer, subject
to and in accordance with the Conditions and the Trust Deed, promises to pay to the registered holder hereof on 12 August
2025 and/or on such earlier date(s) as all or any of the Bonds represented by this Global Certificate may become due and
repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such
Bonds on each such date and to pay interest (if any) on the principal amount of the Bonds outstanding from time to time
represented by this Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with
any other sums payable under the Conditions and the Trust Deed. At maturity, and prior to the payment of any amount due, the
registered holder hereof shall surrender this Global Certificate at the specified office of the Principal Paying Agent at 125
Old Broad Street, London EC2N 1AR or such other office as may be specified by the Issuer and approved by the Trustee. On any
redemption or purchase and cancellation of any of the Bonds represented by this Global Certificate, details of such
redemption or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in the Schedule
hereto and the relevant space in the Schedule hereto recording any such redemption or purchase and cancellation (as the case
may be) shall be signed by or on behalf of the Principal Paying Agent. Upon any such redemption or purchase and cancellation
the principal amount outstanding of this Global Certificate and the Bonds held by the registered holder hereof shall be
reduced by the principal amount of such Bonds so redeemed or purchased and cancelled. The principal amount outstanding of
this Global Certificate and of the Bonds held by the registered holder hereof following any such redemption or purchase and
cancellation as aforesaid or any exchange as referred to below shall be the outstanding principal amount most recently
entered in the fourth column in the Schedule hereto.
Bonds represented by this
Global Certificate are exchangeable and transferable only in accordance with, and subject to, the provisions hereof and the rules
and operating procedures of Euroclear Bank SA/NV (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg).
Upon the exchange of the
whole or a part of this Global Certificate for Definitive Certificates (only where Euroclear or Clearstream, Luxembourg notifies
the Issuer and the Guarantors that it is unwilling or unable to continue as a clearing system in connection with a Global Certificate,
and a successor clearing system approved by the Trustee is not appointed by the Issuer and the Guarantors within 90 days after
receiving such notice from Euroclear, Clearstream, Luxembourg), details of such exchange shall be entered by or on behalf of the
Issuer in the third column of the Schedule hereto and the relevant space in the Schedule hereto recording such exchange shall be
signed by or on behalf of the Principal Paying Agent, whereupon the outstanding principal amount of this Global Certificate and
the Bonds held by the registered holder hereof shall be increased or reduced (as the case may be) by the principal amount so exchanged.
Subject as provided in the
following paragraph, until the exchange of the whole of this Global Certificate as aforesaid, the registered holder hereof shall
in all respects be entitled to the same benefits as if he were the registered holder of Definitive Certificates in the form set
out in Part 1 of Schedule 2 to the Trust Deed.
Subject as provided in
the Trust Deed, each person who is for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg as entitled
to a particular principal amount of the Bonds represented by this Global Certificate (in which regard any certificate or other
document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Bonds standing to the account of any
person shall be conclusive and binding for all purposes save in the case of manifest error) shall be deemed to be the holder of
such principal amount of such Bonds for all purposes other than with respect to payments of principal and interest on the Bonds
for which purpose the registered holder of this Global Certificate shall be deemed to be the holder of such principal amount of
the Bonds in accordance with and subject to the terms of this Global Certificate and the Trust Deed. Whilst the Bonds are represented
by this Global Certificate payments will be made to the registered holder appearing on the Register at the close of the business
day (being for this purpose a day on which Euroclear and Clearstream, Luxembourg are open for business) preceding such due date.
For so long as all of
the Bonds are represented by this Global Certificate and this Global Certificate is held on behalf of Euroclear and/or
Clearstream, Luxembourg, notices to Bondholders may be given by delivery of the relevant notice to Euroclear and/or
Clearstream, Luxembourg (as the case may be) for communication to the relative accountholders rather than by publication as
required by Condition 14 (Notices) provided that, so long as the Bonds are admitted to the official list maintained by
the Financial Conduct Authority in its capacity as the UK Listing Authority (the UKLA) and admitted to trading on the
London Stock Exchange plc's market for listed securities, all requirements of the UKLA have been complied with. Any such
notice shall be deemed to have been given to the Bondholders on the second day after the day on which such notice is
delivered to Euroclear and/or Clearstream, Luxembourg (as the case may be) as aforesaid.
Whilst any Bonds held by
a Bondholder are represented by this Global Certificate, notices to be given by such Bondholder may be given by such Bondholder
to the Principal Paying Agent through Euroclear and/or Clearstream, Luxembourg, as the case may be, in such a manner as the Principal
Paying Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.
Claims against the Issuer
and the Guarantors in respect of principal and interest on the Bonds represented by this Global Certificate will be prescribed
after 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date (as defined in Condition
9 (Taxation)).
References herein to Euroclear
and/or Clearstream, Luxembourg shall be deemed to include references to any other clearing system approved by the Trustee.
No rights are conferred
on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Global Certificate but this does
not affect any right or remedy of any person which exists or is available apart from that Act.
This Global Certificate
and any non-contractual obligations arising out of or in connection with it is governed by, and shall be construed in accordance
with, English law.
This Global Certificate
shall not be valid unless authenticated by Elavon Financial Services DAC as Principal Paying Agent.
IN WITNESS whereof the Issuer has caused this Global
Certificate to be signed on its behalf.
BURFORD CAPITAL FINANCE LLC
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By:
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………………………….
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(Duly authorised)
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Issued
on 12 February 2018
Certificate of authentication
This Global Certificate is duly authenticated
without recourse, warranty or liability.
………………………………….
Duly authorised
for and on behalf of
Elavon Financial Services DAC
as
Principal Paying Agent
SCHEDULE
Outstanding Principal
Amount
The following (i) exchanges
of this Global Certificate for Definitive Certificates (only in the limited circumstances set forth in this Global Certificate),
(ii) payments of any redemption amount in respect of this Global Certificate and/or (iii) cancellations of interests in this Global
Certificate have been made, resulting in the principal amount outstanding hereof being the amount specified in the latest entry
in the fourth column:
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Date
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Amount of increase/ decrease in outstanding principal amount of this Global Certificate
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Reasons for increase/ decrease in outstanding principal amount of this Global Certificate (initial issue, cancellation, redemption or payment)
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Outstanding principal amount of this Global Certificate following such increase/ decrease
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Notation made by or on behalf of the Principal Paying Agent
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SCHEDULE 2
FORM OF DEFINITIVE
CERTIFICATE AND CONDITIONS OF THE BONDS
PART 1
FORM OF DEFINITIVE CERTIFICATE
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$100
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ISIN: XS1756325228
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[SERIES]
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[SERIAL NO.]
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BURFORD CAPITAL FINANCE
LLC
(a limited liability
company formed under the laws of the State of Delaware)
$180,000,000 6.125
PER CENT.
BONDS DUE 2025
jointly and severally,
unconditionally and irrevocably guaranteed
as to payment of principal and interest by
BURFORD CAPITAL LIMITED
(Incorporated with limited
liability under the laws of Guernsey with registered number 50877)
and any Subsidiary of
Burford Capital Limited which becomes a Guarantor from time to time
and
BURFORD CAPITAL PLC
(Incorporated with
limited liability under the laws of England and Wales with registered number 09077893)
and any Subsidiary of Burford
Capital PLC which becomes a Guarantor from time to time
The issue of the Bonds
was authorised by a written resolution of the manager of Burford Capital Finance LLC (the Issuer) pursuant to Section 18-404
of the Delaware Limited Liability Company Act passed on 16 January 2018 and the giving of the guarantee in respect of the Bonds
was authorised by a resolution of the Board of Directors of Burford Capital Limited (BCL) passed on 16 January 2018 and
a resolution of the Board of Directors of Burford Capital PLC (BCP) passed on 12 January 2018.
This Bond forms one of
a series of Bonds constituted by a Trust Deed (the Trust Deed) dated 12 February 2018 made between the Issuer, the Guarantor
and U.S. Bank Trustees Limited as trustee for the holders of the Bonds and issued as Registered Bonds in the denomination of $100
each, in an aggregate principal amount of $180,000,000.
THIS IS TO CERTIFY that
is/are the registered
holder(s) of one of the above-mentioned Registered Bonds, such Bond being in the denomination of $100 (one hundred U.S. Dollars)
and is/are entitled on the Interest Payment Date (as defined in Condition 6 (Interest) endorsed hereon) falling on 12 August
2025 (or on such earlier date as the principal sum hereinafter mentioned may become repayable in accordance with the Conditions
endorsed hereon) to the repayment of such principal sum of:
$100 (one hundred U.S. Dollars)
together with such other
amounts (if any) as may be payable, all subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
Interest at rates determined
in accordance with the said Conditions is payable on the said principal sum semi- annually in arrear on 12 February and 12 August
in each year, subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
IN WITNESS whereof this Registered Bond has
been executed on behalf of the Issuer.
BURFORD CAPITAL FINANCE LLC
By: ............................................
Officer
By: .............................................
Officer
Dated as of [l]
Certificate of authentication
This Bond is duly authenticated
without recourse,
warranty or liability.
…………………………………
Duly authorised
for and on behalf of
Elavon Financial Services DAC
as Registrar
FORM OF TRANSFER OF
REGISTERED BOND
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) to
..................................................................................................................................................................
..................................................................................................................................................................
..................................................................................................................................................................
(Please print or type name and address (including
postal code) of transferee)
$100 principal amount of this Bond and all rights
hereunder, hereby irrevocably constituting and appointing
...........................................................................................as
attorney to transfer such principal amount of this Bond in the register maintained by Burford Capital Finance LLC with full power
of substitution.
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Signature(s)
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.............................................
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.............................................
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Date: .............................................
[20 ]
N.B.:
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1.
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This form of transfer must be accompanied by such documents, evidence and
information as may be required pursuant to the Conditions and must be executed under the hand of the transferor or, if the transferor
is a corporation, either under its common seal or under the hand of two of its officers duly authorised in writing and, in such
latter case, the document so authorising such officers must be delivered with this form of transfer.
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2.
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The signature(s) on this form of transfer must correspond with the name(s)
as it/they appear(s) on the face of this Bond in every particular, without alteration or enlargement or any change whatever.
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PART 2
CONDITIONS
OF THE BONDS
The US Dollar denominated
6.125 per cent. Guaranteed Bonds due 2025 (the “Bonds”, which expression shall in these Conditions, unless the
context otherwise requires, include any further bonds issued pursuant to Condition 18 and forming a single series with the Bonds
of Burford Capital Finance LLC (the “Issuer”)) are constituted by a Trust Deed dated the Issue Date (the “Trust
Deed”) made between the Issuer, Burford Capital Limited (“BCL”) and Burford Capital PLC (“BCP”)
as guarantors and U.S. Bank Trustees Limited (the “Trustee”, which expression shall include its successor(s))
as trustee for the holders of the Bonds (the “Bondholders”). References in these Conditions to the “Guarantors”
shall be references to BCL, BCP and each Subsidiary of BCL which becomes a Guarantor pursuant to Condition 4.3 but shall not include
any Subsidiary of BCL which has ceased to be a Guarantor pursuant to Condition 4.4.
The statements in these
Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed. Copies of the
Trust Deed and the Agency Agreement dated the Issue Date (the “Agency Agreement”) made between the Issuer, BCL,
BCP, the Registrar, the initial Transfer Agent, the initial Paying Agent and the Trustee are available for inspection during normal
business hours by the Bondholders at the registered office for the time being of the Trustee, being at the date of issue of the
Bonds at 125 Old Broad Street, London EC2N 1AR and at the specified office of each of the Paying Agents. The Bondholders are entitled
to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement
applicable to them.
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1.
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Form, Denomination and Title
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1.1
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Form and Denomination
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The Bonds are issued in
registered form in amounts of US$100 (referred to as the “principal amount” of a Bond). A certificate (each
a “Certificate”) will be issued to each Bondholder in respect of its registered holding of Bonds. Each Certificate
will be numbered serially with an identifying number which will be recorded on the relevant Certificate and in the register of
Bondholders which the Issuer will procure to be kept by the Registrar.
Title to the Bonds passes
only by registration in the register of Bondholders. The holder of any Bond will (except as otherwise required by law) be treated
as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest
or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be liable for so treating
the holder. In these Conditions “Bondholder” and (in relation to a Bond) “holder” means the
person in whose name a Bond is registered in the register of Bondholders.
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2.
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Transfers of Bonds and Issue of Certificates
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A Bond may be transferred
by depositing the Certificate issued in respect of that Bond, with the form of transfer on the back duly completed and signed,
at the specified office of any Transfer Agent.
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2.2
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Delivery of new Certificates
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Each new Certificate to
be issued upon transfer of Bonds will, within five business days of receipt by the relevant Transfer Agent of the duly completed
form of transfer endorsed on the relevant Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Bond
to the address specified in the form of transfer. For the purposes of this Condition, “business day” shall mean
a day on which banks are open for business in the city in which the specified office of the Transfer Agent with whom a Certificate
is deposited in connection with a transfer is located.
Where some but not all
of the Bonds in respect of which a Certificate is issued are to be transferred a new Certificate in respect of the Bonds not so
transferred will, within five business days of receipt by the relevant Transfer Agent of the original Certificate, be mailed by
uninsured mail at the risk of the holder of the Bonds not so transferred to the address of such holder appearing on the register
of Bondholders or as specified in the form of transfer.
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2.3
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Formalities free of charge
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Registration of transfer
of Bonds will be effected without charge by or on behalf of the Issuer or any Transfer Agent but upon payment (or the giving of
such indemnity as the Issuer or the relevant Transfer Agent may reasonably require) in respect of any tax or other governmental
charges which may be imposed in relation to such transfer.
No Bondholder may require
the transfer of a Bond to be registered during the period of 15 days ending on the due date for any payment of principal, premium
or interest on that Bond.
All transfers of Bonds
and entries on the register of Bondholders will be made subject to the detailed regulations concerning transfer of Bonds scheduled
to the Trust Deed. The regulations may be changed by the Issuer with the prior written approval of the Transfer Agents and the
Trustee. A copy of the current regulations will be mailed (free of charge) by the Registrar to any Bondholder who requests one.
The Bonds are direct,
unconditional and (subject to the provisions of Condition 5.1) unsecured obligations of the Issuer and (subject as provided above)
rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated
obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws
relating to creditors’ rights.
The payment of the principal
and interest in respect of the Bonds and all other moneys payable by the Issuer under or pursuant to the Trust Deed has been jointly
and severally unconditionally and irrevocably guaranteed by BCL and BCP (such guarantee together with any additional guarantees
provided pursuant to Condition 4.3, the “Guarantee”) in the Trust Deed.
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4.2
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Status of the Guarantee
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The obligations of
each Guarantor under the Guarantee constitute direct, unconditional and (subject to the provisions of Condition 5.1)
unsecured obligations of such Guarantor and (subject as provided above) rank and will rank pari passu with all other
outstanding unsecured and unsubordinated obligations of such Guarantor, present and future, but, in the event of insolvency,
only to the extent permitted by applicable laws relating to creditors’ rights.
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4.3
|
Addition of Subsidiary Guarantors
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Without prejudice to Condition
5, if any Subsidiary of BCL (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate (without duplication)
amounts to more than £2,000,000 (or its equivalent in any other currency), BCL covenants that it shall procure that such
Subsidiary shall as soon as reasonably practicable, but in any event no later than 60 days after the date on which it incurs such
Financial Indebtedness, provide a Guarantee in respect of the Trust Deed and the Bonds by procuring the delivery to the Trustee
of a deed of accession substantially in the form scheduled to the Trust Deed or otherwise as the Trustee may agree, duly executed,
and relevant legal opinions having been delivered to the Trustee in accordance with the Trust Deed.
Notice of any addition
of a Subsidiary Guarantor (as defined below) pursuant to this Condition 4.3 will promptly be given by the Issuer to the Bondholders
in accordance with Condition 14.
Upon execution of the deed
of accession referred to above and relevant legal opinions having been delivered to the Trustee (and subject to Condition 4.4)
the relevant acceding Subsidiary shall be referred to as a “Subsidiary Guarantor”.
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4.4
|
Release of Subsidiary Guarantors
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A Subsidiary Guarantor which
has Financial Indebtedness which in aggregate (without duplication) amounts to £2,000,000 (or its equivalent in any other
currency) or less shall be immediately, automatically and (subject to Condition 4.3) irrevocably released and relieved of all its
future obligations under the Guarantee and all of its future obligations as a Subsidiary Guarantor under the Trust Deed upon BCL
giving written notice to the Trustee signed by two directors of BCL or by a director and the secretary of BCL. Such notice must
also contain the following certifications:
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(i)
|
that no Event of Default or Potential Event of Default (as defined in the Trust
Deed) is continuing; and
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(ii)
|
that such Subsidiary Guarantor has Financial Indebtedness which in aggregate
(without duplication) amounts to £2,000,000 (or its equivalent in any other currency) or less.
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None of the Issuer, BCL,
BCP or any Subsidiary Guarantor will be required to execute or provide any other document in relation to any release pursuant to
this Condition 4.4 but, if the Issuer requests in writing, the Trustee shall (at the expense of the Issuer) enter into any documentation
in relation to the release of any Subsidiary Guarantor which the Issuer (acting reasonably) considers necessary or desirable and
in a form satisfactory to the Trustee to evidence the release of that Subsidiary Guarantor, provided that, the Trustee shall not
be obliged to enter into any documentation which, in the sole opinion of the Trustee, would have the effect of:
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(i)
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exposing the Trustee to any liability against which it has not been indemnified
and/or secured and/or pre-funded to its satisfaction; or
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(ii)
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increasing or imposing new and/or additional obligations or duties, or reducing
the protections, of the Trustee in the Trust Deed, the Agency Agreement and the Bonds.
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Notice of any release
of a Subsidiary Guarantor pursuant to this Condition 4.4 will promptly be given by the Issuer to the Bondholders in accordance
with Condition 14.
If any Subsidiary of BCL
released from the Guarantee as described above subsequently has Financial Indebtedness which in aggregate (without duplication)
amounts to more than £2,000,000 (or its equivalent in any other currency) at any time after such release, such Subsidiary
of BCL shall (unless it is an Excluded Subsidiary) be required to provide a Guarantee as described in Condition 4.3.
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4.5
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No Requirement to monitor
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The Trustee shall not be
obliged to monitor compliance by BCL with Conditions 4.3 or 4.4 and shall have no liability to any person for not doing so. The
Trustee shall be entitled to rely without further enquiry or evidence, without liability to any person, on any notice provided
by BCL in relation to this Condition 4, and until it receives such notice shall be entitled to assume that no other Subsidiary
of BCL (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate (without duplication) amounts to more
than £2,000,000 (or its equivalent in any other currency).
So long as any of the Bonds remain
outstanding (as defined in the Trust Deed):
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(a)
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the Issuer will not, create, assume or permit to subsist any mortgage,
charge, lien, pledge or other security interest (each a “Security Interest”, provided that (for the avoidance
of doubt), a “Security Interest” shall not include any arrangement by which the Issuer, Guarantor, or any Subsidiary
enters into a title transfer collateral arrangement governed by English law or a comparable arrangement in any other jurisdiction
that is no more permissive for that Issuer, Guarantor or Subsidiary than an English law title transfer collateral arrangement)
upon, or with respect to, the whole or any part of its present or future business, undertaking, assets or revenues (including any
uncalled capital) to secure any Financial Indebtedness of any person other than an Excluded Subsidiary1 unless the Issuer,
in the case of the creation of a Security Interest, before or at the same time and, in any other case, promptly, takes any and
all action necessary to ensure that:
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|
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(i)
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all amounts payable by it under the Bonds and the Trust Deed are secured
by the Security Interest equally and rateably with the Financial Indebtedness to the satisfaction of the Trustee; or
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(ii)
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such other Security Interest or guarantee or other arrangement (whether
or not it includes the giving of a Security Interest) is provided either (A) as the Trustee in its absolute discretion deems not
materially less beneficial to the interests of the Bondholders or (B) as is approved by an Extraordinary Resolution (as defined
in the Trust Deed) of the Bondholders;
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(b)
|
no Guarantor will, and each Guarantor will procure, so far as it can by
the proper exercise of voting and other rights or powers of control exercisable by it in relation to its Subsidiaries that none
of its Subsidiaries (other than Excluded Subsidiaries) will, create, assume or permit to subsist any Security Interest upon, or
with respect to, the whole or any part of the present or future business, undertaking, assets or revenues (including any uncalled
capital) of such Guarantor and/or any of its respective Subsidiaries (other than Excluded Subsidiaries) to secure any Financial
Indebtedness of any person other than an Excluded Subsidiary unless the relevant Guarantor, in the case of the creation of a Security
Interest, before or at the same time and, in any other case, promptly, takes any and all action necessary to ensure that:
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1 In
relation to Financial Indebtedness of Excluded Subsidiaries please see Condition 5.1(c) below.
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(i)
|
all amounts payable by it under the Guarantee are secured by the Security
Interest equally and rateably with the Financial Indebtedness to the satisfaction of the Trustee; or
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(ii)
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such other Security Interest or guarantee or other arrangement (whether
or not it includes the giving of a Security Interest) is provided either (A) as the Trustee in its absolute discretion deems not
materially less beneficial to the interests of the Bondholders or (B) as is approved by an Extraordinary Resolution of the Bondholders;
and
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(c)
|
neither the Issuer nor any Guarantor will, and each Guarantor will procure,
so far as it can by the proper exercise of voting and other rights or powers of control exercisable by it in relation to its Subsidiaries
that none of its Subsidiaries (other than Excluded Subsidiaries) will:
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|
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(i)
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create, assume or permit to subsist any Security Interest upon, or with
respect to, the whole or any part of the present or future business, undertaking, assets or revenues (including any uncalled capital)
of the Issuer, any Guarantor and/or any of their respective Subsidiaries (other than Excluded Subsidiaries) to secure any Financial
Indebtedness of any Excluded Subsidiary; or
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(ii)
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create, assume or permit to subsist any guarantee or indemnity of any Financial
Indebtedness of any Excluded Subsidiary,
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So long as any Bond remains
outstanding (as defined in the Trust Deed), BCL shall ensure that, as at each Reference Date the Leverage Ratio is no more than
1:2.
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5.3
|
Compliance Certificate
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BCL
shall, concurrently with the delivery of each of the annual and semi-annual Consolidated Financial Statements referred to in Condition
5.4, provide to the Trustee a Directors’ Certificate confirming compliance with the covenant contained in Condition 5.2 with
respect to the most recent Reference Date.
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5.4
|
Financial Information
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BCL has agreed in the Trust Deed,
so long as any of the Bonds remain outstanding, to supply to the Trustee:
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(a)
|
as soon as they may become available, but in any event within six months
of its most recent financial year-end, a copy of its audited Consolidated Financial Statements for such financial year, together
with the report thereon of BCL’s independent auditors; and
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(b)
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as soon as they may become available, but in any event within three months
of the end of the first half of each financial year, a copy of its unaudited Consolidated Financial Statements for such period.
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5.5
|
No Requirement to Monitor
|
The Trustee shall not be
obliged to review any Consolidated Financial Statements provided to it pursuant to Condition 5.4, nor to monitor the Leverage Ratio
on any Reference Date for the purposes of Condition 5.2.
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6.1
|
Interest Rate and Interest Payment Dates
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The Bonds bear
interest from (and including) 12 February 2018 at the rate of 6.125 per cent. per annum, payable semi-annually in arrear on
12 February and 12 August (each an “Interest Payment Date”) in each year until (and including) the
Maturity Date. The first payment (for the period from (and including) 12 February 2018 to (but excluding) 12 August 2018 and
amounting to US$3.06 per US$100 principal amount of Bonds) shall be made on 12 August 2018.
Each Bond will cease to
bear interest from (and including) its due date for redemption unless upon due presentation payment of the principal in respect
of the Bond is improperly withheld or refused or unless default is otherwise made in respect of payment, in which event interest
shall continue to accrue as provided in the Trust Deed.
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6.3
|
Calculation of Broken Interest
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When interest is required
to be calculated in respect of a Bond for a period of less than a full half-year, it shall be calculated on the basis of a 360-day
year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed on the basis of
a month of 30 days.
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6.4
|
Interest Rate Step-up
|
If following the Issue
Date a Step-Up Event occurs, the rate of interest payable on the Bonds under Condition 6.1 shall increase by 1.00 per cent. per
annum from (and including) the Interest Payment Date following the occurrence of such Step-Up Event and the Bonds shall thereafter
bear interest at an increased rate of interest of 7.125 per cent. per annum.
Notice of any increase
in the rate of interest pursuant to this Condition 6.4 will promptly be given by the Issuer to the Bondholders in accordance with
Condition 14.
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7.1
|
Payments in respect of Bonds
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Payments of principal
and interest in respect of each Bond will be made by transfer to the registered account of the Bondholder or by a cheque in US
Dollars drawn on a bank that processes payment in US Dollars mailed to the registered address of the Bondholder if it does not
have a registered account. Payments of principal and payments of interest due otherwise than on an Interest Payment Date will only
be made against surrender of the relevant Certificate at the specified office of any of the Paying Agents. Interest on Bonds due
on an Interest Payment Date will be paid to the holder shown on the register of Bondholders at the close of business on the date
(the “record date”) being the fifteenth day before the relevant Interest Payment Date.
For the purposes of this
Condition, a Bondholder’s registered account means the US Dollar account maintained by or on behalf of it with a bank that
processes payments in US Dollars, details of which appear on the register of Bondholders at the close of business, in the case
of principal and interest due otherwise than on an Interest Payment Date, on the second Payment Business Day before the due date
for payment and, in the case of interest due on an Interest Payment Date, on the relevant record date, and a Bondholder’s
registered address means its address appearing on the register of Bondholders at that time.
Any payments to a Bondholder
in respect of each Bond shall be rounded to the nearest cent, half a cent being rounded upwards.
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7.2
|
Payments subject to Applicable Laws
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Payments
will be subject in all cases to any fiscal or other laws and regulations applicable thereto, but without prejudice to the provisions
of Condition 9, in the place of payment.
No commissions or expenses
shall be charged to the Bondholders in respect of any payments made in accordance with this Condition.
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7.4
|
Payment on Payment Business Days
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Where payment is to be
made by transfer to a registered account, payment instructions (for value the due date or, if that is not a Payment Business Day,
for value the first following day which is a Payment Business Day) will be initiated and, where payment is to be made by cheque,
the cheque will be mailed, on the Business Day preceding the due date for payment or, in the case of a payment of principal or
a payment of interest due otherwise than on an Interest Payment Date, if later, on the Business Day on which the relevant Certificate
is surrendered at the specified office of a Paying Agent.
Bondholders will not be
entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due date is not a
Payment Business Day, if the Bondholder is late in surrendering its Certificate (if required to do so) or if a cheque mailed in
accordance with this Condition arrives after the due date for payment.
If the amount of principal
or interest which is due on the Bonds is not paid in full, the Registrar will annotate the register of Bondholders with a record
of the amount of principal or interest in fact paid.
The names of the initial
Agents and their initial specified offices are set out at the end of these Conditions. The Issuer and the Guarantors reserve the
right, subject to the prior written approval of the Trustee, at any time to vary or terminate the appointment of any Agent and
to appoint additional or other Agents provided that:
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(a)
|
there will at all times be a Principal Paying Agent, a Transfer Agent and a Registrar; and
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(b)
|
there will at all times be at least one Paying Agent
(which may be the Principal Paying Agent) having its specified office in a European city.
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Notice of any termination
or appointment and of any changes in specified offices will be given to the Bondholders promptly by the Issuer in accordance with
Condition 14.
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8.
|
Redemption and Purchase
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8.1
|
Redemption at Maturity
|
Unless previously redeemed
or purchased and cancelled as provided below, the Issuer will redeem the Bonds at their principal amount on the Maturity Date.
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8.2
|
Redemption for Taxation Reasons
|
If the Issuer satisfies the
Trustee immediately before the giving of the notice referred to below that:
|
(a)
|
as a result of any change in, or amendment to, the laws or regulations
of a Relevant Jurisdiction, or any change in the application or official interpretation of the laws or regulations of a Relevant
Jurisdiction, which change or amendment becomes effective after (i) in the case of the Issuer, BCP or BCL, the Issue Date; or (ii)
in the case of any Subsidiary Guarantor, the first day on which such Subsidiary Guarantor becomes a Guarantor pursuant to Condition
4.3, on the next Interest Payment Date either the Issuer
would be required to pay additional amounts as provided or referred to in Condition 9.1 or any Guarantor could, if the Guarantee
was called, be required to pay such additional amounts; and
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|
(b)
|
the requirement cannot be avoided by the Issuer or any Guarantor taking
reasonable measures available to them (including by BCL procuring payment by the Issuer, itself or any other Guarantor),
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the Issuer may at its option,
having given not less than 30 nor more than 60 days’ notice to the Bondholders in accordance with Condition 14 (which notice
shall be irrevocable and shall specify the date fixed for redemption), redeem all the Bonds, but not some only, at any time at
their principal amount together with interest accrued to (but excluding) the date of redemption, provided that no such notice of
redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the relevant
Guarantor would be required to pay such additional amounts, were a payment in respect of the Bonds then due. Prior to the publication
of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee a Directors’ Certificate
from the Issuer or, as the case may be, the relevant Guarantor stating that the requirement referred to in (a) above will apply
on the next Interest Payment Date and cannot be avoided by the Issuer or the Guarantors taking reasonable measures available to
them, and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions
precedent set out above, in which event it shall be conclusive and binding on the Bondholders.
The Issuer, any Guarantor
or any other member of the Group may at any time purchase Bonds in any manner and at any price. Such Bonds may be held, reissued
or resold, or at the option of the Issuer, BCP or BCL, surrendered to any Paying Agent for cancellation.
All Bonds which are redeemed
or purchased by the Issuer, any Guarantor or any member of the Group and surrendered for cancellation in accordance with Condition
8.3 above will forthwith be cancelled, and accordingly may not be held, reissued or resold.
Upon the expiry of any
notice as is referred to in Condition 8.2 above the Issuer shall be bound to redeem the Bonds to which the notice refers in accordance
with the terms of such Condition.
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9.1
|
Payment without Withholding
|
All payments in respect
of the Bonds by or on behalf of the Issuer or any Guarantor shall be made without withholding or deduction for, or on account of,
any present or future taxes, duties, assessments or governmental charges of whatever nature (“Taxes”) imposed
or levied by or on behalf of any of the Relevant Jurisdictions, unless the withholding or deduction of the Taxes is required by
law. In that event, the Issuer or, as the case may be, the relevant Guarantor will pay such additional amounts as may be necessary
in order that the net amounts received by the Bondholders after the withholding or deduction shall equal the respective amounts
which would have been receivable in respect of the Bonds in the absence of the withholding or deduction; except that no additional
amounts shall be payable in relation to any payment in respect of any Bond:
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(a)
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presented for payment by or on behalf of, a holder who is liable to the
Taxes in respect of the Bond by reason of his having some connection with any Relevant Jurisdiction other than the mere holding
of the Bond; or
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(b)
|
where such withholding or deduction is imposed in respect of FATCA; or
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|
(c)
|
where such withholding or deduction for United States federal income taxes
would not have been required but for the failure of the holder or beneficial owner to provide upon request a valid U.S. IRS Form
W-8 or W-9 (or successor forms) or other documentation as required by official IRS guidance; or
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|
(d)
|
presented for payment more than 30 days after the Relevant Date except
to the extent that a holder would have been entitled to additional amounts on presenting the same for payment on the last day of
the period of 30 days assuming, whether or not such is in fact the case, that day to have been a Payment Business Day.
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Any reference in these
Conditions to any amounts in respect of the Bonds shall be deemed also to refer to any additional amounts which may be payable
under this Condition or under any undertakings given in addition to, or in substitution for, this Condition pursuant to the Trust
Deed.
Claims in respect of principal
and interest will become prescribed unless made within periods of 10 years (in the case of principal) and five years (in the case
of interest) from the Relevant Date in respect of the Bonds subject to the provisions of Condition 7.
The Trustee at its discretion
may, and if so requested in writing by the holders of at least one-fifth in principal amount of the Bonds then outstanding or if
so directed by an Extraordinary Resolution of the Bondholders shall (subject in each case to being indemnified and/or secured and/or
pre-funded to its satisfaction) (but, in the case of the happening of any of the events described in subparagraphs (b) to (d) inclusive
(other than the winding up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries), (e) to (g) inclusive
and (k) and (l) below, only if the Trustee shall have certified in writing to the Issuer and the Guarantors that such event is,
in its opinion, materially prejudicial to the interests of the Bondholders) give notice to the Issuer and the Guarantors that the
Bonds are, and they shall accordingly forthwith become, immediately due and repayable at their principal amount, together with
accrued interest as provided in the Trust Deed, in any of the following events (“Events of Default”):
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(a)
|
if default is made in the payment of any principal or interest due in respect
of the Bonds or any of them and the default continues for a period of 7 days in the case of principal or 14 days in the case of
interest; or
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|
(b)
|
if the Issuer or any Guarantor fails to perform or observe any of its other
obligations under these Conditions or the Trust Deed and (except in any case where the Trustee considers the failure to be incapable
of remedy, when no continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of
30 days (or such longer period as the Trustee may permit) following the service by the Trustee on the Issuer or such Guarantor
(as the case may be) of notice requiring the same to be remedied; or
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|
(c)
|
if (i) any Financial Indebtedness of the Issuer, any Guarantor or any of
Material Subsidiaries becomes due and repayable prematurely or becomes capable of being declared due and repayable prematurely
in each case by reason of an event of default (however described); or (ii) the Issuer, any Guarantor or any of the Material Subsidiaries
fails to make any payment in respect of any Financial Indebtedness on the due
date for payment as extended by any originally applicable grace period; provided that the amount of Financial Indebtedness in respect
of which one or more of the events mentioned in this paragraph 11.1(c) have occurred and are continuing, individually or in aggregate
exceeds £2,000,000 (or its equivalent in any other currency); or
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(d)
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(i) if any order is made by any competent court or resolution is passed
for the winding up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries; or (ii) if the Issuer, any
Guarantor or the Group ceases or threatens to cease to carry on all or substantially all of its business or operations, save (in
either case) (x) for the purposes of and followed by a reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation
on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material
Subsidiary, for the purposes of and followed by a Permitted Reorganisation; or
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|
(e)
|
the Issuer, any Guarantor or any of the Material Subsidiaries is (or is
deemed (other than where a demand is made for less than £1,000,000 under section 123(l)(a) of the Insolvency Act 1986) by
law or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment
of all or a material part of its debts;
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|
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(i)
|
proceedings are initiated against the Issuer, any Guarantor or any of the
Material Subsidiaries under any applicable liquidation, insolvency, composition, reorganisation or other similar laws or an application
is made (or documents filed with a court) for the appointment of an administrative or other receiver, manager, administrator or
other similar official, or an administrative or other receiver, manager, administrator or other similar official is appointed,
in relation to the Issuer, any Guarantor or any of the Material Subsidiaries or, as the case may be, in relation to the whole or
any material part of the undertaking or assets of any of them or an encumbrancer takes possession of the whole or any material
part of the undertaking or assets of any of them, or a distress, execution, attachment, sequestration or other process is levied,
enforced upon, sued out or put in force against the whole or any material part of the undertaking or assets of any of them, and
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|
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(ii)
|
in any such case (other than the appointment of an administrator or an administrative
receiver appointed following presentation of a petition for an administration order) unless initiated by the relevant company,
is not discharged or stayed within 45 days,
|
save (x) for the purposes
of and followed by a reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation on terms approved in
writing by the Trustee or by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material Subsidiary, for the
purposes of and followed by a Permitted Reorganisation; or
|
(g)
|
if the Issuer, any Guarantor or any of the Material Subsidiaries (or their
respective directors or shareholders) initiates or consents to judicial proceedings relating to itself under any applicable liquidation,
insolvency, composition, reorganisation or other similar laws (including the obtaining of a moratorium) or makes a conveyance or
assignment for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class
of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally
(or any class of its creditors) save (in any case) (x) for the purposes of and followed by a reconstruction, amalgamation, reorganisation,
restructuring, merger or consolidation on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Bondholders,
or (y) in the case of a Material Subsidiary, for the purposes of and followed by a Permitted Reorganisation; or
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(h)
|
any action, condition or thing (including the obtaining or effecting of
any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required
to be taken, fulfilled or done in order (i) to enable the Issuer or any Guarantor lawfully to enter into, exercise their respective
rights and perform and comply with their respective obligations under the Bonds and the Trust Deed; (ii) to ensure that those obligations
are legally binding and enforceable; and (iii) to make the Bonds and the Trust Deed, as the case may be, admissible in evidence
in the courts of England is not taken, fulfilled or done; or
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|
(i)
|
if the Guarantee ceases to be, or is claimed by the Issuer or any Guarantor
not to be, in full force and effect; or
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(j)
|
it is or will become unlawful for the Issuer or any Guarantor to perform
or comply with any one or more of its obligations under the Conditions; or
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|
|
|
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(k)
|
if the Issuer, BCP or any Subsidiary Guarantor ceases to be a Subsidiary of BCL; or
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|
(l)
|
if any event occurs which, under the laws of any Relevant Jurisdiction,
has or may have, in the Trustee’s opinion, an analogous effect to any of the events referred to in subparagraphs (d) to (g)
above.
|
A report by two directors
of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion a Subsidiary of
BCL is or is not or was or was not at any particular time or throughout any specified period a Material Subsidiary may be relied
upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest error,
be conclusive and binding on all parties.
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12.1
|
Enforcement by the Trustee
|
The Trustee may at any
time, at its discretion and without notice, take such proceedings and/or other steps or action (including lodging an appeal in
any proceedings) against or in relation to the Issuer and/or any one or more of the Guarantors as it may think fit to enforce the
provisions of the Trust Deed and the Bonds or otherwise, but it shall not be bound to take any such proceedings or other steps
or action unless (a) it has been so directed by an Extraordinary Resolution of the Bondholders or so requested in writing by the
holders of at least one-fifth in principal amount of the Bonds then outstanding and (b) it has been indemnified and/or secured
and/or pre-funded to its satisfaction.
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12.2
|
Limitation on Trustee actions
|
The Trustee may refrain
from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion based upon legal
advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may also refrain from
taking such action if it would otherwise render it liable to any person in that jurisdiction or if, in its opinion based upon such
legal advice, it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable law in that
jurisdiction or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power.
|
12.3
|
Enforcement by the Bondholders
|
No Bondholder shall be
entitled to (i) take any steps or action against the Issuer or any Guarantor to enforce the performance of any of the
provisions of the Trust Deed or the Bonds or (ii) take any other proceedings (including lodging an appeal in any proceedings)
in respect of or concerning the Issuer or any Guarantor, in each case unless the Trustee, having become bound so to take any
such action, steps or proceedings, fails so to do within a reasonable period and the failure shall be continuing.
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13.
|
Replacement of Certificates
|
Should any Certificate
be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Registrar upon payment by the
claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnify as the Issuer
and the Guarantors may reasonably require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.
All notices to the Bondholders
will be valid if mailed to them at their respective addresses in the register of Bondholders maintained by the Registrar. The Issuer
shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange
or the relevant authority on which the Bonds are for the time being listed. Any such notice will be deemed to have been given on
the date of the first publication or, where required to be published in more than one newspaper, on the second day after being
so mailed or on the date of publication or, if so published more than once or on different dates, on the date of first publication.
The Trustee may, without
the consent of the Bondholders, agree with the Issuer and the Guarantors to the substitution in place of the Issuer (or of any
previous substitute under this Condition) as the principal debtor under the Bonds and the Trust Deed, of BCL or any other Subsidiaries
of BCL subject to:
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(a)
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the Bonds remaining jointly and severally, unconditionally and irrevocably
guaranteed by the Guarantors (other than a Guarantor substituted in place of the Issuer);
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(b)
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the Trustee being satisfied that the substitution is not materially prejudicial
to the interests of the Bondholders; and
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(c)
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certain other conditions set out in the Trust Deed being complied with.
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16.
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Meetings of Bondholders, Modification, Waiver, Authorisation and Determination
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16.1
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Meetings of Bondholders
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The Trust Deed contains provisions
for convening meetings of the Bondholders to consider any matter affecting their interests, including the modification or
abrogation by Extraordinary Resolution of any of these Conditions or any of the provisions of the Trust Deed. The quorum at
any meeting for passing an Extraordinary Resolution will be one or more persons present holding or representing more than 50
per cent. in principal amount of the Bonds for the time being outstanding, or at any adjourned such meeting one or more
persons present whatever the principal amount of the Bonds held or represented by him or them, except that, at any meeting
the business of which includes any matter defined in the Trust Deed as a Basic Terms Modification, including the modification
or abrogation of certain of the provisions of these Conditions and certain of the provisions of the Trust Deed, the necessary
quorum for passing an Extraordinary Resolution will be one or more persons present holding or representing not less than
two-thirds, or at any adjourned such meeting not less than one-third, of the principal amount of the Bonds for the time being
outstanding. The Trust Deed provides that (i) a resolution passed at a meeting duly convened and held in accordance with the
Trust Deed by a majority consisting of not less than three-fourths of the votes cast on such resolution, (ii) a resolution in
writing signed by or on behalf of the holders of not less than three-fourths in principal amount of the Bonds for the time
being outstanding or (iii) consent given by way of electronic consents through the relevant clearing system(s) (in a form
satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in principal amount of the Bonds
for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Bondholders. An
Extraordinary Resolution passed by the Bondholders will be binding on all Bondholders, whether or not they are present at any
meeting and whether or not they voted on the resolution.
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16.2
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Modification, Waiver, Authorisation and Determination
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The Trustee may agree,
without the consent of the Bondholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach
of, any of these Conditions or any of the provisions of the Trust Deed or the Agency Agreement, or determine, without any such
consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated
as such (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of
the Bondholders) or may agree, without any such consent as aforesaid, to any modification which, in its opinion, is of a formal,
minor or technical nature or to correct a manifest error or an error which is, in the opinion of the Trustee, proven.
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16.3
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Trustee to have Regard to Interests of Bondholders as a Class
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In connection with the exercise
by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation,
determination or substitution), the Trustee shall have regard to the general interests of the Bondholders as a class but shall
not have regard to any interests arising from circumstances particular to individual Bondholders (whatever their number) and, in
particular but without limitation, shall not have regard to the consequences of any such exercise for individual Bondholders (whatever
their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the
jurisdiction of, any particular territory or any political sub- division thereof and the Trustee shall not be entitled to require,
nor shall any Bondholder be entitled to claim, from the Issuer, any Guarantor, the Trustee or any other person any indemnification
or payment in respect of any tax consequence of any such exercise upon individual Bondholders except to the extent already provided
for in Condition 9 and/or any undertaking given in addition to, or in substitution for, Condition 9 pursuant to the Trust Deed.
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16.4
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Notification to the Bondholders
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Any modification, abrogation,
waiver, authorisation, determination or substitution shall be binding on the Bondholders and, unless the Trustee agrees otherwise,
any modification or substitution shall be notified by the Issuer to the Bondholders as soon as practicable thereafter in accordance
with Condition 14.
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17.
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Indemnification and Protection of the Trustee and its
Contracting with the Issuer and the Guarantors
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17.1
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Indemnification and protection of the Trustee
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The Trust Deed contains
provisions for the indemnification of the Trustee and for its relief from responsibility and liability towards the Issuer, the
Guarantors and the Bondholders, including (i) provisions relieving it from taking action unless indemnified and/or secured and/or
pre-funded to its satisfaction and (ii) provisions limiting or excluding its liability in certain circumstances. The Trust Deed
provides that, when determining whether an indemnity or any security or pre-funding is satisfactory to it, the Trustee shall be
entitled (i) to evaluate its risk in any given circumstance by considering the worst-case scenario and (ii) to require that any
indemnity or security given to it by the Bondholders or any of them be given on a joint and several basis and be supported by evidence
satisfactory to it as to the financial standing and creditworthiness of each counterparty and/or as to the value of the security
and an opinion as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security.
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17.2
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Trustee Contracting with the Issuer and the Guarantors
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The Trust Deed also contains
provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions with the Issuer
and/or any Guarantor and/or any other member of the Group and to act as trustee for the holders of any other securities issued
or guaranteed by, or relating to, the Issuer and/or any Guarantor and/or any other member of the Group, (b) to exercise and enforce
its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may
be, any such trusteeship without regard to the interests of, or consequences for, the Bondholders, and (c) to retain and not be
liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
The Issuer is at liberty
from time to time without the consent of the Bondholders to create and issue further notes or bonds (whether in bearer or registered
form) either (a) ranking pari passu in all respects (or in all respects save for the first payment of interest thereon)
and so that the same shall be consolidated and form a single series with the outstanding notes or bonds of any series (including
the Bonds) constituted by the Trust Deed or any supplemental deed or (b) upon such terms as to ranking, interest, conversion, redemption
and otherwise as the Issuer may determine at the time of the issue. Any further notes or bonds which are to form a single series
with the outstanding notes or bonds of any series (including the Bonds) constituted by the Trust Deed or any supplemental deed
shall, and any other further notes or bonds may (with the consent of the Trustee), be constituted by a deed supplemental to the
Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Bondholders and the holders of notes or bonds
of other series in certain circumstances where the Trustee so decides.
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19.
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Governing Law and Submission to Jurisdiction
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The Trust Deed (including
the Guarantee), the Bonds and any non-contractual obligations arising out of or in connection with them are governed by, and will
be construed in accordance with, English law.
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19.2
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Jurisdiction of English Courts
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The
Issuer and each of the Guarantors has in the Trust Deed, irrevocably agreed (or will be required to agree) for the benefit of the
Trustee and the Bondholders that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise
out of or in connection with the Trust Deed or the Bonds (including a dispute relating to any non-contractual obligations arising
out of or in connection with the Trust Deed or the Bonds) and accordingly has submitted (or will be required to submit) to the
exclusive jurisdiction of the English courts.
The Issuer and each of
the Guarantors has, in the Trust Deed, waived (or will be required to waive) any objection to the courts of England on the grounds
that they are an inconvenient or inappropriate forum. To the extent permitted by law, the Trustee and the Bondholders may take
any suit, action or proceeding arising out of or in connection with the Trust Deed or the Bonds respectively (including any suit,
action or proceedings relating to any non-contractual obligations arising out of or in connection with the Trust Deed or the Bonds)
(together referred to as “Proceedings”) against the Issuer or any Guarantor in any other court of competent
jurisdiction and concurrent Proceedings in any number of jurisdictions.
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19.3
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Appointment of Process Agent
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The Issuer and each
of the Guarantors incorporated in a jurisdiction other than England and Wales has in the Trust Deed irrevocably and
unconditionally appointed (or will be required to appoint) Burford Capital PLC at its registered office for the time being as
its agent for service or process in England in respect of any Proceedings and has undertaken that in the event of such agent
ceasing so to act it will appoint such other person as the Trustee may approve as its agent for that purpose.
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20.
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Rights of Third Parties
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No rights are conferred
on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Bond, but this does not affect
any right or remedy of any person which exists or is available apart from that Act.
In these Conditions:
“Business Day”
means, in relation to any place, a day on which commercial banks and foreign exchange markets settle payments and are open for
general business (including dealing in foreign exchange and foreign currency deposits) in that place.
“Cash and Cash
Equivalents” as at any Reference Date shall be equal to the amount recorded as “Cash and cash equivalents”
in the relevant Consolidated Financial Statements; minus (ii) any such “Cash and cash equivalents” to which any Excluded
Subsidiary is beneficially entitled; and (iii) any such “Cash and cash equivalents” upon which there is any Security
Interest.
“Cash Management
Investments” as at any Reference Date shall be equal to the amount recorded as “Cash management investments at
fair value through profit or loss” in the relevant Consolidated Financial Statements; minus (ii) any such “Cash management
investments at fair value through profit or loss” to which any Excluded Subsidiary is beneficially entitled; and (iii) any
such “Cash management investments at fair value through profit or loss” upon which there is a Security Interest.
“Consolidated
Financial Statements” means BCL’s audited annual consolidated financial statements or its unaudited semi-annual
consolidated financial statements, as the case may be, including the relevant accounting policies and notes to the accounts in
each case prepared in accordance with IFRS from time to time.
“Directors’
Certificate” means a certificate addressed to the Trustee, signed on behalf of the Issuer or the relevant Guarantor (as
the case may be) (but without personal liability) by two directors of the Issuer or the relevant Guarantor (as applicable) or any
one director and the secretary of the Issuer or the relevant Guarantor (as applicable).
“Excluded Financial
Indebtedness” means Financial Indebtedness of any Excluded Subsidiary which is not also Financial Indebtedness of a member
of the Group which is not an Excluded Subsidiary.
A report by two directors
of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion Financial Indebtedness
is or is not or was or was not at any particular time or throughout any specified period Excluded Financial Indebtedness may be
relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest
error, be conclusive and binding on all parties.
“Excluded Subsidiary”
means Burford Lending LLC and its Subsidiaries, provided that BCL may by irrevocable notice to the Trustee permanently deem any
entity which could otherwise be an Excluded Subsidiary not to be an Excluded Subsidiary and such entity shall no longer be an Excluded
Subsidiary for the purposes of these Conditions.
A report by two directors
of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion a Subsidiary of
BCL is or is not or was or was not at any particular time or throughout any specified period an Excluded Subsidiary may be relied
upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest error,
be conclusive and binding on all parties.
“FATCA”
means Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (the “Code”) (including an agreement
described in Section 1471(b) thereof) together with any regulations thereunder or any official interpretations thereof, any intergovernmental
agreement between the U.S. and another jurisdiction facilitating the implementation thereof or any law implementing such an intergovernmental
agreement.
“Financial Conduct Authority”
means the United Kingdom Financial Conduct Authority.
“Financial Indebtedness”
means any indebtedness (other than indebtedness owed by any member of the Group which is not an Excluded Subsidiary to another
member of the Group which is also not an Excluded Subsidiary) whether or not contingent, for or in respect of:
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(b)
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any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
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(c)
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any amount raised pursuant to any note purchase facility or the issue of
bonds, notes, debentures, loan stock or any similar instrument;
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(d)
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the amount of any liability in respect of any lease or hire purchase contract
which would, in accordance with IFRS, be treated as a finance or capital lease;
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(e)
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receivables sold or discounted (other than any receivables to the extent
they are sold on a non- recourse basis);
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(f)
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any amount raised under any other transaction (including any forward sale
or purchase agreement) having the commercial effect of a borrowing;
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(g)
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any derivative transaction entered into in connection with protection against
or benefit from fluctuation in any rate, index or price (and, when calculating the value of any derivative transaction, only the
marked-to-market value shall be taken into account);
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(h)
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any counter-indemnity obligation in respect of a guarantee, indemnity, bond
or any other instrument issued by a bank or financial institution; and
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(i)
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the amount of any liability in respect of any guarantee or indemnity for
any of the items referred to in paragraphs (a) to (h) above.
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“Group” means BCL and its Subsidiaries
taken as a whole.
“Group Net Debt”
means (i) the aggregate of all Financial Indebtedness of the Group (other than Excluded Financial Indebtedness) at the relevant
time less (ii) the sum of (x) Cash and Cash Equivalents; and (y) Cash Management Investments (other than any Cash and Cash Equivalents
and Cash Management Investments to which any Excluded Subsidiary is beneficially entitled).
“Group Total Assets” as at any
Reference Date shall be equal to:
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(i)
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the amount recorded as “Total assets” in the relevant Consolidated Financial Statements;
minus
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(ii)
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the sum (without duplication) of (x) any `Total assets” referred
to in (a) above to which any Excluded Subsidiary is beneficially entitled and (y) any goodwill and intangible assets which are
included in the “Total assets” referred to in (a) above.
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“IFRS” means the generally
accepted accounting practice and principles applicable to the business BCL conducts, currently International Financial Reporting
Standards.
“Issue Date” means 12 February
2018.
“Leverage Ratio” means the ratio of:
“Material Subsidiary” means at
any time a Subsidiary (other than an Excluded Subsidiary) of BCL:
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(a)
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whose gross assets (consolidated in the case of a Subsidiary which itself
has Subsidiaries) represent (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest
audited consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less than 5.00 per cent. of the consolidated
gross assets of the Group, all as calculated respectively by reference to the then latest Directors’ Certificate relating
to such Subsidiary delivered to the Trustee in accordance with the relevant provisions of the Trust Deed and the then latest audited
consolidated accounts of BCL and its Subsidiaries, provided that:
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(A)
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in the event that the relevant Subsidiary itself has Subsidiaries which
are Excluded Subsidiaries, the gross assets of such Excluded Subsidiaries are excluded from the calculation of the consolidated
gross assets of such Subsidiary;
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(B)
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the gross assets of all Excluded Subsidiaries are excluded from the calculation
of the consolidated gross assets of the Group; and
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(C)
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in the case of a Subsidiary of BCL acquired after the end of the financial
period to which the then latest audited consolidated accounts of BCL and its Subsidiaries relate, the reference to the then latest
audited consolidated accounts of BCL and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts
for the financial period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference
to such first-mentioned accounts as if such Subsidiary had been shown in such accounts by reference to the then latest Directors’
Certificate relating to such Subsidiary delivered to the Trustee in accordance with the relevant provisions of the Trust Deed,
adjusted as deemed appropriate by BCL; or
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(b)
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to which is transferred the whole or substantially the whole of the undertaking
and assets of a Subsidiary of BCL which immediately prior to such transfer is a Material Subsidiary, provided that the transferor
Subsidiary shall upon such transfer forthwith cease to be a Material Subsidiary and the transferee Subsidiary shall cease to be
a Material Subsidiary pursuant to this subparagraph (b) on the date on which the consolidated accounts of BCL and its Subsidiaries
for the financial period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor
Subsidiary or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such consolidated
accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after
such date, by virtue of any other applicable provision of this definition; or
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(c)
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to which is transferred an undertaking or assets which, taken together
with the undertaking or assets of the transferee Subsidiary, represent (or, in the case of the transferee Subsidiary being acquired
after the end of the financial period to which the then latest audited consolidated accounts of BCL and its Subsidiaries relate,
are equal to) not less than 5.00 per cent. of the consolidated gross assets of the Group, all as calculated as referred to in subparagraph
(a) above, provided that the transferor Subsidiary (if a Material Subsidiary) shall upon such transfer forthwith cease to be a
Material Subsidiary unless immediately following such transfer its undertaking and assets represent (or, in the case aforesaid,
are equal to) not less than 5.00 per cent. of the consolidated gross assets of the Group, all as calculated as referred to in subparagraph
(a) above, and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to this subparagraph (c) on the date
on which the consolidated accounts of BCL and its Subsidiaries for the financial period current at the date of such transfer have
been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary may be a Material Subsidiary on
or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the
provisions of subparagraph (a) above or, prior to or after such date, by virtue of any other applicable provision of this definition,
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all as more particularly defined
in the Trust Deed.
In accordance with the
provisions of the Trust Deed, BCL has agreed to give to the Trustee a Director’s Certificate which provides a list of Material
Subsidiaries (a) on the Issue Date; (b) within three business days after demand by the Trustee therefor and (c) (without the necessity
for such demand) within six months of its most recent financial year-end commencing with the financial period ending 31 December
2016 and within three months of the end of the first half of each financial year commencing with the financial period ending 31
December 2017.
“Maturity Date”
means 12 August 2025.
“Payment Business
Day” means a day (other than a Saturday or Sunday) on which commercial banks are open for business in New York City and,
in the case of presentation of a Certificate, in the place in which the Certificate is presented.
“Permitted Reorganisation”
means, in the case of a Material Subsidiary, any reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation
the result of which will be that all or substantially all of the assets and undertaking of such Material Subsidiary will be transferred
to or otherwise vested in the Issuer, any Guarantor or another Subsidiary of BCL (other than an Excluded Subsidiary).
“Rating Agency”
means Moody’s Investors Services Limited, Fitch Ratings Ltd. or Standard & Poor’s Credit Market Services Europe
Limited (or any of their respective affiliates).
“Reference Date”
means such annual or semi-annual date or dates as at which BCL prepares its audited annual Consolidated Financial Statements or
unaudited semi-annual Consolidated Financial Statements, as the case may be and as at the Issue Date those are 31 December and
30 June in each year, respectively.
“Relevant Date”
means the date on which the payment first becomes due but, if the full amount of the money payable has not been received by the
Principal Paying Agent or the Trustee on or before the due date, it means the date on which, the full amount of the money having
been so received, notice to that effect has been duly given to the Bondholders by the Issuer in accordance with Condition 14.
“Relevant
Jurisdiction” means: (i) in the case of the Issuer, the U.S. or any political subdivision or any authority thereof
or therein having power to tax; (ii) in the case of BCL, Guernsey or any political subdivision or any authority thereof or
therein having power to tax; (iii) in the case of BCP, the U.K. or any political subdivision or any authority thereof or
therein having power to tax; and (iv) in the case of any Subsidiary Guarantor, any jurisdiction under the laws of which that
Subsidiary Guarantor for the time being is organised or in which it is treated as resident for tax purposes or any political
subdivision or any authority thereof or therein having power to tax or (in each case) any other jurisdiction or any political
subdivision or any authority thereof or therein having power to tax to which the Issuer or the relevant Guarantor, as the
case may be, is or becomes subject in respect of payments made by it of principal and interest on the Bonds.
“Step-Up Event” means that
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(i)
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any member of the Group (other than an Excluded Subsidiary); or
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(ii)
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any Financial Indebtedness of any member of the Group (other than Excluded
Financial Indebtedness),
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is assigned a credit rating
solicited by a member of the Group by any Rating Agency and, in either case, the credit rating initially assigned by such Rating
Agency is below:
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(a)
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Ba3 in the case of Moody’s Investors Services Limited (or any of its affiliates);
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(b)
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BB- in the case of Fitch Ratings Ltd. (or any of its affiliates); or
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(c)
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BB- in the case of Standard & Poor’s Credit
Market Services Europe Limited (or any of its affiliates) (or, in each case, their respective equivalent ratings for the time
being).
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“Subsidiary” means a subsidiary
within the meaning of Section 1159 of the Companies Act 2006 as amended.
“U.K.” means the United Kingdom.
“U.S.” means the United States
of America.
PRINCIPAL PAYING AGENT
Elavon Financial Services
DAC (acting through its UK Branch)
125 Old Broad Street
Fifth
Floor
London
EC2N 1AR
REGISTRAR
Elavon Financial Services
DAC
2nd Floor
Block E
Cherrywood Business
Park
Loughlinstown
Dublin,
Ireland
TRANSFER AGENT
Elavon Financial Services
Limited DAC (acting
through its UK Branch)
125 Old Broad Street
Fifth Floor
London
EC2N 1AR
and/or such other or further
Principal Paying Agent and other Paying Agents, Registrar and Transfer Agents and/or specified offices as may from time to time
be appointed by the Issuer and the Guarantors with the approval of the Trustee and notice of which has been given to the Bondholders.
SCHEDULE 3
REGISTER AND TRANSFER
OF BONDS
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1.
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The Issuer shall at all times ensure that the Registrar maintains in London,
or at such other place in the United Kingdom as the Trustee may agree, a register showing the amount of the Bonds from time to
time outstanding and the dates of issue and all subsequent transfers and changes of ownership thereof and the names and addresses
of the holders of the Bonds. The Trustee and the holders of the Bonds or any of them and any person authorised by it or any of
them may at all reasonable times during office hours inspect the register and take copies of or extracts from it. The register
may be closed by the Issuer for such periods at such times (not exceeding in total 30 days in any one year) as it may think fit.
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2.
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Each Bond shall have an identifying serial number which shall be entered on the register.
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3.
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The Bonds are transferable by execution of the form of transfer endorsed
thereon under the hand of the transferor or, where the transferor is a corporation, under its common seal or under the hand of
two of its officers duly authorised in writing.
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4.
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The Bonds to be transferred must be delivered for registration to the specified
office of the Registrar or any Transfer Agent with the form of transfer endorsed thereon duly completed and executed and must be
accompanied by such documents, evidence and information as may be required pursuant to the Conditions and such other evidence as
the Issuer may reasonably require to prove the title of the transferor or his right to transfer the Bonds and, if the form of transfer
is executed by some other person on his behalf or in the case of the execution of a form of transfer on behalf of a corporation
by its officers, the authority of that person or those persons to do so.
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5.
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The executors or administrators of a deceased holder of Bonds (not being
one of several joint holders) and in the case of the death of one or more of several joint holders the survivor or survivors of
such joint holders shall be the only person or persons recognised by the Issuer as having any title to such Bonds.
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6.
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Any person becoming entitled to Bonds in consequence of the death or bankruptcy
of the holder of such Bonds may upon producing such evidence that he holds the position in respect of which he proposes to act
under this paragraph or of his title as the Issuer shall require be registered himself as the holder of such Bonds or, subject
to the preceding paragraphs as to transfer, may transfer such Bonds. The Issuer shall be at liberty to retain any amount payable
upon the Bonds to which any person is so entitled until such person shall be registered as aforesaid or shall duly transfer the
Bonds.
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7.
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Unless otherwise requested by him, the holder of Bonds shall be entitled
to receive only one Certificate in respect of his entire holding.
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8.
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The joint holders of Bonds shall be entitled to one Certificate only in
respect of their joint holding which shall, except where they otherwise direct, be delivered to the joint holder whose name appears
first in the register of the holders of Bonds in respect of such joint holding.
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9.
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Where a holder of Bonds has transferred part only of his holding there
shall be delivered to him without charge a Certificate in respect of the balance of such holding.
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10.
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The Issuer shall make no charge to the Bondholders for the registration
of any holding of Bonds or any transfer thereof or for the issue thereof or for the delivery thereof at the specified office of
the Registrar or of any Transfer Agent or by post to the address specified by the Bondholder. If any Bondholder entitled to
receive a Certificate wishes to have the same delivered to him otherwise than at the specified office of the Registrar or of any
Transfer Agent, such delivery shall be made, upon his written request to the Registrar or such Transfer Agent, at his risk and
(except where sent by post to the address specified by the Bondholder) at his expense.
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11.
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The holder of a Bond may (to the fullest extent permitted by applicable
laws) be treated at all times, by all persons and for all purposes as the absolute owner of such Bond notwithstanding any notice
any person may have of the right, title, interest or claim of any other person thereto. The Issuer, each Guarantor and the Trustee
shall not be bound to see to the execution of any trust to which any Bond may be subject and no notice of any trust shall be entered
on the register. The holder of a Bond will be recognised by the Issuer and each Guarantor as entitled to his Bond free from any
equity, set-off or counterclaim on the part of the Issuer or each Guarantor against the original or any intermediate holder of
such Bond.
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SCHEDULE 4
PROVISIONS FOR MEETINGS
OF BONDHOLDERS
DEFINITIONS
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1.
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As used in this Schedule the following expressions shall have the following
meanings unless the context otherwise requires:
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Block Voting Instruction
means an English language document issued by a Paying Agent in which:
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(a)
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it is certified that on the date thereof Bonds represented by the Global
Certificate or Definitive Certificates which are held in an account with any Clearing System (in each case not being Bonds in respect
of which a Voting Certificate has been issued and is outstanding in respect of the meeting specified in such Block Voting Instruction)
are blocked in an account with a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1)
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the conclusion of the meeting specified in such Block Voting Instruction; and
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(2)
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the Bonds ceasing with the agreement of the Paying Agent to be so blocked
and the giving of notice by the Paying Agent to the Issuer in accordance with paragraph 3(E) of the necessary amendment to the
Block Voting Instruction;
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(b)
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it is certified that each holder of such Bonds has instructed such Paying
Agent that the vote(s) attributable to the Bonds so blocked should be cast in a particular way in relation to the resolution(s)
to be put to such meeting and that all such instructions are, during the period commencing 48 Hours prior to the time for which
such meeting is convened and ending at the conclusion or adjournment thereof, neither revocable nor capable of amendment;
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(c)
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the aggregate principal amount of the Bonds so blocked is listed distinguishing
with regard to each such resolution between those in respect of which instructions have been given that the votes attributable
thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes
attributable thereto should be cast against the resolution; and
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(d)
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one or more persons named in such Block Voting Instruction (each hereinafter
called a proxy) is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Bonds so
listed in accordance with the instructions referred to in (c) above as set out in such Block Voting Instruction;
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Clearing System means
Euroclear and/or Clearstream, Luxembourg and includes in respect of any Bond any clearing system on behalf of which such Bond is
held or which is the holder or (directly or through a nominee) registered owner of a Bond, in either case whether alone or jointly
with any other Clearing System(s). For the avoidance of doubt, the provisions of subclause 1.2(g) shall apply to this definition;
Eligible Person means
any one of the following persons who shall be entitled to attend and vote at a meeting:
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(a)
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a holder of a Bond in definitive form which is not held in an account with
any Clearing System;
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(b)
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a bearer of any Voting Certificate;
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(c)
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a proxy specified in any Block Voting Instruction; and
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(d)
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a proxy appointed by a holder of a Bond in definitive form which is not
held in an account with any Clearing System;
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Extraordinary Resolution
means:
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(a)
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a resolution passed at a meeting duly convened and held in accordance with
these presents by a majority consisting of not less than three-fourths of the Eligible Persons voting thereon upon a show of hands
or, if a poll is duly demanded, by a majority consisting of not less than three-fourths of the votes cast on such poll;
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(b)
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a resolution in writing signed by or on behalf of the holders of not less
than three fourths in principal amount of the Bonds for the time being outstanding which resolution may be contained in one document
or in several documents in like form each signed by or on behalf of one or more of the holders; or
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(c)
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consent given by way of electronic consents through the relevant Clearing
System(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in principal amount
of the Bonds for the time being outstanding;
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Voting Certificate
means an English language certificate issued by a Paying Agent in which it is stated:
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(a)
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that on the date thereof Bonds represented by the Global Certificate or
Definitive Certificates which are held in an account with any Clearing System (in each case not being Bonds in respect of which
a Block Voting Instruction has been issued and is outstanding in respect of the meeting specified in such Voting Certificate) are
blocked in an account with a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1)
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the conclusion of the meeting specified in such Voting Certificate; and
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(2)
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the surrender of the Voting Certificate to the Paying Agent who issued the same; and
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(b)
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that the bearer thereof is entitled to attend and vote at such meeting
in respect of the Bonds represented by such Voting Certificate;
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24 Hours means
a period of 24 hours including all or part of a day upon which banks are open for business in both the place where the relevant
meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose
the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more
periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of
the places as aforesaid; and
48 Hours means
a period of 48 hours including all or part of two days upon which banks are open for business both in the place where the
relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding
for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period or, to the
extent necessary, more periods of 24 hours until there is included as aforesaid all or part of two days upon which banks are
open for business in all of the places as aforesaid.
For the purposes of calculating a period of Clear Days in
relation to a meeting, no account shall be taken of the day on which the notice of such meeting is given (or, in the case of
an adjourned meeting, the day on which the meeting to be adjourned is held) or the day on which such meeting is held.
All references in this
Schedule to a "meeting" shall, where the context so permits, include any relevant adjourned meeting.
EVIDENCE OF ENTITLEMENT TO ATTEND AND VOTE
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2.
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A holder of a Bond represented by the Global Certificate or a Definitive
Certificate which is held in an account with any Clearing System may require the issue by a Paying Agent of Voting Certificates
and Block Voting Instructions in accordance with the terms of paragraph 3.
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For the purposes of paragraph
3, the Principal Paying Agent and each Paying Agent shall be entitled to rely, without further enquiry, on any information or instructions
received from a Clearing System and shall have no liability to any holder or other person for any loss, damage, cost, claim or
other liability occasioned by its acting in reliance thereon, nor for any failure by a Clearing System to deliver information or
instructions to the Principal Paying Agent or any Paying Agent.
The holder of any Voting
Certificate or the proxies named in any Block Voting Instruction shall for all purposes in connection with the relevant meeting
be deemed to be the holder of the Bonds to which such Voting Certificate or Block Voting Instruction relates.
PROCEDURE FOR ISSUE OF VOTING CERTIFICATES,
BLOCK VOTING INSTRUCTIONS AND PROXIES
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3.
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(A)
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Definitive Certificates not held in a Clearing System
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If Bonds have been issued
in definitive form and are not held in an account with any Clearing System, the Trustee may from time to time prescribe further
regulations (in accordance with paragraph 23) to enable the holders of such Bonds to attend and/or vote at a meeting in respect
of such Bonds.
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(B)
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Global Certificate and Definitive Certificates held in a Clearing System - Voting Certificate
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A holder of a Bond (not
being a Bond in respect of which instructions have been given to the Principal Paying Agent in accordance with paragraph 3(C))
represented by the Global Certificate or which is in definitive form and is held in an account with any Clearing System may procure
the delivery of a Voting Certificate in respect of such Bond by giving notice to the Clearing System through which such holder's
interest in the Bond is held specifying by name a person (an Identified Person) (which need not be the holder himself) to
collect the Voting Certificate and attend and vote at the meeting. The relevant Voting Certificate will be made available at or
shortly prior to the commencement of the meeting by the Principal Paying Agent against presentation by such Identified Person of
the form of identification previously notified by such holder to the Clearing System. The Clearing System may prescribe forms of
identification (including, without limitation, a passport or driving licence) which it deems appropriate for these purposes. Subject
to receipt by the Principal Paying Agent from the Clearing System, no later than 24 Hours prior to the time for which such meeting
is convened, of notification of the principal amount of the Bonds to be represented by any such Voting Certificate and the form
of identification against presentation of which such Voting Certificate should be released, the Principal Paying Agent shall, without
any obligation to make further enquiry, make available Voting Certificates against presentation of the form of identification corresponding
to that notified.
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(C)
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Global Certificate and Definitive Certificates held in a Clearing System
- Block Voting Instruction
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A holder of a Bond (not
being a Bond in respect of which a Voting Certificate has been issued) represented by the Global Certificate or which is in definitive
form and is held in an account with any Clearing System may require the Principal Paying Agent to issue a Block Voting Instruction
in respect of such Bond by first instructing the Clearing System through which such holder's interest in the Bond is held to procure
that the votes attributable to such Bond should be cast at the meeting in a particular way in relation to the resolution or resolutions
to be put to the meeting. Any such instruction shall be given in accordance with the rules of the Clearing System then in effect.
Subject to receipt by the Principal Paying Agent of instructions from the Clearing System, no later than 24 Hours prior to the
time for which such meeting is convened, of notification of the principal amount of the Bonds in respect of which instructions
have been given and the manner in which the votes attributable to such Bonds should be cast, the Principal Paying Agent shall,
without any obligation to make further enquiry, appoint a proxy to attend the meeting and cast votes in accordance with such instructions.
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(D)
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Each Block Voting Instruction, together (if so requested by the Trustee)
with proof satisfactory to the Trustee of its due execution on behalf of the relevant Paying Agent shall be deposited by the relevant
Paying Agent or (as the case may be) by the Registrar or the relevant Transfer Agent at such place as the Trustee shall approve
not less than 24 Hours before the time appointed for holding the meeting at which the proxy or proxies named in the Block Voting
Instruction proposes to vote, and in default the Block Voting Instruction shall not be treated as valid unless the Chairman of
the meeting decides otherwise before such meeting proceeds to business. A copy of each Block Voting Instruction shall be deposited
with the Trustee before the commencement of the meeting but the Trustee shall not thereby be obliged to investigate or be concerned
with the validity of or the authority of the proxy or proxies named in any such Block Voting Instruction.
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(E)
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Any vote given in accordance with the terms of a Block Voting Instruction
shall be valid notwithstanding the previous revocation or amendment of the Block Voting Instruction or of any of the instructions
of the relevant holder or the relevant Clearing System (as the case may be) pursuant to which it was executed provided that no
intimation in writing of such revocation or amendment has been received from the relevant Paying Agent by the Issuer at its registered
office (or such other place as may have been required or approved by the Trustee for the purpose) by the time being 24 Hours (in
the case of a Block Voting Instruction) or 48 Hours (in the case of a proxy) before the time appointed for holding the meeting
at which the Block Voting Instruction is to be used.
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CONVENING OF MEETINGS, QUORUM AND ADJOURNED
MEETINGS
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4.
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The Issuer, the Guarantors or the Trustee may at any time, and the Issuer
shall upon a requisition in writing in the English language signed by the holders of not less than ten per cent. in principal amount
of the Bonds for the time being outstanding, convene a meeting and if the Issuer makes default for a period of seven days in convening
such a meeting the same may be convened by the Trustee or the requisitionists. Whenever the Issuer or any Guarantor is about to
convene any such meeting the Issuer or the relevant Guarantor, as the case may be, shall forthwith give notice in writing to the
Trustee of the day, time and place thereof and of the nature of the business to be transacted thereat. Every such meeting shall
be held at such time and place as the Trustee may appoint or approve in writing.
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5.
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At
least 21 Clear Days' notice specifying the place, day and hour of meeting shall be given to the holders prior to any meeting
in the manner provided by Condition 14 (Notices). Such notice, which shall be in the English
language, shall state generally the nature of the business to be transacted at the meeting thereby convened and, where an Extraordinary
Resolution will be proposed at the meeting, shall either specify in such notice the terms of such resolution or state fully the
effect on the holders of such resolution, if passed. Such notice shall include statements as to the manner in which holders may
arrange for Voting Certificates or Block Voting Instructions to be issued and, if applicable, appoint proxies. A copy of the notice
shall be sent by post to the Trustee (unless the meeting is convened by the Trustee), to the Issuer (unless the meeting is convened
by the Issuer) and to each of the Guarantors (unless the meeting is convened by that Guarantor).
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6.
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A person (who may but need not be a holder) nominated in writing by the
Trustee shall be entitled to take the chair at the relevant meeting, but if no such nomination is made or if at any meeting the
person nominated shall not be present within 15 minutes after the time appointed for holding the meeting the holders present shall
choose one of their number to be Chairman, failing which the Issuer may appoint a Chairman. The Chairman of an adjourned meeting
need not be the same person as was Chairman of the meeting from which the adjournment took place.
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7.
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At any such meeting one or more Eligible Persons present and holding or
representing in the aggregate more than 50 per cent. in principal amount of the Bonds for the time being outstanding shall (subject
as provided below) form a quorum for the transaction of business (including the passing of an Extraordinary Resolution) PROVIDED
THAT at any meeting the business of which includes any Basic Terms Modification (which shall, subject only to clause 22 and clause
25, only be capable of being effected after having been approved by Extraordinary Resolution) the quorum shall be one or more Eligible
Persons present and holding or representing in the aggregate not less than two-thirds of the principal amount of the Bonds for
the time being outstanding. No business (other than the choosing of a Chairman) shall be transacted at any meeting unless the requisite
quorum is present at the commencement of the relevant business.
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8.
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If within 15 minutes (or such longer period not exceeding 30 minutes as
the Chairman may decide) after the time appointed for any such meeting a quorum is not present for the transaction of any particular
business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting
shall if convened upon the requisition of holders be dissolved. In any other case it shall stand adjourned for such period, being
not less than 13 Clear Days nor more than 42 Clear Days, and to such place as may be appointed by the Chairman either at or subsequent
to such meeting and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman
may decide) after the time appointed for any adjourned meeting a quorum is not present for the transaction of any particular business,
then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairman may
either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period, being not less than 13 Clear
Days (but without any maximum number of Clear Days), and to such place as may be appointed by the Chairman either at or subsequent
to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall apply to all further adjourned
such meetings.
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9.
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At any adjourned meeting one or more Eligible Persons present (whatever
the principal amount of the Bonds so held or represented by them) shall (subject as provided below) form a quorum and shall have
power to pass any resolution and to decide upon all matters which could properly have been dealt with at the meeting from which
the adjournment took place had the requisite quorum been present PROVIDED THAT at any adjourned meeting the quorum for the transaction
of business comprising any Basic Terms Modification shall be one or more Eligible Persons present and holding or representing in
the aggregate not less than one-third of the principal amount of the Bonds for the time being outstanding.
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10.
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Notice of any adjourned meeting shall be given in the same manner as notice
of an original meeting but as if 10 were substituted for 21 in paragraph 5 and such notice shall state the required quorum.
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CONDUCT OF BUSINESS AT MEETINGS
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11.
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Every question submitted to a meeting shall be decided in the first instance
by a show of hands. A poll may be demanded (before or on the declaration of the result of the show of hands) by the Chairman, the
Issuer, any Guarantor, the Trustee or any Eligible Person (whatever the amount of the Bonds so held or represented by him).
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12.
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At any meeting, unless a poll is duly demanded, a declaration by the Chairman
that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
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13.
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Subject to paragraph 15, if at any such meeting a poll is so demanded it
shall be taken in such manner and, subject as hereinafter provided, either at once or after an adjournment as the Chairman directs
and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of
the taking of the poll. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business
other than the motion on which the poll has been demanded.
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14.
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The Chairman may, with the consent of (and shall if directed by) any such
meeting, adjourn the same from time to time and from place to place; but no business shall be transacted at any adjourned meeting
except business which might lawfully have been transacted at the meeting from which the adjournment took place.
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15.
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Any poll demanded at any such meeting on the election of a Chairman or on
any question of adjournment shall be taken at the meeting without adjournment.
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16.
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Any director or officer of the Trustee, its lawyers and financial advisors,
any director or officer of the Issuer or, as the case may be, the Guarantors, their lawyers and financial advisors, any director
or officer of any of the Paying Agents and any other person authorised so to do by the Trustee may attend and speak at any meeting.
Save as aforesaid, no person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting unless
he is an Eligible Person. No person shall be entitled to vote at any meeting in respect of Bonds which are deemed to be not outstanding
by virtue of the proviso to the definition of "outstanding" in clause 1.
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(a)
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on a show of hands every Eligible Person present shall have one vote; and
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(b)
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on a poll every Eligible Person present shall have one vote in respect of
each $1 or such other amount as the Trustee may in its absolute discretion stipulate in principal amount of the Bonds held or represented
by such Eligible Person.
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Without prejudice to the
obligations of the proxies named in any Block Voting Instruction, any Eligible Person entitled to more than one vote need not use
all his votes or cast all the votes to which he is entitled in the same way.
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18.
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The proxies named in any Block Voting Instruction need not be holders.
Nothing herein shall prevent any of the proxies named in any Block Voting Instruction from being a director, officer or representative
of or otherwise connected with the Issuer or any Guarantor.
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19.
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The Bondholders shall in addition to the powers hereinbefore given have
the following powers exercisable (without prejudice to any powers conferred on other persons by these presents) only by
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Extraordinary Resolution (subject, in the case
of an Extraordinary Resolution to be proposed at a meeting, to the provisions relating to quorum contained in paragraphs 7 and
9) namely:
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(a)
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Power to sanction any compromise or arrangement proposed to be made between
the Issuer, the Guarantors, the Trustee, any Appointee and the holders or any of them.
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(b)
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Power to sanction any abrogation, modification, compromise or arrangement
in respect of the rights of the Trustee, any Appointee, the holders, the Issuer or the Guarantors against any other or others of
them or against any of their property whether such rights arise under these presents or otherwise.
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(c)
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Power to assent to any modification of the provisions of these presents
which is proposed by the Issuer, the Guarantors, the Trustee or any holder.
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(d)
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Power to give any authority or sanction which under the provisions of these
presents is required to be given by Extraordinary Resolution.
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(e)
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Power to appoint any persons (whether holders or not) as a committee or
committees to represent the interests of the holders and to confer upon such committee or committees any powers or discretions
which the holders could themselves exercise by Extraordinary Resolution.
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(f)
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Power to approve of a person to be appointed a trustee and power to remove
any trustee or trustees for the time being of these presents.
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(g)
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Power to discharge or exonerate the Trustee and/or any Appointee from all
liability in respect of any act or omission for which the Trustee and/or such Appointee may have become responsible under these
presents.
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(h)
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Power to authorise the Trustee and/or any Appointee to concur in and execute
and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution.
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(i)
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Power to sanction any scheme or proposal for the exchange or sale of the
Bonds for or the conversion of the Bonds into or the cancellation of the Bonds in consideration of shares, stock, notes, bonds,
debentures, debenture stock and/or other obligations and/or securities of the Issuer or any other company formed or to be formed,
or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures,
debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration of cash and
for the appointment of some person with power on behalf of the holders to execute an instrument of transfer of the Bonds held by
them in favour of the persons with or to whom the Bonds are to be exchanged or sold respectively.
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(j)
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Power to approve the substitution of any entity for the Issuer (or any previous
substitute) as principal debtor under these presents.
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20.
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Any Extraordinary Resolution (i) passed at a meeting of the holders duly
convened and held in accordance with these presents, (ii) passed as an Extraordinary Resolution in writing in accordance with these
presents or (iii) passed by way of electronic consents given by holders through the relevant Clearing System(s) in accordance with
these presents shall be binding upon all the holders whether or not present or whether or not represented at any meeting and whether
or not voting on such Extraordinary Resolution and each of them shall be bound to give effect thereto accordingly and the passing
of any such Extraordinary Resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of
the result of the voting on any Extraordinary Resolution duly considered
by the holders shall be published in accordance with Condition 14 (Notices) by the Issuer within 14 days of such result
being known, PROVIDED THAT the non- publication of such notice shall not invalidate such result.
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21.
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Minutes of all resolutions and proceedings at every meeting shall be made
and entered in books to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid, if purporting
to be signed by the Chairman of the meeting at which such resolutions were passed or proceedings transacted, shall be conclusive
evidence of the matters therein contained and, until the contrary is proved, every such meeting in respect of the proceedings of
which minutes have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted
thereat to have been duly passed or transacted.
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22.
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(A) If and whenever the Issuer has issued and has outstanding Bonds of
more than one series the foregoing provisions of this Schedule shall have effect subject to the following modifications:
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(i)
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a resolution which in the opinion of the Trustee affects the Bonds of only
one series shall be deemed to have been duly passed if passed at a separate meeting (or by a separate resolution in writing or
by a separate resolution passed by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds
of that series;
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(ii)
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a resolution which in the opinion of the Trustee affects the Bonds of more
than one series but does not give rise (in the opinion of the Trustee) to an actual or potential conflict of interest between the
holders of Bonds of any of the series so affected shall be deemed to have been duly passed if passed at a single meeting (or by
a single resolution in writing or by a single resolution passed by way of consents received through the relevant Clearing System(s))
of the holders of the Bonds of all the series so affected;
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(iii)
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a resolution which in the opinion of the Trustee affects the Bonds of more
than one series and gives or may give rise (in the opinion of the Trustee) to a conflict of interest between the holders of the
Bonds of one series or group of series so affected and the holders of the Bonds of another series or group of series so affected
shall be deemed to have been duly passed only if passed at separate meetings (or by separate resolutions in writing or by separate
resolutions passed by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds of each series
or group of series so affected; and
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(iv)
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to all such meetings all the preceding provisions of this Schedule shall
mutatis mutandis apply as though references therein to Bonds and holders were references to the Bonds of the series or group
of series in question or to the holders of such Bonds, as the case may be.
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(B)
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Subject as provided below, if the Issuer has issued and has outstanding
Bonds which are not denominated in U.S. Dollars, or in the case of any meeting of Bonds of more than one currency, the principal
amount of such Bonds shall
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(i)
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for the purposes of paragraph 4, be the equivalent in U.S. Dollars at the
spot rate of a bank nominated by the Trustee for the conversion of the relevant currency or currencies into U.S. Dollars on the
seventh dealing day prior to the day on which the requisition in writing is received by the Issuer; and
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(ii)
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for the purposes of paragraphs 7, 9 and 17 (whether in respect of the meeting
or any adjourned such meeting or any poll resulting therefrom), be the equivalent at such spot rate on the seventh dealing day
prior to the day of such meeting.
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In such circumstances,
on any poll each person present shall have one vote for each $1 (or such other U.S. Dollar amount as the Trustee may in its absolute
discretion stipulate) in principal amount of the Bonds (converted as above) which he holds or represents. For the avoidance of
doubt, in the case of a meeting of Bonds which are denominated in a single currency which is not U.S. Dollars, the Trustee (in
its sole discretion) may agree with the Issuer that the relevant currency for the purposes of the meeting (including, without limitation,
the quorum and voting calculations) shall be the currency of the relevant Bonds, in which case the provisions of this Schedule
shall be construed accordingly.
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23.
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Subject to all other provisions of these presents the Trustee may (after
consultation with the Issuer and the Guarantors where the Trustee considers such consultation to be practicable but without the
consent of the Issuer, the Guarantors or the holders) prescribe such further or alternative regulations regarding the requisitioning
and/or the holding of meetings and attendance and voting thereat as the Trustee may in its sole discretion reasonably think fit
(including, without limitation, the substitution for periods of 24 Hours and 48 Hours referred to in this Schedule of shorter periods).
Such regulations may, without prejudice to the generality of the foregoing, reflect the practices and facilities of any relevant
Clearing System. Notice of any such further or alternative regulations may, at the sole discretion of the Trustee, be given to
holders in accordance with Condition 14 (Notices) at the time of service of any notice convening a meeting or at such other
time as the Trustee may decide.
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SCHEDULE 5
FORM OF DIRECTORS'/OFFICERS’
CERTIFICATE
[ON THE HEADED PAPER OF
THE ISSUER/GUARANTOR]
To: [Trustee]
[Date]
Dear Sirs
$180,000,000 6.125 per cent. Guaranteed Bonds
due 2025
This certificate is delivered
to you in accordance with Clause 16(f) of the Trust Deed dated 12 February 2018 (the Trust Deed) and made between Burford
Capital Finance LLC (the Issuer), Burford Capital Limited (BCL), Burford Capital PLC (BCP) and U.S. Bank Trustees
Limited (the Trustee). All words and expressions defined in the Trust Deed shall (save as otherwise provided herein or unless
the context otherwise requires) have the same meanings herein.
We hereby certify that:
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(a)
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as at [ ]2, no Event of Default or Potential Event of Default
existed [other than [ ]]3 and no Event of Default or Potential Event of Default had existed or happened at any time
since [ ]4 [the certification date (as defined in the Trust Deed) of the last certificate delivered under Clause [16(f)]5
[other than [ ]]6; and
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(b)
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from and including [ ]3 [the certification date of the last
certificate delivered under Clause [16(f)]4 to and including [ ]1, [each of] the Issuer and the Guarantors
have complied in all respects with its obligations under these presents (as defined in the Trust Deed) [other than [ ]]7.
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For and on behalf of
[BURFORD
CAPITAL FINANCE LLC / BURFORD CAPITAL LIMITED]
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[Officer/Director]
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[Officer/Director/Secretary]
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2 Specify
a date not more than 7 days before the date of delivery of the certificate.
3 If
any Event of Default or Potential Event of Default did exist, give details; otherwise delete.
4 Insert
date of Trust Deed in respect of the first certificate delivered under Clause 16(f), otherwise delete.
5 Include
unless the certificate is the first certificate delivered under Clause 16(f) , in which case delete.
6 If
any Event of Default or Potential Event of Default did exist or had happened, give details; otherwise delete.
7 If
the Issuer and/or Guarantors have failed to comply with any obligation(s), give details; otherwise delete.
SCHEDULE 6
FORM OF MATERIAL SUBSIDIARIES
CERTIFICATE
[ON THE HEADED PAPER OF
BCL]
To: [Trustee]
[Date]
Dear Sirs
$180,000,000 6.125 per cent. Guaranteed Bonds
due 2025
Please note that the
contents of this certificate constitutes Confidential Information (as defined in the Trust Deed) and is subject to the confidentiality
provisions set out in clause 31 of the Trust Deed.
This certificate is delivered
to you in accordance with Clause 16(s) of the Trust Deed dated 12 February 2018 (the Trust Deed) and made between Burford
Capital Finance LLC (the Issuer), Burford Capital Limited (BCL), Burford Capital PLC (BCP) and U.S. Bank Trustees
Limited (the Trustee). All words and expressions defined in the Trust Deed shall (save as otherwise provided herein or unless
the context otherwise requires) have the same meanings herein.
We
hereby certify that as at [insert date] the following Subsidiaries were Material Subsidiaries:
[insert list of Material
Subsidiaries]
For and on behalf of
BURFORD CAPITAL LIMITED
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Director
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Director/Secretary
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SCHEDULE 7
FORM OF SUPPLEMENTAL
DEED
DEED
[l]
20[l]
BURFORD CAPITAL FINANCE
LLC
and
BURFORD CAPITAL LIMITED
and
BURFORD CAPITAL PLC
and
[enter name of
Subsidiary Guarantor]
(as the Subsidiary Guarantor)
and
U.S. BANK TRUSTEES
LIMITED
relating to
$180,000,000
6.125 per cent.
Bonds due 2025
jointly and severally,
unconditionally and irrevocably guaranteed by
Burford Capital Limited and Burford Capital PLC
THIS SUPPLEMENTAL DEED is made on [l]
20[l]
BETWEEN:
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(1)
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BURFORD CAPITAL FINANCE LLC, a limited liability company formed under
the laws of the State of Delaware, whose registered office is at 292 Madison Avenue, New York, NY 10017 (the Issuer);
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(2)
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BURFORD CAPITAL LIMITED, a company incorporated under the laws of
Guernsey with company number 50877, whose registered office is at Regency Court, Glategny Esplanade, St Peter Port GY1 1WW, Guernsey
(BCL);
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(3)
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BURFORD CAPITAL PLC, a company incorporated under the laws of England
and Wales with registered number 09077893, whose registered office is at 24 Cornhill, London EC3V 3ND (BCP);
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(4)
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[l] a company incorporated
under the laws of [l] whose registered office is at [l]
(the Subsidiary Guarantor);
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(5)
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U.S. BANK TRUSTEES LIMITED, a limited liability company registered
in England and Wales with company number 02379632 having its registered office at 125 Old Broad Street, Fifth Floor, London EC2N
1AR (the Trustee, which expression shall, wherever the context so admits, include such company and all other persons or
companies for the time being the trustee or trustees of these presents) as trustee for the Bondholders (each as defined
below);
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(6)
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ELAVON FINANCIAL SERVICES DAC (the Registrar); and
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(7)
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ELAVON FINANCIAL SERVICES DAC (the Paying Agent and the Transfer Agent).
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WHEREAS:
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(A)
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This Supplemental Deed is supplemental to the Trust Deed dated 12 February
2018 (the Principal Trust Deed) made between the Issuer, BCL and the Trustee constituting the $180,000,000 6.125 per cent.
Bonds due 2025 (the Bonds) and the Agency Agreement dated 12 February 2018 (the Principal Agency Agreement) made
between the Issuer, BCL, the Trustee and the various Agents set out therein.
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(B)
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Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors)
of the Bonds provides that, BCL may from time to time appoint or procure to be appointed, a Subsidiary (as defined in the Principal
Trust Deed) of BCL which is not a Guarantor (as defined in the Principal Trust Deed) as a Subsidiary Guarantor in order to comply
with its obligations under Condition 4.1 (Guarantee) of the Bonds.
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(C)
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Clause 9.11 of the Principal Trust Deed provides that in connection with
the proposed admission of any Subsidiary of BCL as a Guarantor pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary
Guarantors) of the Bonds, no such admission shall be effective until the Trustee shall have received (inter alia) a
duly executed deed supplemental to the Principal Trust Deed (or in such other form as may be necessary or appropriate to comply
with any applicable law, rule or regulation, including the law of any jurisdiction where that Subsidiary is organised or carries
on business) containing a joint and several guarantee (in terms substantially similar to the Guarantee) and otherwise in form and
manner satisfactory to the Trustee pursuant to which such Subsidiary agrees to be bound by the provisions of the Principal Trust
Deed as fully as if such Subsidiary had been named in the Principal Trust Deed as a Guarantor.
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(D)
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The Subsidiary Guarantor is a Subsidiary of the Guarantor and is not an Excluded Subsidiary.
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(E)
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By [a resolution of the shareholders of the
Subsidiary Guarantor passed on [l] and] a resolution of the Board of Directors
of the Subsidiary Guarantor passed on [l], and pursuant to Condition 4.3 (Guarantee
– Addition of Subsidiary Guarantors) of the Bonds and Clause 9.11 of the Principal Trust Deed, the Subsidiary Guarantor
(being of the opinion that it will be to its benefit and interest and in the furtherance of its objects to do so) has agreed to
guarantee the said Bonds and to enter into certain covenants as set out or referred to in this Supplemental Deed and BCL has procured
that the Subsidiary Guarantor will be a party to this Supplemental Deed for such purposes.
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NOW THIS SUPPLEMENTAL DEED WITNESSES AND IT IS HEREBY AGREED
AND DECLARED as follows:
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1.
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INTERPRETATION AND CONSTRUCTION
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1.1
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Save as herein otherwise provided and unless there is something in the
subject or context inconsistent therewith all words and expressions defined in the Principal Trust Deed shall have the same meanings
in this Supplemental Deed.
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1.2
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The Principal Trust Deed and the Agency Agreement shall henceforth be read
and construed as one document with this Supplemental Deed.
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1.1
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The Subsidiary Guarantor hereby irrevocably and unconditionally, and notwithstanding
the release of any other guarantor or any other person under the terms of any composition or arrangement with any creditors of
the Issuer, BCL or any other Subsidiary of BCL, guarantees on a joint and several basis with each of the current Guarantors set
out in the Schedule hereto to the Trustee:
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(a)
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the due and punctual payment in accordance with the provisions of these
presents of the principal of and interest on the Bonds and of any other amounts payable by the Issuer under these presents; and
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(b)
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the due and punctual performance and observance by the Issuer of each of
the other provisions of these presents on the Issuer's part to be performed or observed.
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[Insert
any legally applicable limitations on guarantee for jurisdiction of Subsidiary Guarantor, as appropriate]
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1.2
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If the Issuer fails for any reason whatsoever punctually to pay any such
principal, interest or other amount, the Subsidiary Guarantor shall cause each and every such payment to be made as if the Subsidiary
Guarantor instead of the Issuer were expressed to be the primary obligor under these presents and not merely as surety (but without
affecting the nature of the Issuer's obligations) to the intent that the holder of the relevant Bond or the Trustee (as the case
may be) shall receive the same amounts in respect of principal interest or such other amount as would have been receivable had
such payments been made by the Issuer.
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1.3
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If any payment received by the Trustee or any Bondholder under the provisions
of these presents shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without
limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or
diminishing the liability of the Subsidiary Guarantor and this guarantee shall continue to apply as if such payment had at all
times remained owing by the Issuer and each other Guarantor shall severally indemnify the Trustee and the Bondholders (as the case
may be) in respect thereof PROVIDED THAT the obligations of the Issuer and/or the Subsidiary Guarantor under this subclause
shall, as regards each payment made to the Trustee or any Bondholder which is avoided or set aside, be contingent upon such payment
being reimbursed to the Issuer or other persons entitled through the Issuer.
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1.4
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The Subsidiary Guarantor hereby agrees that its obligations under this clause
shall be unconditional and that the Subsidiary Guarantor shall be fully liable irrespective of the validity, regularity, legality
or enforceability against the Issuer of, or of any defence or counter-claim whatsoever available to the Issuer in relation to,
its obligations under these presents, whether or not any action has been taken to enforce the same or any judgment obtained against
the Issuer, whether or not any of the other provisions of these presents have been modified, whether or not any time, indulgence,
waiver, authorisation or consent has been granted to the Issuer by or on behalf of the Bondholders or the Trustee, whether or not
any determination has been made by the Trustee pursuant to clause 21 of the Principal Trust Deed, whether or not there have been
any dealings or transactions between the Issuer, any of the Bondholders or the Trustee, whether or not the Issuer has been dissolved,
liquidated, merged, consolidated, bankrupted or has changed its status, functions, control or ownership, whether or not the Issuer
has been prevented from making payment by foreign exchange provisions applicable at its place of registration or incorporation
and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge of or
defence to a guarantor. Accordingly the validity of this guarantee shall not be affected by reason of any invalidity, irregularity,
illegality or unenforceability of all or any of the obligations of the Issuer under these presents and this guarantee shall not
be discharged nor shall the liability of the Subsidiary Guarantor under these presents be affected by any act, thing or omission
or means whatever whereby its liability would not have been discharged if it had been the principal debtor.
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1.5
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Without prejudice to the provisions of subclause 11.1 of the Principal
Trust Deed the Trustee may determine from time to time whether or not it will enforce this guarantee which it may do without making
any demand of or taking any proceedings against the Issuer and may from time to time make any arrangement or compromise with the
Subsidiary Guarantor in relation to this guarantee which the Trustee may consider expedient in the interests of the Bondholders.
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1.6
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The Subsidiary Guarantor waives diligence, presentment, demand of payment,
filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Issuer, any right to require
a proceeding first against the Issuer, protest or notice with respect to these presents or the indebtedness evidenced thereby and
all demands whatsoever and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate balance
of all sums payable and obligations owed by the Issuer under these presents, shall not be discharged except by complete performance
of the obligations in these presents and is additional to, and not instead of, any security or other guarantee or indemnity at
any time existing in favour of any person, whether from the Subsidiary Guarantor or otherwise.
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1.7
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If any moneys shall become payable by the Subsidiary Guarantor under this
guarantee the Subsidiary Guarantor shall not, so long as the same remain unpaid, without the prior written consent of the Trustee:
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(a)
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in respect of any amounts paid or payable by it under this guarantee, exercise
any rights of subrogation or contribution or, without limitation, any other right or remedy which may accrue to it in respect of
or as a result of any such payment or any such obligation to make payment; or
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(b)
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in respect of any other moneys for the time being due to the Guarantors
by the Issuer, claim payment thereof or exercise any other right or remedy;
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(including in
either case claiming the benefit of any security or right of set-off or contribution or, on the liquidation of the Issuer,
proving in competition with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation
of the Issuer, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or
securities, shall be received by the Subsidiary Guarantor before payment in full of all amounts payable under these presents
shall have been made to the Bondholders and the Trustee, such payment or distribution shall be received by the Subsidiary
Guarantor on trust to pay the same over immediately to the Trustee for application in or towards the payment of all sums due
and unpaid under these presents in accordance with clause 12 of the Principal Trust Deed.
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1.8
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Until all amounts which may be or become payable by the Issuer under these
presents have been irrevocably paid in full, the Trustee may:
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(a)
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refrain from applying or enforcing any other moneys, security or rights
held or received by the Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees
fit (whether against those amounts or otherwise), and the Subsidiary Guarantor shall not be entitled to the benefit of the same;
and
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(b)
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hold in a suspense account any moneys received from the Subsidiary Guarantor
or on account of the Subsidiary Guarantor's liability under this guarantee, without liability to pay interest on those moneys.
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1.9
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If any sum which, although expressed to be payable by the Issuer under
these presents or the Bonds, is for any reason (whether or not now existing and whether or not now known or becoming known to the
Issuer, the Subsidiary Guarantor, the Trustee or any Bondholder) not recoverable from the Subsidiary Guarantor on the basis of
a guarantee then (a) it will nevertheless be recoverable from it as if it were the sole principal debtor and will be paid by it
to the Trustee on demand and (b) as a separate and additional liability under these presents the Subsidiary Guarantor agrees, as
a primary obligation and on a joint and several basis, to indemnify each of the Trustee and each Bondholder in respect of such
sum by way of a full indemnity in the manner and currency as is provided for in the Bonds or these presents (as the case may be)
and to indemnify each Bondholder against all losses, claims, costs, charges and expenses to which it may be subject or which it
may incur in recovering such sum.
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1.10
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The obligations of the Subsidiary Guarantor under these presents constitute
direct, unconditional and (subject to the provisions of Condition 5.1 (Negative Pledges)) unsecured obligations of the Subsidiary
Guarantor and (subject as aforesaid) rank and will rank pari passu with all other outstanding unsecured and unsubordinated
obligations of the Subsidiary Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable
laws relating to creditors' rights.
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2.
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APPLICABILITY OF PROVISION OF TRUST DEEDS AND AGENCY AGREEMENT
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2.1
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On and from the date hereof, the Subsidiary Guarantor will become a Guarantor
for the purposes of the Trust Deed and the Agency Agreement (as amended and restated pursuant to this Supplemental Deed) pursuant
to Clause 9 of the Principal Trust Deed and Clause 21.11 of the Principal Agency Agreement respectively.
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2.2
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All the provisions of the Principal Trust Deed relating to each other Guarantor
shall apply to the Subsidiary Guarantor and to the guarantee given by the Subsidiary Guarantor under Clause 2 hereof in all respects
as if the Subsidiary Guarantor had been a party to the Principal Trust Deed and references therein to the Guarantors had included
the Subsidiary Guarantor and the Subsidiary Guarantor hereby covenants with the Trustee that it will henceforth duly observe and
perform and be bound by all such of the covenants, conditions and provisions contained in the Principal Trust Deed as are expressed
to be binding on the Guarantors.
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2.3
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All the provisions of the Principal Agency Agreement relating to each other
Guarantor shall apply to the Subsidiary Guarantor as if the Subsidiary Guarantor had been a party to the Principal Agency Agreement
and references therein to the Guarantors had included the Subsidiary Guarantor and the Subsidiary Guarantor hereby covenants with
the Trustee, the Registrar, the Paying Agent and the Transfer Agent that it will henceforth duly observe and perform and be bound
by all such of the covenants, conditions and provisions contained in the Principal Agency Agreement as are expressed to be binding
on the Guarantors.
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The Issuer and the Subsidiary
Guarantor shall, at their own cost, take such action and execute such documentation as the Trustee shall reasonably request in
respect of the matters contemplated by this Supplemental Deed.
Any notice or demand to the Subsidiary Guarantor
to be given, made or served for any purposes under these presents shall be given, made or served by sending the same by pre-paid
post (first class if inland, first class airmail if overseas) or facsimile transmission or by delivering it by hand as follows:
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to the Additional
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[Name of Subsidiary
Guarantor]
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Guarantor:
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[Address]
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(Attention: l)
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Facsimilie
No. l
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These presents and any non-contractual obligations
arising out of or in connection with these presents are governed by, and shall be construed in accordance with, English law.
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6.
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CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
|
A person who is not a party to these presents
(other than an Appointee of the Trustee) has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term
of these presents, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
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7.
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[SUBMISSION TO JURISDICTION
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7.1
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The Subsidiary Guarantor irrevocably agrees for the benefit of the Trustee
and the Bondholders that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of
or in connection with these presents and that accordingly any suit, action or proceedings arising out of or in connection with
these presents (together referred to as Proceedings) may be brought in the courts of England. The Subsidiary Guarantor irrevocably
and unconditionally waives and agrees not to raise any objection which it may have now or subsequently to the laying of the venue
of any Proceedings in the courts of England and any claims that any Proceedings have been brought in an inconvenient or inappropriate
forum and unconditionally agrees that a judgement in any Proceedings brought in the courts of England shall be conclusive and binding
upon it and may be enforced in the courts of any other jurisdiction. To the extent permitted by law, the Trustee and the Bondholders
may take any Proceedings against the Subsidiary Guarantor in any other court of competent jurisdiction and concurrent Proceedings
in any number of jurisdictions.
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7.2
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The Subsidiary Guarantor irrevocably and unconditionally appoints [l]
at its registered office for the time being and in the event of its ceasing so to act will appoint such other person as the Trustee
may approve and as the Subsidiary
Guarantor may nominate in writing to the Trustee for the purpose to accept service of process on its behalf in England in respect
of any Proceedings. The Subsidiary Guarantor:
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(a)
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agrees to procure that, so long as any of the Bonds remains liable to prescription,
there shall be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept
service as aforesaid;
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(b)
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agrees that failure by any such person to give notice of such service of
process to the Issuer or any Subsidiary Guarantor shall not impair the validity of such service or of any judgment based thereon;
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(c)
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consents to the service of process in respect of any Proceedings by the
airmailing of copies, postage prepaid, to the Issuer or the Subsidiary Guarantor in accordance with Clause 30 of the Principal
Trust Deed; and
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(d)
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agrees that nothing in these presents shall affect the right to serve process
in any other manner permitted by law.]
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This Supplemental Deed may be executed and delivered
in any number of counterparts, all of which, taken together, shall constitute one and the same deed and any party to this Supplemental
Deed may enter into the same by executing and delivering a counterpart.
IN WITNESS whereof this Supplemental Deed
has been executed as a deed by the Issuer, the Subsidiary Guarantor and the Trustee and delivered on the date first stated on page
1.
SCHEDULE
THE CURRENT GUARANTORS
Burford Capital Limited
Burford Capital PLC
[insert
names of the other current Guarantors (if any)]
SIGNATORIES
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EXECUTED as
a deed
by BURFORD
CAPITAL FINANCE LLC,
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)
)
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acting by:
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Director/Officer:
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In the presence of
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Witness
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Signature:
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Name:
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Address:
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EXECUTED as a deed
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)
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by BURFORD CAPITAL LIMITED,
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)
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acting by:
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Director/Officer:
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In the presence of
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Witness
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Signature:
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Name:
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Address:
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EXECUTED as a deed
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)
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by BURFORD CAPITAL PLC,
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)
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acting by:
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Director:
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Director/Secretary:
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EXECUTED as a deed
|
)
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by [SUBSIDIARY
GUARANTOR],
acting by l
and l
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)
)
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acting under the authority
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)
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of that company[ in the presence of:
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)
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Witness's signature
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Name
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Address
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Occupation]
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EXECUTED as a deed
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)
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by U.S. BANK TRUSTEES
LIMITED,
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)
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acting by:
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)
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Name:
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Name:
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SIGNATORIES
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EXECUTED as a deed
by BURFORD CAPITAL FINANCE LLC,
|
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)
)
|
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acting by:
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Director/Officer:
|
/s/ Philip Braverman
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In the presence of
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Witness
|
/s/ Mark Klein
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Signature:
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Name:
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Address:
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EXECUTED as a deed
by BURFORD CAPITAL LIMITED,
acting by:
|
)
)
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Director/Officer:
|
/s/ David Lowe
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In the presence of
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Witness
|
/s/ Tracy Lewis
|
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Signature:
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Name:
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Address:
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EXECUTED as a deed
by BURFORD CAPITAL PLC,
acting by:
|
)
)
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Director:
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/s/ Leslie Paster
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Director/Secretary:
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/s/ Hugo Marshall
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EXECUTED as a deed
|
)
|
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by U.S. BANK TRUSTEES LIMITED,
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)
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acting by:
|
)
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Name:
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/s/ Laurence Griffiths
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Name:
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/s/ Michael Leong
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Exhibit 4.2
TRUST DEED
DATED 1 JUNE 2017
BURFORD CAPITAL
PLC
and
BURFORD CAPITAL
LIMITED
and
U.S. BANK TRUSTEES
LIMITED
constituting
£175,000,000
5.0 per cent. Guaranteed
Bonds due 2026
CONTENTS
|
Clause
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Page
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1.
|
Definitions
|
3
|
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2.
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Covenant to Repay and to Pay Interest on the Bonds
|
10
|
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3.
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Form and Issue of Bonds
|
12
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4.
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Fees, Duties and Taxes
|
13
|
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5.
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Covenant of Compliance
|
13
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6.
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Cancellation of Bonds and Records
|
13
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9.
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Action, Proceedings and Indemnification
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17
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10.
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Application of Moneys
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18
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11.
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Notice of Payments
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18
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12.
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Investment by Trustee
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18
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14.
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Covenants by the Issuer and the Guarantors
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19
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15.
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Remuneration and Indemnification of Trustee
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22
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16.
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Supplement to Trustee Acts
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24
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17.
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Trustee's Liability
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29
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18.
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Trustee Contracting with the Issuer and the Guarantors
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30
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19.
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Waiver, Authorisation and Determination
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30
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20.
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Entitlement to treat Holder as Absolute Owner
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31
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22.
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Currency Indemnity
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32
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24.
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Trustee's Retirement and Removal
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33
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25.
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Trustee's Powers to be Additional
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34
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27.
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Confidentiality Undertaking
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35
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29.
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Submission to Jurisdiction
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36
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31.
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Contracts (Rights of Third Parties) Act 1999
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36
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Schedule
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1.
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Form of Global Certificate
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38
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2.
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Form of Definitive Certificate and Conditions of the Bonds
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42
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Part 1
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Form of Definitive Certificate
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42
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Part 2
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Conditions of the Bonds
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45
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3.
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Register and Transfer of Bonds
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68
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4.
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Provisions for Meetings of Bondholders
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70
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5.
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Form of Directors' Certificate
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79
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6.
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Form of Material Subsidiaries Certificate
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80
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7.
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Form of Supplemental Deed
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81
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THIS
TRUST DEED is made on 1 June 2017
BETWEEN:
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(1)
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BURFORD CAPITAL PLC, a company incorporated under the
laws of England and Wales with company number 09077893, whose registered office is at 24 Cornhill,
London EC3V 3ND (the Issuer);
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(2)
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BURFORD CAPITAL LIMITED, a company incorporated under
the laws of Guernsey with company number 50877, whose registered office is at Regency Court,
Glategny Esplanade, St Peter Port GY1 1WW, Guernsey (BCL); and
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(3)
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U.S. BANK TRUSTEES LIMITED, a limited liability company
registered in England and Wales with company number 02379632 having its registered office at
125 Old Broad Street, Fifth Floor, London EC2N 1AR (the Trustee, which expression shall,
wherever the context so admits, include such company and all other persons or companies for
the time being the trustee or trustees of these presents) as trustee for the Bondholders (each
as defined below).
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WHEREAS:
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(A)
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By a resolution of the Board of Directors of the Issuer passed
on 10 May 2017 the Issuer has resolved to issue £175,000,000 5.0 per cent. Guaranteed
Bonds due 2026 to be constituted by this Trust Deed.
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(B)
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By a resolution of the Board of Directors of BCL passed on
16 May 2017 BCL has agreed to guarantee the said Bonds and to enter into certain covenants
as set out in this Trust Deed.
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(C)
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The said Bonds in definitive form will be in registered form without
coupons attached.
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(D)
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The Trustee has agreed to act as trustee of these presents
for the benefit of the Bondholders upon and subject to the terms and conditions of these presents.
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NOW
THIS TRUST DEED WITNESSES AND IT IS AGREED AND DECLARED as follows:
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1.1
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Terms defined in the Conditions and
not otherwise defined herein shall have the same meaning in this Trust Deed. In these presents
unless there is anything in the subject or context inconsistent therewith the following expressions
shall have the following meanings:
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Agency
Agreement means the agreement appointing the initial Paying Agents, Registrar and/or Transfer Agents in relation to the Bonds
and any other agreement for the time being in force appointing Successor paying agents, successor registrars and/or transfer agents
in relation to the Bonds, or in connection with their duties, the terms of which have previously been approved in writing by the
Trustee, together with any agreement for the time being in force amending or modifying with the prior written approval of the
Trustee any of the aforesaid agreements in relation to the Bonds;
Appointee
means any attorney, manager, agent, delegate, nominee, custodian or other person appointed by the Trustee under these presents;
Auditors
means the independent auditors for the time being of the Issuer, or (as the case may be) the relevant Guarantor or, in the
event of their being unable or unwilling promptly to carry out any action requested of them pursuant to the provisions of these
presents, such other firm of accountants or such financial advisors as may be nominated or approved by the Trustee for the purposes
of these presents;
Basic
Terms Modification means any proposal to:
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(a)
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reduce
or cancel the amount payable or, where applicable, modify, except where such modification
is in the opinion of the Trustee bound to result in an increase, the method of calculating
the amount payable or modify the date of payment or, where applicable, the method of
calculating the date of payment in respect of any principal or interest in respect of
the Bonds;
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(b)
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alter the currency in which payments
under the Bonds are to be made;
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(c)
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alter the majority required to
pass an Extraordinary Resolution;
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(d)
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sanction
any such scheme or proposal or substitution as is described in paragraphs 19(i) and 19(j)
of Schedule 4;
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(e)
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alter the proviso to paragraph
7 of Schedule 4 or the proviso to paragraph 9 of Schedule 4; or
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(f)
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alter the definition of a Basic
Terms Modification;
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Bondholders
means the several persons who are for the time being holders of the Bonds (being the several persons whose names are entered
in the register of holders of the Bonds as the holders thereof) save that, for so long as such Bonds or any part thereof are represented
by the Global Certificate deposited with a common depositary for Euroclear and Clearstream, Luxembourg or, in respect of Bonds
in definitive form held in an account with Euroclear or Clearstream, Luxembourg, each person who is for the time being shown in
the records of Euroclear or Clearstream, Luxembourg (other than Clearstream, Luxembourg, if Clearstream, Luxembourg shall be an
accountholder of Euroclear, and Euroclear, if Euroclear shall be an accountholder of Clearstream, Luxembourg) as the holder of
a particular principal amount of the Bonds shall be deemed to be the holder of such principal amount of such Bonds (and the registered
holder of the relevant Bond shall be deemed not to be the holder) for all purposes of these presents other than with respect to
the payment of principal or interest on such principal amount of such Bonds, the rights to which shall be vested, as against the
Issuer and the Trustee, solely in such common depositary and for which purpose such common depositary shall be deemed to be the
holder of such principal amount of such Bonds in accordance with and subject to its terms and the provisions of these presents;
and the words holder and holders and related expressions shall (where appropriate) be construed accordingly;
Bonds
means the bonds in registered form comprising the said £175,000,000 5.0 per cent. Guaranteed Bonds due 2026 of the Issuer
hereby constituted or the principal amount thereof for the time being outstanding or, as the context may require, a specific number
thereof and includes any replacements for Bonds issued pursuant to Condition 13 (Replacement of Certificates) and (except
for the purposes of clause 2.4(d)) the Global Certificate;
Certificate
means a Global Certificate or a Definitive Certificate;
Clearstream,
Luxembourg means Clearstream Banking S.A.;
Conditions
means the Conditions in the form set out in Schedule 2 as the same may from time to time be modified in accordance with these
presents and any reference in these presents to a particular specified Condition or paragraph of a Condition shall in relation
to the Bonds be construed accordingly;
Confidential
Information means the legal name, legal or business address or any incorporation details or constitutive documents relating
to a Material Subsidiary or any other information that would enable a third party to determine any of the foregoing and that may
be given to the Trustee by the Issuer or any Guarantor pursuant to the provisions of these presents, provided that the Issuer
or the relevant Guarantor, as the case may be, has identified such information (other than the legal names of the Material Subsidiaries
and any such information that the Trustee may itself obtain from publicly available sources from the legal names of such Material
Subsidiaries) as “Confidential Information” at the time it is given to the Trustee.
Definitive
Certificates has the meaning set out in subclause 3.1;
Directors
means the Board of Directors for the time being of the Issuer or, as the case may be, the relevant Guarantor, and Director
means any of them;
Euroclear
means Euroclear Bank SA/NV;
Event
of Default means any of the conditions, events or acts provided in Condition 11.1 (Events of Default) to be events
upon the happening of which the Bonds would, subject only to notice by the Trustee as therein provided, become immediately due
and repayable;
Extraordinary
Resolution has the meaning set out in paragraph 1 of Schedule 4;
Global
Certificate means the global certificate in respect of the Bonds to be issued pursuant to subclause 3.1 in the form or substantially
in the form set out in Schedule 1;
Guarantee
has the meaning ascribed to it in Condition 4.1 (Guarantee);
Guarantors
means:
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(ii)
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any Subsidiary Guarantor,
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and
the term Guarantor means any of them;
Liability
means any loss, damage, cost, fee, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever
(including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added
tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;
Material
Subsidiary means at any time a Subsidiary (other than an Excluded Subsidiary) of BCL:
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(a)
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whose gross assets (consolidated
in the case of a Subsidiary which itself has Subsidiaries) represent (or, in the case
of a Subsidiary acquired after the end of the financial period to which the then latest
audited consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less
than 5 per cent. of the consolidated gross assets of the Group, all as calculated respectively
by reference to the then latest Directors’ Certificate relating to such Subsidiary
delivered to the Trustee in accordance with clause 14(s) below and the then latest audited
consolidated accounts of BCL and its Subsidiaries, provided that:
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(i)
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in the event that the relevant
Subsidiary itself has Subsidiaries which are Excluded Subsidiaries, the gross assets
of such Excluded Subsidiaries are excluded from the calculation of the consolidated gross
assets of such Subsidiary;
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(ii)
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the gross assets of all Excluded
Subsidiaries are excluded from the calculation of the consolidated gross assets of the
Group; and
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(iii)
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in the case of a Subsidiary of
BCL acquired after the end of the financial period to which the then latest audited consolidated
accounts of BCL and its Subsidiaries relate, the reference to the then latest audited
consolidated accounts of BCL and its Subsidiaries for the purposes of the calculation
above shall, until consolidated accounts for the financial period in which the acquisition
is made have been prepared and audited as aforesaid, be deemed to be a reference to such
first- mentioned accounts as if such Subsidiary had been shown in such accounts by reference
to the then latest Directors’ Certificate relating to such Subsidiary delivered
to the Trustee in accordance with clause 14(s) below, adjusted as deemed appropriate
by BCL;
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(b)
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to which is transferred the
whole or substantially the whole of the undertaking and assets of a Subsidiary of BCL
which immediately prior to such transfer is a Material Subsidiary, provided that the
transferor Subsidiary shall upon such transfer forthwith cease to be a Material Subsidiary
and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to this
subparagraph (b) on the date on which the consolidated accounts of BCL and its Subsidiaries
for the financial period current at the date of such transfer have been prepared and
audited as aforesaid but so that such transferor Subsidiary or such transferee Subsidiary
may be a Material Subsidiary on or at any time after the date on which such consolidated
accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph
(a) above or, prior to or after such date, by virtue of any other applicable provision
of this definition; or
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(c)
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to which is transferred an
undertaking or assets which, taken together with the undertaking or assets of the transferee
Subsidiary, represent (or, in the case of the transferee Subsidiary being acquired after
the end of the financial period to which the then latest audited consolidated accounts
of BCL and its Subsidiaries relate, are equal to) not less than 5 per cent. of the consolidated
gross assets of the Group, all as calculated as referred to in subparagraph (a) above,
provided that the transferor Subsidiary (if a Material Subsidiary) shall upon such transfer
forthwith cease to be a Material Subsidiary unless immediately following such transfer
its undertaking and assets represent (or, in the case aforesaid are equal to) not less
than 5 per cent. of the consolidated gross assets of the Group, all as calculated as
referred to in subparagraph (a) above, and the transferee Subsidiary shall cease to be
a Material Subsidiary pursuant to this subparagraph (c) on the date on which the consolidated
accounts of BCL and its Subsidiaries for the financial period current at the date of
such transfer have been prepared and audited but so that such transferor Subsidiary or
such transferee Subsidiary may be a Material Subsidiary on or at any time after the date
on which such consolidated accounts have been prepared and audited as aforesaid by virtue
of the provisions of subparagraph (a) above or, prior to or after such date, by virtue
of any other applicable provision of this definition.
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A
report by two Directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their
opinion a Subsidiary of BCL is or is not or was or was not at any particular time or throughout any specified period a Material
Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall in
the absence of manifest error, be conclusive and binding on all parties;
Official
List has the meaning set out in Section 103 of the Financial Services and Markets Act 2000;
outstanding
means in relation to the Bonds all the Bonds issued other than:
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(a)
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those Bonds which have been redeemed
pursuant to these presents;
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(b)
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those Bonds in respect of which
the date for redemption in accordance with the Conditions has occurred and the redemption
moneys (including all interest payable thereon) have been duly paid to the Trustee or
to the Principal Paying Agent in the manner provided in the Agency Agreement (and where
appropriate notice to that effect has been given to the Bondholders in accordance with
Condition 14 (Notices)) and remain available for payment (against presentation
of the relevant Bond, if required);
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(c)
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those Bonds which have been
purchased and cancelled in accordance with Condition 8 (Redemption and Purchase);
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(d)
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those Bonds which have become
void under Condition 10 (Prescription);
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(e)
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those mutilated or defaced
Bonds which have been surrendered and cancelled and in respect of which replacements
have been issued pursuant to Condition 13 (Replacement of Certificates);
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(f)
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(for the purpose only of ascertaining
the principal amount of the Bonds outstanding and without prejudice to the status for
any other purpose of the relevant Bonds) those Bonds which are alleged to have been lost,
stolen or destroyed and in respect of which replacements have been issued pursuant to
Condition 13 (Replacement of Certificates); and
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(g)
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the Global Certificate to the
extent that it shall have been exchanged for Bonds in definitive form pursuant to its
provisions;
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PROVIDED
THAT for each of the following purposes, namely:
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(i)
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the right to attend and vote
at any meeting of the Bondholders or any of them, an Extraordinary Resolution in writing
or an Extraordinary Resolution by way of electronic consents given through the relevant
Clearing System(s) as envisaged by paragraph 1 of Schedule 4 and any direction or request
by the holders of the Bonds;
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(ii)
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the determination of how many
and which Bonds are for the time being outstanding for the purposes of subclause 9.1,
Conditions 11 (Events of Default), 12 (Enforcement) and 16 (Meeting
of Bondholders, Modification, Waiver, Authorisation and Determination) and paragraphs
4, 7 and 9 of Schedule 4;
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(iii)
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any discretion, power or
authority (whether contained in these presents or vested by operation of law) which the
Trustee is required, expressly or impliedly, to exercise in or by reference to the interests
of the Bondholders or any of them; and
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(iv)
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the determination by the Trustee
whether any event, circumstance, matter or thing is, in its opinion, materially prejudicial
to the interests of the Bondholders or any of them,
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those
Bonds (if any) which are for the time being held by or on behalf of or for the benefit of the Issuer, any Guarantor, any other
Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding company, in each case
as beneficial owner, shall (unless and until ceasing to be so held) be deemed not to remain outstanding;
Paying
Agents means the several institutions (including where the context permits the Principal Paying Agent) at their respective
specified offices initially appointed as paying agents in relation to the Bonds by the Issuer and the Guarantors pursuant to the
Agency Agreement and/or, if applicable, any Successor paying agents in relation to such Bonds;
Potential
Event of Default means any condition, event or act which, with the lapse of time and/or the issue, making or giving of any
notice, certification, declaration, demand, determination and/or request and/or the taking of any similar action and/or the fulfilment
of any similar condition, would constitute an Event of Default;
Principal
Paying Agent means the institution at its specified office initially appointed as principal paying agent in relation to such
Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement or, if applicable, any Successor principal paying agent
in relation to such Bonds;
Registrar
means the institution at its specified office initially appointed as the registrar in relation to the Bonds by the Issuer
and the Guarantors pursuant to the Agency Agreement or, if applicable, any Successor registrar in relation to such Bonds;
Relevant
Date has the meaning set out in Condition 9 (Taxation);
repay,
redeem and pay shall each include both the others and cognate expressions shall be construed accordingly;
Subsidiary
means any company which is for the time being a subsidiary (within the meaning of Section 1159 of the Companies Act 2006);
Subsidiary
Guarantor means each Subsidiary of BCL that enters into a deed supplemental to the Trust Deed (or in such other form as may
be necessary or appropriate to comply with any applicable law, rule or regulation, including the law of any jurisdiction outside
England and Wales where that Subsidiary is organised or carries on business) for the purpose of giving a joint and several guarantee
(in the same terms, mutatis mutandis, as the Guarantee) in accordance with Condition 4.3 (Guarantee – Addition
of Subsidiary Guarantors) and Clause 7.11, and, which has not been released or discharged from its obligations as a Subsidiary
Guarantor in accordance with Condition 4.4 (Guarantee – Release of a Subsidiary Guarantor);
Successor
means, in relation to the Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents, any successor
to any one or more of them in relation to the Bonds which shall become such pursuant to the provisions of these presents or the
Agency Agreement and/or such other or further principal paying agent, paying agents, registrar and/or transfer agents (as the
case may be) in relation to such Bonds as may (with the prior approval of, and on terms previously approved by, the Trustee in
writing) from time to time be appointed as such, and/or, if applicable, such other or further specified offices (in the former
case being within the same place as those for which they are substituted) as may from time to time be nominated, in each case
by the Issuer and, if applicable, the Guarantors, and (except in the case of the initial appointments and specified offices made
under and specified in the Conditions and/or the Agency Agreement, as the case may be) notice of whose appointment or, as the
case may be, nomination has been given to the Bondholders pursuant to subclause 14(m) in accordance with Condition 14 (Notices);
the
London Stock Exchange means the London Stock Exchange plc or any successor thereto;
these
presents means this Trust Deed and the Schedules and any trust deed supplemental hereto and the Schedules (if any) thereto
and the Bonds and the Conditions, all as from time to time modified in accordance with the provisions herein or therein contained;
Transfer
Agents means the institutions at their respective specified offices initially appointed as transfer agents in relation to
the Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement and/or, if applicable, any Successor transfer agents
in relation to such Bonds;
Trust
Corporation means a corporation entitled by rules made under the Public Trustee Act 1906 or entitled pursuant to any other
comparable legislation applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee;
Trustee
Acts means the Trustee Act 1925 and the Trustee Act 2000;
UK
Listing Authority means the Financial Conduct Authority in its capacity as competent authority under the Financial Services
and Markets Act 2000;
words
denoting the singular shall include the plural and vice versa;
words
denoting one gender only shall include the other genders; and
words
denoting persons only shall include firms and corporations and vice versa.
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1.2
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(a)
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All references in these presents to principal and/or interest
in respect of the Bonds or to any moneys payable by the Issuer and/or the Guarantors under
these presents shall be deemed to include, in the case of amounts of principal payable, a reference
to any specific redemption price (as defined in the relevant Conditions), any premium which
may be payable under or in respect of the Bonds and, in any case, a reference to any additional
amounts which may be payable under Condition 9 (Taxation).
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(b)
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All references in these presents
to pounds sterling, Pounds Sterling or the sign £ shall be
construed as references to the lawful currency for the time being of the United Kingdom.
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(c)
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All references in these presents
to any statute or any provision of any statute shall be deemed also to refer to any statutory
modification or re-enactment thereof or any statutory instrument, order or regulation
made thereunder or under any such modification or re- enactment.
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(d)
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All references in these presents
to guarantees or to an obligation being guaranteed shall be deemed to include respectively
references to indemnities or to an indemnity being given in respect thereof.
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(e)
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All references in these presents
to any action, remedy or method of proceeding for the enforcement of the rights of creditors
shall be deemed to include, in respect of any jurisdiction other than England, references
to such action, remedy or method of proceeding for the enforcement of the rights of creditors
available or appropriate in such jurisdiction as shall most nearly approximate to such
action, remedy or method of proceeding described or referred to in these presents.
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(f)
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All references in these presents
to taking proceedings against the Issuer and/or any Guarantor shall be deemed to include
references to proving in the winding up of the Issuer and/or such Guarantor (as the case
may be).
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(g)
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All references in these presents
to Euroclear and/or Clearstream, Luxembourg shall be deemed to include references to
any other clearing system as is approved by the Trustee.
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(h)
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Unless the context otherwise
requires words or expressions used in these presents shall bear the same meanings as
in the Companies Act 2006.
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(i)
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In this Trust Deed references
to Schedules, clauses, subclauses, paragraphs and subparagraphs shall be construed as
references to the Schedules to this Trust Deed and to the clauses, subclauses, paragraphs
and subparagraphs of this Trust Deed respectively.
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(j)
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In these presents tables of
contents and clause headings are included for ease of reference and shall not affect
the construction of these presents.
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(k)
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Any reference in these presents
to a written notice, consent or approval being given by the Trustee shall, for the avoidance
of doubt, be deemed to include such notice, consent or approval being given by e-mail.
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(l)
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All references in these presents
to Bonds being listed or having a listing shall, in relation to the London
Stock Exchange, be construed to mean that such Bonds have been admitted to the Official
List by the UK Listing Authority and to trading on the London Stock Exchange's market
for listed securities and all references in these presents to listing or listed
shall include references to quotation and quoted, respectively.
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(m)
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Any references to the records
of Euroclear and Clearstream, Luxembourg shall be to the records that each of Euroclear
and Clearstream, Luxembourg holds for its customers which reflects the amount of such
customers' interests in the Bonds.
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2.
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COVENANT TO REPAY AND TO PAY INTEREST ON THE BONDS
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2.1
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The aggregate principal amount of the Bonds is limited to £175,000,000.
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2.2
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The Issuer covenants with the Trustee that it will, in accordance
with these presents, on the due date for the final maturity of the Bonds provided for in the
Conditions, or on such earlier date as the same or any part thereof may become due and repayable
thereunder, pay or procure to be paid unconditionally to or to the order of the Trustee in
pounds sterling in immediately available funds the principal amount of the Bonds repayable
on that date and shall in the meantime and until such date (both before and after any judgment
or other order of a court of competent jurisdiction) pay or procure to be paid unconditionally
to or to the order of the Trustee as aforesaid interest (which shall accrue from day to day)
on the principal amount of the Bonds at rates calculated from time to time in accordance with
Condition 6 (Interest) and on the dates provided for in the Conditions PROVIDED THAT:
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(a)
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every payment of principal or
interest in respect of the Bonds to or to the account of the Principal Paying Agent in
the manner provided in the Agency Agreement shall operate in satisfaction pro tanto
of the relative covenant by the Issuer in this clause except to the extent that there
is default in the subsequent payment thereof in accordance with the Conditions to the
Bondholders;
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(b)
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in any case where payment of principal
is not made to the Trustee or the Principal Paying Agent on or before the due date, interest
shall continue to accrue on the principal amount of the Bonds (both before and after
any judgment or other order of a court of competent jurisdiction) at the rate aforesaid
up to and including the date which the Trustee determines to be the date on and after
which payment is to be made to the Bondholders in respect thereof as stated in a notice
given to the Bondholders in accordance with Condition 14 (Notices) (such date
to be not later than seven days after the day on which the whole of such principal amount,
together with an amount equal to the interest which has accrued and is to accrue pursuant
to this proviso up to and including that date, has been received by the Trustee or the
Principal Paying Agent); and
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(c)
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in any case where payment of the
whole or any part of the principal amount of any Bond is improperly withheld or refused
(other than in circumstances contemplated by proviso (b) above and provided that the
relevant Bond is duly presented (if required)) interest shall accrue on that principal
amount payment of which has been so withheld or refused (both before and after any judgment
or other order of a court of competent jurisdiction) at the rate aforesaid from and including
the date of such withholding or refusal up to and including the date on which (upon further
presentation of the relevant Bond, if required) payment of the full amount (including
interest as aforesaid) in pounds sterling payable in respect of such Bond is made or
(in respect of the payment of the principal amount and if earlier) the seventh day after
notice is given to the relevant Bondholder (either individually or in accordance with
Condition 14 (Notices)) that the full amount (including interest as aforesaid)
in pounds sterling payable in respect of such Bond is available for payment, provided
that, upon further presentation thereof being duly made, such payment is made.
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The Trustee will
hold the benefit of this covenant on trust for the Bondholders and itself in accordance with these presents.
TRUSTEE'S
REQUIREMENTS REGARDING PAYING AGENTS
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2.3
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At any time after an Event of Default or a Potential Event
of Default shall have occurred or if there is failure to make payment of any amount in respect
of any Bond when due or the Trustee shall have received any money which it proposes to pay
under clause 10 to the Bondholders, the Trustee may:
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(a)
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by notice in writing to the Issuer,
any Guarantor, the Principal Paying Agent and the other Paying Agents require the Principal
Paying Agent and the other Paying Agents pursuant to the Agency Agreement:
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(i)
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to act thereafter as Principal
Paying Agent and Paying Agents respectively of the Trustee in relation to payments to
be made by or on behalf of the Trustee under the provisions of these presents mutatis
mutandis on the terms provided in the Agency Agreement (with such consequential amendments
as the Trustee shall deem necessary and save that the Trustee's liability under any provisions
thereof for the indemnification, remuneration and payment of out-of-pocket expenses of
the Paying Agents shall be limited to the amounts for the time being held by the Trustee
on the trusts of these presents relating to the Bonds and available for such purpose)
and thereafter to hold all Bonds and all sums, documents and records held by them in
respect of the Bonds on behalf of the Trustee; or
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(ii)
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to deliver up all Bonds and all
sums, documents and records held by them in respect of the Bonds to the Trustee or as
the Trustee shall direct in such notice provided that such notice shall be deemed not
to apply to any documents or records which the relative Paying Agent is obliged not to
release by any law or regulation; and/or
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(b)
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by notice in writing to the Issuer
and the Guarantors require each of them to make all subsequent payments in respect of
the Bonds to or to the order of the Trustee and not to the Principal Paying Agent; with
effect from the issue of any such notice to the Issuer and the Guarantors and until such
notice is withdrawn proviso (a) to subclause 2.2 of this clause relating to the Bonds
shall cease to have effect.
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FURTHER ISSUES
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2.4
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(a)
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The Issuer shall be at liberty from time to time (but subject
always to the provisions of these presents) without the consent of the Bondholders to create
and issue further notes or bonds (whether in bearer or registered form) either (i) ranking
pari passu in all respects (or in all respects save for the first payment of interest
thereon), and so that the same shall be consolidated and form a single series, with the Bonds
and/or the further notes or bonds of any series or (ii) upon such terms as to ranking, interest,
conversion, redemption and otherwise as the Issuer may at the time of issue thereof determine.
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(b)
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Any further
notes or bonds which are to be created and issued pursuant to the provisions of paragraph
2.4(a) above so as to form a single series with the Bonds and/or the further notes or
bonds of any series shall be constituted by a trust deed supplemental to this Trust Deed
and any other further notes or bonds which are to be created and issued pursuant to the
provisions of paragraph 2.4(a) above may (subject to the consent of the Trustee) be constituted
by a trust deed supplemental to this Trust Deed. In any such case the Issuer and the
Guarantors shall prior to the issue of any further notes or bonds to be so constituted
execute and deliver to the Trustee a trust deed supplemental to this Trust Deed (in relation
to which all applicable stamp duties or other documentation fees, duties or taxes have
been paid and, if applicable, duly stamped or denoted accordingly) containing a covenant
by the Issuer in the form mutatis mutandis of subclause 2.2 in relation to the
principal and interest in respect of such further notes or bonds and such other provisions
(whether or not corresponding to any of the provisions contained in this Trust Deed)
as the Trustee shall require including making such consequential modifications to this
Trust Deed as the Trustee shall require in order to give effect to such issue of further
notes or bonds.
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(c)
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A memorandum
of every such supplemental trust deed shall be endorsed by the Trustee on this Trust
Deed and by the Issuer and the Guarantors on their duplicates of this Trust Deed.
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(d)
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Whenever
it is proposed to create and issue any further notes or bonds the Issuer shall give to
the Trustee not less than 14 days' notice in writing of its intention so to do stating
an indicative amount of further notes or bonds proposed to be created and issued.
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3.
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FORM AND ISSUE OF BONDS
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3.1
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The Bonds shall be represented initially by the Global Certificate
which the Issuer shall issue to a common depositary for Euroclear and Clearstream, Luxembourg
on terms that such common depositary shall hold the same for the account of the persons who
would otherwise be entitled to receive the Bonds in definitive form (Definitive Certificates)
and the successors in title to such persons as appearing in the records of Euroclear and Clearstream,
Luxembourg for the time being.
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3.2
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The Global Certificate shall be printed or typed in the form
or substantially in the form set out in Schedule 1 and may be a facsimile. The Global Certificate
shall be in the aggregate principal amount of £175,000,000 and shall be signed manually
or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall
be authenticated by or on behalf of the Principal Paying Agent. The Global Certificate so executed
and authenticated shall be a binding and valid obligation of the Issuer and title thereto shall
pass by registration of transfer in respect thereof in accordance with the provisions of these
presents.
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3.3
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The Issuer shall issue the Definitive Certificates in exchange
for the Global Certificate in accordance with the provisions thereof.
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3.4
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The Bonds in definitive form shall be in registered form and
shall be issued in the form or substantially in the form set out in Schedule 2 in the denomination
and transferable in units of £100 each, shall be serially numbered and shall be endorsed
with a Form of Transfer in the form or substantially in the form also set out in Schedule 2
and with the Conditions. Title to the Bonds in definitive form shall pass upon the registration
of transfers in respect thereof in accordance with the provisions of these presents.
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3.5
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The Definitive Certificates shall be signed manually or in
facsimile by two of the Directors of the Issuer on behalf of the Issuer and shall be authenticated
by or on behalf of the Principal Paying Agent.
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3.6
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The Issuer may use the facsimile signature of any person who
at the date such signature is affixed is a person duly authorised by the Issuer or is a Director
of the Issuer as referred to in subclauses 3.2 and 3.5 above notwithstanding that at the time
of issue of the Global Certificate or any of the Definitive Certificates, as the case may be,
he may have ceased for any reason to be so authorised or to be the holder of such office. The
Definitive Certificates so signed shall be binding and valid obligations of the Issuer.
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4.
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FEES, DUTIES AND TAXES
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The
Issuer will pay any stamp, issue, registration, documentary and other fees, duties and taxes, including interest and penalties,
payable in any relevant jurisdiction on or in connection with (a) the execution and delivery of these presents, (b) the constitution
and issue of the Bonds and (c) any action taken by or on behalf of the Trustee or (where permitted under these presents so to
do) any Bondholder to enforce, or to resolve any doubt concerning, or for any other purpose in relation to, these presents.
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5.
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COVENANT OF COMPLIANCE
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Each
of the Issuer and the Guarantors severally covenants with the Trustee that it will comply with and perform and observe all the
provisions of these presents which are expressed to be binding on it. The Conditions shall be binding on the Issuer, the Guarantors
and the Bondholders. The Trustee shall be entitled to enforce the obligations of the Issuer and the Guarantors under the Bonds
as if the same were set out and contained in the trust deeds constituting the same, which shall be read and construed as one document
with the Bonds. The Trustee will hold the benefit of this covenant upon trust for itself and the Bondholders according to its
and their respective interests.
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6.
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CANCELLATION OF BONDS AND RECORDS
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6.1
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The Issuer shall procure that all Bonds (a) redeemed or (b)
purchased and surrendered for cancellation by or on behalf of the Issuer, the Guarantors or
any member of the Group or (c) which, being mutilated or defaced, have been surrendered and
replaced pursuant to Condition 13 (Replacement of Certificates) or (d) exchanged as
provided in these presents shall forthwith be cancelled by or on behalf of the Issuer and a
certificate stating:
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(a)
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the aggregate principal amount
of Bonds which have been redeemed;
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(b)
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the serial numbers of such Bonds
in definitive form;
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(c)
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the aggregate amount of interest
paid (and the due dates of such payments) on the Bonds;
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(d)
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the aggregate principal amount
of Bonds (if any) which have been purchased by or on behalf of the Issuer, BCL or any
member of the Group and cancelled and the serial numbers of such Bonds in definitive
form; and
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(e)
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the aggregate principal amounts
of Bonds which have been so exchanged or surrendered and replaced and the serial numbers
of such Bonds in definitive form,
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shall
be given to the Trustee by or on behalf of the Issuer as soon as possible and in any event within four months after the date of
any such redemption, purchase, payment, exchange or replacement (as the case may be) takes place. The Trustee may accept such
certificate as conclusive evidence of redemption, purchase, exchange or replacement pro tanto of the Bonds or payment of
interest thereon respectively and of cancellation of the relative Bonds.
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6.2
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The Issuer shall procure (i) that the Principal Paying Agent
shall keep a full and complete record of all Bonds and of their redemption, cancellation, payment
or exchange (as the case may be) and of all replacement notes issued in substitution for lost,
stolen, mutilated, defaced or destroyed Bonds and (ii) that such records shall be made available
to the Trustee at all reasonable times.
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7.1
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BCL hereby irrevocably and unconditionally, and notwithstanding
the release of any other guarantor or any other person under the terms of any composition or
arrangement with any creditors of the Issuer or any other Subsidiary of BCL, guarantees to
the Trustee:
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(a)
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the due and punctual payment in
accordance with the provisions of these presents of the principal of and interest on
the Bonds and of any other amounts payable by the Issuer under these presents; and
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(b)
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the due and punctual performance
and observance by the Issuer of each of the other provisions of these presents on the
Issuer's part to be performed or observed.
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7.2
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If the Issuer fails for any reason whatsoever punctually to
pay any such principal, interest or other amount, BCL shall cause each and every such payment
to be made as if BCL instead of the Issuer were expressed to be the primary obligor under these
presents and not merely as surety (but without affecting the nature of the Issuer's obligations)
to the intent that the holder of the relevant Bond or the Trustee (as the case may be) shall
receive the same amounts in respect of principal, interest or such other amount as would have
been receivable had such payments been made by the Issuer.
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7.3
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If any payment received by the Trustee or any Bondholder under
the provisions of these presents shall (whether on the subsequent bankruptcy, insolvency or
corporate reorganisation of the Issuer or, without limitation, on any other event) be avoided
or set aside for any reason, such payment shall not be considered as discharging or diminishing
the liability of BCL and this guarantee shall continue to apply as if such payment had at all
times remained owing by the Issuer and BCL shall indemnify the Trustee and the Bondholders
in respect thereof PROVIDED THAT the obligations of the Issuer and/or BCL under this subclause
shall, as regards each payment made to the Trustee or any Bondholder which is avoided or set
aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled
through the Issuer.
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7.4
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BCL hereby agrees that its obligations under this clause shall
be unconditional and that BCL shall be fully liable irrespective of the validity, regularity,
legality or enforceability against the Issuer of, or of any defence or counter-claim whatsoever
available to the Issuer in relation to, its obligations under these presents, whether or not
any action has been taken to enforce the same or any judgment obtained against the Issuer,
whether or not any of the other provisions of these presents have been modified, whether or
not any time, indulgence, waiver, authorisation or consent has been granted to the Issuer by
or on behalf of the Bondholders or the Trustee, whether or not any determination has been made
by the Trustee pursuant to subclause 19.1, whether or not there have been any dealings or transactions
between the Issuer, any of the Bondholders or the Trustee, whether or not the Issuer has been
dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions,
control or ownership, whether or not the Issuer has been prevented from making payment by foreign
exchange provisions applicable at its place of registration or incorporation and whether or
not any other circumstances have occurred which might otherwise constitute a legal or equitable
discharge of or defence to a guarantor. Accordingly the validity of this guarantee shall not
be affected by reason of any invalidity, irregularity, illegality or unenforceability of all
or any of the obligations of the Issuer under these presents and this guarantee shall not be
discharged nor shall the liability of BCL under these presents be affected by any act, thing
or omission or means whatever whereby its liability would not have been discharged if it had
been the principal debtor.
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7.5
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Without prejudice to the provisions of subclause 9.1 the Trustee
may determine from time to time whether or not it will enforce this guarantee which it may
do without making any demand of or taking any proceedings against the Issuer and may from time
to time make any arrangement or compromise with BCL in relation to this guarantee which the
Trustee may consider expedient in the interests of the Bondholders.
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7.6
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BCL waives diligence, presentment, demand of payment, filing
of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the
Issuer, any right to require a proceeding first against the Issuer, protest or notice with
respect to these presents or the indebtedness evidenced thereby and all demands whatsoever
and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate
balance of all sums payable and obligations owed by the Issuer under these presents, shall
not be discharged except by complete performance of the obligations in these presents and is
additional to, and not instead of, any security or other guarantee or indemnity at any time
existing in favour of any person, whether from BCL or otherwise.
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7.7
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If any moneys shall become payable by BCL under this guarantee
BCL shall not, so long as the same remain unpaid, without the prior written consent of the
Trustee:
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(a)
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in respect of any amounts paid
by it under this guarantee, exercise any rights of subrogation or contribution or, without
limitation, any other right or remedy which may accrue to it in respect of or as a result
of any such payment; or
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(b)
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in respect of any other moneys
for the time being due to BCL by the Issuer, claim payment thereof or exercise any other
right or remedy;
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(including
in either case claiming the benefit of any security or right of set-off or, on the liquidation of the Issuer, proving in competition
with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer, any payment
or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be received by
BCL before payment in full of all amounts payable under these presents shall have been made to the Bondholders and the Trustee,
such payment or distribution shall be received by BCL on trust to pay the same over immediately to the Trustee for application
in or towards the payment of all sums due and unpaid under these presents in accordance with clause 10.
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7.8
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Until all amounts which may be or become payable by the Issuer
under these presents have been irrevocably paid in full, the Trustee may:
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(a)
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refrain from applying or enforcing
any other moneys, security or rights held or received by the Trustee in respect of those
amounts, or apply and enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise), and BCL shall not be entitled to the benefit of
the same; and
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(b)
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hold in a suspense account any
moneys received from BCL or on account of BCL’s liability under this guarantee,
without liability to pay interest on those moneys.
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7.9
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If any sum which, although expressed to be payable by the Issuer
under these presents or the Bonds, is for any reason (whether or not now existing and whether
or not now known or becoming known to the Issuer, BCL, the Trustee or any Bondholder) not recoverable
from BCL on the basis of a guarantee then (a) it will nevertheless be recoverable from it as
if it were the sole principal debtor and will be paid by it to the Trustee on demand and (b)
as a separate and additional liability under these presents BCL agrees, as a primary obligation
and on a joint and several basis, to indemnify each of the Trustee and each Bondholder in respect
of such sum by way of a full indemnity in the manner and currency as is provided for in the
Bonds or these presents (as the case may be) and to indemnify each Bondholder against all losses,
claims, costs, charges and expenses to which it may be subject or which it may incur in recovering
such sum.
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7.10
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The obligations of BCL under these presents constitute direct,
unconditional and (subject to the provisions of Condition 5.1 (Negative Pledges)) unsecured
obligations of BCL and (subject as aforesaid) rank and will rank pari passu with all
other outstanding unsecured and unsubordinated obligations of BCL, present and future, but,
in the event of insolvency, only to the extent permitted by applicable laws relating to creditors'
rights.
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7.11
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In connection with the proposed admission of any Subsidiary
of BCL as a Subsidiary Guarantor pursuant to Condition 4.3 (Guarantee – Addition
of Subsidiary Guarantors), no such admission shall be effective until the Trustee shall
have received:
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(a)
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a duly executed deed supplemental
to this Trust Deed and the Agency Agreement (or in such other form as may be necessary
or appropriate to comply with any applicable law, rule or regulation, including the law
of any jurisdiction outside England and Wales where that Subsidiary is organised or carries
on business) containing a joint and several guarantee (in the same terms, mutatis
mutandis, as the Guarantee) and otherwise in form and manner satisfactory to the
Trustee pursuant to which such Subsidiary agrees to be bound by the provisions of these
presents and the Agency Agreement as fully as if such Subsidiary had been named in these
presents and the Agency Agreement as a Guarantor on the date hereof; and
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(b)
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such legal opinion(s) as the Trustee
shall require from legal advisers satisfactory to the Trustee and in a form and with
substance satisfactory to the Trustee as to the enforceability under the laws of all
relevant jurisdictions of the guarantee to be given by such Subsidiary and all other
obligations to be assumed by such Subsidiary in the agreements described in paragraph
(a) above,
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and
such Subsidiary and the Issuer shall have complied with such other requirements to assure more fully that the agreements in paragraph
(a) above are enforceable as the Trustee may direct in the interests of the Bondholders.
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7.12
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If any Subsidiary Guarantor ceases to be a Subsidiary Guarantor
under the Bonds pursuant to Condition 4.4 (Guarantee –Release of Subsidiary Guarantors),
such Subsidiary Guarantor will be deemed to be released simultaneously from all of its future
obligations under these presents, without prejudice to any obligations which may have accrued
prior to that time.
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7.13
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All the provisions of this Trust Deed relating to BCL and
Guarantors shall apply to a Subsidiary of BCL which gives a guarantee pursuant to Condition
4.3 (Guarantee – Addition of Subsidiary Guarantors) and to the guarantee given
by the Subsidiary Guarantor in all respects as if the Subsidiary Guarantor had been a party
to this Trust Deed and references herein to a Guarantor or Guarantors had included the Subsidiary
Guarantor.
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7.14
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The Issuer and each Guarantor shall be deemed to have consented
to the admission of any company as a Subsidiary Guarantor and shall be deemed to be jointly
and severally liable with any new Subsidiary Guarantor by virtue of the giving by any Subsidiary
Guarantor of a guarantee without the necessity for the Issuer or any Guarantor to concur in
or consent to any deed admitting any Subsidiary Guarantor.
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7.15
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BCL, excluding any express right contained in these presents,
waives any existing or future right which it may have:
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(a)
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to require that any liability
under or in connection with these presents be divided or apportioned with any other person
or reduced in any manner whatsoever, whether by virtue of the "droit de division"
or otherwise; and
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(b)
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to require that recourse be had
to the assets of any other person before any claim is enforced against it in respect
of the obligations assumed by it in or in connection with these presents, whether by
virtue of "droit de discussion" or otherwise.
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8.1
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The Trustee may at any time, at its discretion and without
notice, take such proceedings and/or other steps or action (including lodging an appeal in
any proceedings) as it may think fit against or in relation to each of the Issuer and the Guarantors
to enforce their respective obligations under these presents or otherwise.
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8.2
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Proof that as regards any specified Bond the Issuer or any
Guarantor (as the case may be) has made default in paying any amount due in respect of such
Bond shall (unless the contrary be proved) be sufficient evidence that the same default has
been made as regards all other Bonds in respect of which the relevant amount is due and payable.
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9.
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ACTION, PROCEEDINGS AND INDEMNIFICATION
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9.1
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The Trustee shall not be bound to take any action in relation
to these presents (including but not limited to the giving of any notice pursuant to Condition
11.1 (Events of Default) or the taking of any proceedings and/or other steps mentioned
in subclause 8.1) unless respectively directed or requested to do so (a) by an Extraordinary
Resolution or (b) in writing by the holders of at least one-fifth in principal amount of the
Bonds then outstanding and in either case then only if it shall be indemnified and/or secured
and/or pre-funded to its satisfaction against all Liabilities to which it may render itself
liable or which it may incur by so doing.
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9.2
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The Trustee may refrain from taking any action in any jurisdiction
if the taking of such action in that jurisdiction would, in its opinion based upon legal advice
in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the
Trustee may also refrain from taking such action if it would otherwise render it liable to
any person in that jurisdiction or if, in its opinion based upon such legal advice, it would
not have the power to take the relevant action in that jurisdiction by virtue of any applicable
law in that jurisdiction or if it is determined by any court or other competent authority in
that jurisdiction that it does not have such power.
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9.3
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Only the Trustee may enforce the provisions of these presents.
No Bondholder shall be entitled to (i) take any steps or action against the Issuer or any Guarantor
to enforce the performance of any of the provisions of these presents or (ii) take any other
proceedings (including lodging an appeal in an proceedings) in respect of or concerning the
Issuer or any Guarantor, in each case unless the Trustee having become bound as aforesaid to
take any such action, steps or proceedings fails to do so within a reasonable period and such
failure is continuing.
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9.4
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Notwithstanding anything else contained in these presents,
the Trustee shall not be required to take any action prior to making any declaration that the
Bonds are immediately due and payable (save that it will procure notice to be given to the
Bondholders of any Event of Default of which it has actual knowledge or express notice) if
such action would require the Trustee to incur any expenditure or other financial liability
or risk its own funds (including obtaining any advice which it might otherwise have thought
appropriate to obtain).
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10.
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APPLICATION OF MONEYS
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All moneys received
by the Trustee under these presents shall be held by the Trustee upon trust to apply them (subject to clause 12):
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(a)
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First, in payment or satisfaction
of all amounts then due and unpaid under clause 15 to the Trustee and/or any Appointee;
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(b)
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Secondly, in or towards
retention of an amount which the Trustee considers necessary to pay any amounts that
may thereafter become due to be paid under clause 15 to it or any Appointee, to the extent
it considers that moneys received by it thereafter under these presents may be insufficient
and/or may not be received in time to pay such amounts;
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(c)
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Thirdly, in or towards
reimbursement pari passu and rateably of any amounts paid by any Indemnifying
Parties as contemplated by clause 15.7, together with interest thereon as provided in
clause 15.8;
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(d)
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Fourthly, in or towards
payment pari passu and rateably of all principal and interest then due and unpaid
in respect of the Bonds; and
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(e)
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Fifthly, in payment of
the balance (if any) to the Issuer (without prejudice to, or liability in respect of,
any question as to how such payment to the Issuer shall be dealt with as between the
Issuer, the Guarantors and any other person).
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Without
prejudice to this clause 10, if the Trustee holds any moneys which represent principal or interest in respect of Bonds which have
become void or in respect of which claims have been prescribed under Condition 10 (Prescription), the Trustee will hold
such moneys on the above trusts.
The
Trustee shall give notice to the Bondholders in accordance with Condition 14 (Notices) of the day fixed for any payment
to them under clause 10. Such payment may be made in accordance with Condition 7 (Payment) and any payment so made shall
be a good discharge to the Trustee.
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12.
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INVESTMENT BY TRUSTEE
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|
12.1
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The Trustee may at its discretion and pending payment invest
moneys at any time available for the payment of principal and interest on the Bonds in some
or one of the investments hereinafter authorised for such periods as it may consider expedient
with power from time to time at the like discretion to vary such investments and to accumulate
such investments and the resulting interest and other income derived therefrom. The accumulated
investments shall be applied under clause 10. All interest and other income deriving from
such investments shall be applied first in payment or satisfaction of all amounts then due
and unpaid under clause 15 to the Trustee and/or any Appointee and otherwise held for the
benefit of and paid to the Bondholders.
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12.2
|
Any moneys which under the trusts of these presents ought
to or may be invested by the Trustee may be invested in the name or under the control of the
Trustee in any investments or other assets in any part of the world whether or not they produce
income or by placing the same on deposit in the name or under the control of the Trustee at
such bank or other financial institution and in such currency as the Trustee may think fit.
If that bank or institution is the Trustee or a subsidiary, holding or associated company
of the Trustee, it need only account for an amount of interest equal to the amount of interest
which would, at then current rates, be payable by it on such a deposit to an independent customer.
The Trustee may at any time vary any such investments for or into other investments or convert
any moneys so deposited into any other currency and shall not be responsible for any loss
resulting from any such investments or deposits, whether due to depreciation in value, fluctuations
in exchange rates or otherwise.
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Upon
any payment under clause 10 (other than payment in full against surrender of a Bond) the Bond in respect of which such payment
is made shall be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall or
shall cause such Paying Agent to enface thereon a memorandum of the amount and the date of payment but the Trustee may dispense
with such production and enfacement upon such indemnity being given as it shall think sufficient.
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14.
|
COVENANTS BY THE ISSUER AND THE GUARANTORS
|
So
long as any of the Bonds remains outstanding (or, in the case of paragraphs (h), (i), (m), (n), (o) and (q), so long as any of
the Bonds remains liable to prescription each of the Issuer and the Guarantors severally (but in the case of paragraph 14(c),
the Issuer only) covenants with the Trustee that it shall:
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(a)
|
promptly give or procure to be
given to the Trustee such opinions, certificates, information and evidence as it shall
reasonably require and in such form as it shall require (including without limitation
the procurement by the Issuer or the Guarantors (as the case may be) of all such certificates
reasonably called for by the Trustee pursuant to subclause 16(c)) for the purpose of
the discharge or exercise of the duties, trusts, powers, authorities and discretions
vested in it under these presents or by operation of law except that the provision of
any financial statements or evidence and information relating to financial statements
shall, for the avoidance of doubt, only extend to the provision of financial statements
for an accounting period prepared in relation to the Group (and in no circumstances shall
extend to any specific entity within the Group (other than the Issuer));
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(b)
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cause to be prepared and certified
by its Auditors in respect of each financial accounting period accounts of the Issuer
in such form as will comply with all relevant legal and accounting requirements and all
requirements for the time being of the London Stock Exchange;
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(c)
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at all times keep and procure
its Subsidiaries (if any) to keep proper books of account and allow and procure such
Subsidiaries to allow the Trustee and any person appointed by the Trustee to whom the
Issuer, the Guarantors or the relevant Subsidiary (as the case may be) shall have no
reasonable objection free access to such books of account at all reasonable times during
normal business hours except that the requirement for Subsidiaries to keep proper books
of account shall not, for the avoidance of doubt, in any circumstances require such Subsidiary
to prepare financial statements (for any accounting period or otherwise);
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(d)
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send to the Trustee (in addition
to any copies to which it may be entitled as a holder of any securities of the Issuer
or any Guarantor) two copies in English of every balance sheet, profit and loss account,
report, circular and notice of general meeting and every other document issued or sent
to its shareholders together with any of the foregoing, and every document issued or
sent to holders of securities other than its shareholders (including the Bondholders)
as soon as practicable after the issue or publication thereof;
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(e)
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forthwith give notice in writing
to the Trustee of the coming into existence of any security interest which would require
any security to be given to the Bonds pursuant to Condition 5.1 (Negative Pledges)
or of the occurrence of any Event of Default or any Potential Event of Default;
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(f)
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give to the Trustee (a) within
seven days after demand by the Trustee therefor and (b) (without the necessity for any
such demand) promptly after the publication of its audited accounts in respect of each
financial period commencing with the financial period ending 31 December, 2016 and in
any event not later than 180 days after the end of each such financial period a certificate
in or substantially in the form set out in Schedule 5 signed by two Directors of the
Issuer and two Directors of each Guarantor or, in the case of BCL, either two Directors
of BCL or a Director and the secretary of BCL to the effect that as at a date not more
than seven days before delivering such certificate (the certification date) there
did not exist and had not existed or happened since the certification date of the previous
certificate (or in the case of the first such certificate the date hereof) any Event
of Default or any Potential Event of Default (or if such exists or existed or had happened
specifying the same) and that during the period from and including the certification
date of the last such certificate (or in the case of the first such certificate the date
hereof) to and including the certification date of such certificate each of the Issuer
and each Guarantor has complied with all its obligations contained in these presents
or (if such is not the case) specifying the respects in which it has not complied;
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(g)
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so long as any of the Bonds remain
outstanding BCL shall supply to the Trustee:
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(i)
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as soon as they may become available,
but in any event within six months of its most recent financial year-end, a copy of its
audited Consolidated Financial Statements for such financial year, together with the
report thereon of BCL’s Auditors;
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(ii)
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as soon as they may become available,
but in any event within three months of the end of the first half of each financial year,
a copy of its unaudited Consolidated Financial Statements for such period; and
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(iii)
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concurrently with the delivery
of items (i) and (ii) above, a Directors’ Certificate confirming compliance with
the covenant contained in Condition 5.2 (Financial Covenant) with respect to the
most recent Reference Date;
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(h)
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so far as permitted by applicable
law, at all times execute and do all such further documents, acts and things as may be
necessary at any time or times in the opinion of the Trustee to give effect to these
presents except that the provision of any financial statements or evidence and information
relating to financial statements shall, for the avoidance of doubt, only extend to the
provision of financial statements for an accounting period prepared in relation to the
Group (and in no circumstances shall extend to any specific entity within the Group (other
than the Issuer));
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(i)
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at all times maintain Paying Agents,
a Registrar and Transfer Agents in accordance with the Conditions;
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(j)
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procure the Principal Paying Agent
to notify the Trustee forthwith in the event that the Principal Paying Agent does not,
on or before the due date for any payment in respect of the Bonds or any of them, receive
unconditionally pursuant to the Agency Agreement payment of the full amount in the requisite
currency of the moneys payable on such due date on all such Bonds;
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(k)
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in the event of the unconditional
payment to the Principal Paying Agent or the Trustee of any sum due in respect of the
Bonds or any of them being made after the due date for payment thereof forthwith give
or procure to be given notice to the Bondholders in accordance with Condition 14 (Notices)
that such payment has been made;
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(l)
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use reasonable endeavours to maintain
the listing of the Bonds on the London Stock Exchange or, if it is unable to do so having
used reasonable or if the Trustee considers that the maintenance of such listing is unduly
onerous and the Trustee is of the opinion that to do so would not be materially prejudicial
to the interests of the Bondholders, use reasonable endeavours to obtain and maintain
a quotation or listing of the Bonds on such other stock exchange or exchanges or securities
market or markets as the Issuer may (with the prior written approval of the Trustee)
decide and shall also upon obtaining a quotation or listing of the Bonds on such other
stock exchange or exchanges or securities market or markets enter into a trust deed supplemental
to this Trust Deed to effect such consequential amendments to these presents as the Trustee
may require or as shall be requisite to comply with the requirements of any such stock
exchange or securities market;
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(m)
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give notice to the Bondholders
in accordance with Condition 14 (Notices) of any appointment, resignation or removal
of any Paying Agent, Registrar or Transfer Agent (other than the appointment of the initial
Paying Agents, Registrar and Transfer Agents) after having obtained the prior written
approval of the Trustee thereto or any change of any Paying Agent's, Registrar's or Transfer
Agent's specified office and (except as provided by the Agency Agreement or the Conditions)
at least 30 days prior to such event taking effect; PROVIDED ALWAYS THAT so long as any
of the Bonds remains outstanding in the case of the termination of the appointment of
the Registrar or a Transfer Agent or so long as any of the Bonds remains liable to prescription
in the case of the termination of the appointment of the Principal Paying Agent no such
termination shall take effect until a new Registrar, Transfer Agent or Principal Paying
Agent (as the case may be) has been appointed on terms previously approved in writing
by the Trustee;
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(n)
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send to the Trustee, not less
than seven Business Days prior to which any such notice is to be given, the draft form
of every notice to be given to the Bondholders in accordance with Condition 14 (Notices)
and obtain the prior written approval of the Trustee (such approval not to be unreasonably
withheld or delayed) to, and promptly give to the Trustee two copies of, the final form
of every notice to be given to the Bondholders in accordance with Condition 14 (Notices)
(such approval, unless so expressed, not to constitute approval for the purposes of Section
21 of the Financial Services and Markets Act 2000 of the United Kingdom (the FSMA)
of a communication within the meaning of Section 21 of the FSMA);
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(o)
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comply with and perform all its
obligations under the Agency Agreement and use its best endeavours to procure that the
Paying Agents, the Registrar and the Transfer Agents comply with and perform all their
respective obligations thereunder and (in the case of the Paying Agents and the Registrar)
any notice given by the Trustee pursuant to subclause 2.3(a) and not make any amendment
or modification to such Agreement without the prior written approval of the Trustee and
use all reasonable endeavours to make such amendments to such Agreement as the Trustee
may require;
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(p)
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in order to enable the Trustee
to ascertain the principal amount of Bonds for the time being outstanding for any of
the purposes referred to in the proviso to the definition of outstanding in clause
1, deliver to the Trustee forthwith upon being so requested in writing by the Trustee
a certificate in writing signed by two Directors of the Issuer or two Directors of the
relevant Guarantor or, in the case of BCL, either two Directors of BCL or a Director
and the secretary of BCL (as appropriate) setting out the total number and aggregate
principal amount of Bonds which:
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(i)
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up to and including the date of such
certificate have been purchased by the Issuer or any member of the Group and cancelled;
and
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(ii)
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are at the date of such certificate
held by, for the benefit of, or on behalf of, the Issuer, any Guarantor, any Subsidiary
of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such
holding company;
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(q)
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procure its Subsidiaries to comply
with all (if any) applicable provisions of Condition 8 (Redemption and Purchase);
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(r)
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procure that each of the Paying
Agents makes available for inspection by Bondholders at its specified office copies of
these presents, the Agency Agreement and the then latest audited balance sheets and profit
and loss accounts (consolidated if applicable) of the Group;
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(s)
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give to the Trustee (i) on the
date hereof, (ii) within three Business Days after a demand by the Trustee therefor and
(iii) (without the necessity for such demand) within six months of BCL’s most recent
financial year-end commencing with the financial period ending 31 December 2016 and within
three months of the end of the first half of each financial year commencing with the
financial period ending 30 June 2017, a certificate in or substantially in the form set
out in Schedule 6 signed by either two Directors of BCL or a Director and the secretary
of BCL addressed to the Trustee listing those Subsidiaries of BCL which as at the date
hereof, as at the date of the relevant certificate or as at any specific date requested
by the Trustee, were Material Subsidiaries for the purposes of Condition 11 (Events
of Default);
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(t)
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promptly give written notice signed
by two directors of BCL or by a director and the secretary of BCL to the Trustee if any
Subsidiary of BCL, (other than an Excluded Subsidiary) has Financial Indebtedness which
in aggregate (without duplication) amounts to more than £2,000,000 (or its equivalent
in any other currency) and BCL covenants that it shall procure that such Subsidiary shall
as soon as reasonably practicable, but in any event no later than 60 days after the date
on which it incurs such Financial Indebtedness, provide a Guarantee in respect of these
presents in accordance with Clause 7 above;
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(u)
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promptly give written notice signed
by two directors of BCL or by a director and the secretary of BCL to the Trustee if a
Subsidiary Guarantor is to be automatically released from the Guarantee in accordance
with Condition 4.4 (Guarantee – Release of Subsidiary Guarantors);
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(v)
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prior to making any modification
or amendment or supplement to these presents, procure the delivery of (a) legal opinion(s)
as to English and any other relevant law, addressed to the Trustee, dated the date of
such modification or amendment or supplement, as the case may be, and in a form acceptable
to the Trustee from legal advisers acceptable to the Trustee;
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(w)
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give notice to the Trustee of
the proposed redemption of the Bonds at least 5 business days in London prior to the
giving of any notice of redemption in respect of such Bonds pursuant to Condition 14
(Notices); and
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(x)
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provide the Trustee with sufficient
information so as to enable it to determine whether or not it is obliged, in respect
of any payments to be made by it pursuant to these presents, to make any withholding
or deduction pursuant to an agreement described in Section 1471(b) of the US Internal
Revenue Code of 1986 (the Code) or otherwise imposed pursuant to Sections 1471
through 1474 of the Code and any regulations or agreements thereunder or official interpretations
thereof (FATCA Withholding Tax).
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15.
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REMUNERATION AND INDEMNIFICATION OF TRUSTEE
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15.1
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The Issuer failing whom, the Guarantors shall pay to the Trustee
remuneration for its services as trustee as from the date of this Trust Deed, such remuneration
to be at such rate and to be paid on such dates as may from time to time be agreed between
the Issuer and the Trustee. In the absence of any agreement to the contrary, such remuneration
shall be payable in advance on 26 April in each year, the first such payment to be made on
the date hereof. Such remuneration shall accrue from day to day and be payable (in priority
to payments to the Bondholders) up to and including the date when, all the Bonds having become
due for redemption, the redemption moneys and interest thereon to the date of redemption have
been paid to the Principal Paying Agent or, as the case may be, the Trustee PROVIDED THAT
if upon due presentation of any Bond (if required) or any cheque payment of the moneys due
in respect thereof is improperly withheld or refused, remuneration will commence again to
accrue.
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15.2
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In the event of the occurrence of an Event of Default or a Potential Event
of Default the Issuer and the Guarantors hereby agree that the Trustee shall be entitled to be paid additional remuneration, which
may be calculated at its normal hourly rates in force from time to time (provided that such hourly rates are comparable to the
prevailing rates in the market at such time). In any other case, if the Trustee considers it expedient or necessary or is requested
by the Issuer or the Guarantors to undertake duties which the Trustee and the Issuer or, as the case may be, the relevant Guarantor
agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents the
Issuer, failing whom the Guarantors, shall pay to the Trustee such additional remuneration as shall be agreed between them (and
which may be calculated by reference to the Trustee's normal hourly rates in force from time to time provided that such hourly
rates are comparable to the prevailing rates in the market at such time).
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15.3
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The Issuer, failing whom the Guarantors shall in addition pay to the Trustee
an amount equal to the amount of any value added tax or similar tax chargeable thereon in respect of its remuneration under these
presents.
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15.4
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In the event of the Trustee and the Issuer failing or, as the case may
be, the relevant Guarantor failing to agree:
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(a)
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(in a case to which subclause 15.1 above applies) upon the amount of the remuneration; or
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(b)
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(in a case to which subclause 15.2 above applies) upon whether such duties
shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents, or upon
such additional remuneration,
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such matters shall be
determined by a person (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing
such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society of England
and Wales (the expenses involved in such nomination and the fees of such person being payable by the Issuer) and the determination
of any such person shall be final and binding upon the Trustee and the Issuer.
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15.5
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Without prejudice to the right of indemnity by law given to trustees, the
Issuer and each Guarantor shall severally indemnify the Trustee and every Appointee and keep it or him indemnified against all
Liabilities to which it or he may be or become subject or which may be incurred by it or him in the preparation and execution or
purported execution of any of its or his trusts, powers, authorities and discretions under these presents or its or his functions
under any such appointment or in respect of any other matter or thing done or omitted in any way relating to these presents or
any such appointment (including all Liabilities incurred in disputing or defending any of the foregoing).
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15.6
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The Issuer, failing whom the Guarantors, shall also pay or discharge all
Liabilities incurred by the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance
of its duties under, and in any other manner relating to, these presents, including but not limited to travelling expenses and
any stamp, issue, registration, documentary and other taxes or duties paid or payable
by the Trustee in connection with any action taken or contemplated by or on behalf of the Trustee for enforcing these presents.
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15.7
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Where any amount which would otherwise be payable by the Issuer or the Guarantors
under subclause 15.5 or subclause 15.6 has instead been paid by any person or persons other than the Issuer or the Guarantors (each,
an Indemnifying Party), the Issuer or the Guarantors, as the case may be, shall pay to the Trustee an equal amount for the
purpose of enabling the Trustee to reimburse the Indemnifying Parties.
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15.8
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All amounts payable pursuant to subclause 15.5 and 15.6 above shall be
payable by the Issuer on the date specified in a demand by the Trustee and in the case of payments actually made by the Trustee
prior to such demand shall carry interest at a rate equal to the Trustee’s cost of borrowing from the date such demand is
made, and in all other cases shall (if not paid within 30 days after the date of such demand or, if such demand specifies that
payment is to be made on an earlier date, on such earlier date) carry interest at such rate from such thirtieth day of such other
date specified in such demand. All remuneration payable to the Trustee shall carry interest at such rate from the due date therefor.
A certificate from the Trustee as to the Trustee’s cost of borrowing on any particular date or during any particular period
shall be conclusive and binding on the Issuer and the Guarantors.
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15.9
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The Issuer hereby further undertakes to the Trustee that all monies payable
by the Issuer, failing which the Guarantors, to the Trustee under this clause shall be made without set-off, counterclaim, deduction
or withholding unless compelled by law in which event the Issuer, failing which the Guarantors, will pay such additional amounts
as will result in the receipt by the Trustee of the amounts which would otherwise have been payable by the Issuer, failing which
the Guarantors to the Trustee under this clause in the absence of any such set-off, counterclaim, deduction or withholding.
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15.10
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Unless otherwise specifically stated in any discharge of these presents
the provisions of this clause 15 shall continue in full force and effect notwithstanding such discharge.
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16.
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SUPPLEMENT TO TRUSTEE ACTS
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Section 1 of the Trustee
Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents. Where there are
any inconsistencies between the Trustee Acts and the provisions of these presents, the provisions of these presents shall, to the
extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of these presents
shall constitute a restriction or exclusion for the purposes of that Act. The Trustee shall have all the powers conferred upon
trustees by the Trustee Acts and by way of supplement thereto it is expressly declared as follows:
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(a)
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The Trustee may in relation to these presents act on the advice or opinion
of or any information (whether addressed to the Trustee or not) obtained from any lawyer, valuer, accountant, surveyor, banker,
broker, auctioneer or other expert whether obtained by the Issuer, any Guarantor, the Trustee or otherwise and shall not be responsible
for any Liability occasioned by so acting.
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(b)
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Any such advice, opinion or information may be sent or obtained by letter,
telex, telegram, facsimile transmission, electronic mail or cable and the Trustee shall not be liable for acting on any advice,
opinion or information purporting to be conveyed by any such letter, telegram, facsimile transmission, electronic mail or cable
although the same shall contain some error or shall not be authentic.
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(c)
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The Trustee may call for and shall be at liberty to accept as sufficient
evidence of any fact or matter or the expediency of any transaction or thing a certificate signed by any two Directors of the Issuer
and/or by any two Directors of any Guarantor or, in the case of BCL, either two Directors of BCL or a
Director and the secretary of BCL and the Trustee shall not be bound in any such case to call for further evidence or be responsible
for any Liability that may be occasioned by it or any other person acting on such certificate.
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(d)
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The Trustee shall be at liberty to hold these presents and any other documents
relating thereto or to deposit them in any part of the world with any banker or banking company or company whose business includes
undertaking the safe custody of documents or lawyer or firm of lawyers considered by the Trustee to be of good repute and the Trustee
shall not be responsible for or required to insure against any Liability incurred in connection with any such holding or deposit
and may pay all sums required to be paid on account of or in respect of any such deposit.
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(e)
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The Trustee shall not be responsible for the receipt or application of
the proceeds of the issue of any of the Bonds by the Issuer, the exchange of the Global Certificate for Definitive Certificates
or the delivery of the Global Certificate or Definitive Certificates to the person(s) entitled to it or them.
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(f)
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The Trustee shall not be bound to give notice to any person of the execution
of any documents comprised or referred to in these presents or to take any steps to ascertain whether any Event of Default or Potential
Event of Default has happened and, until it shall have actual knowledge or express notice pursuant to these presents to the contrary,
the Trustee shall be entitled to assume that no Event of Default or Potential Event of Default has happened and that the Issuer
and each Guarantor is observing and performing all its obligations under these presents.
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(g)
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Save as expressly otherwise provided in these presents, the Trustee shall
have absolute and uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions
under these presents (the exercise or non-exercise of which as between the Trustee and the Bondholders shall be conclusive and
binding on the Bondholders) and shall not be responsible for any Liability which may result from their exercise or non-exercise
and in particular the Trustee shall not be bound to act at the request or direction of the Bondholders or otherwise under any provision
of these presents or to take at such request or direction or otherwise any other action under any provision of these presents,
without prejudice to the generality of subclause 9.1, unless it shall first be indemnified and/or secured and/or pre-funded to
its satisfaction against all Liabilities to which it may render itself liable or which it may incur by so doing and the Trustee
shall incur no liability for refraining to act in such circumstances.
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(h)
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The Trustee shall not be liable to any person by reason of having acted
upon any Extraordinary Resolution in writing or any Extraordinary Resolution purporting to have been passed at any meeting of Bondholders
in respect whereof minutes have been made and signed or any Extraordinary Resolution passed by way of electronic consents received
through the relevant Clearing System(s) in accordance with these presents or any direction or request of Bondholders even though
subsequent to its acting it may be found that there was some defect in the constitution of the meeting or the passing of the resolution
or (in the case of an Extraordinary Resolution in writing or a direction or a request) it was not signed by the requisite number
of Bondholders or (in the case of an Extraordinary Resolution passed by electronic consents received through the relevant Clearing
System(s)) it was not approved by the requisite number of Bondholders or that for any reason the resolution, direction or request
was not valid or binding upon such Bondholders.
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(i)
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The Trustee shall not be liable to any person by reason of having accepted
as valid or not having rejected any Bond purporting to be such and subsequently found to be forged or not authentic.
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(j)
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Any consent or approval given by the Trustee for the purposes of these presents
may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the
contrary in these presents may be given retrospectively. The Trustee may give any consent or approval, exercise any power, authority
or discretion or take any similar action (whether or not such consent, approval, power, authority, discretion or action is specifically
referred to in these presents) if it is satisfied that the interests of the Bondholders will not be materially prejudiced thereby.
For the avoidance of doubt, the Trustee shall not have any duty to the Bondholders in relation to such matters other than that
which is contained in the preceding sentence.
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(k)
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The Trustee shall not (unless and to the extent ordered so to do by a court
of competent jurisdiction) be required to disclose to any Bondholder any information (including, without limitation, information
of a confidential, financial or price sensitive nature) made available to the Trustee by the Issuer or the Guarantors or any other
person in connection with these presents and no Bondholder shall be entitled to take any action to obtain from the Trustee any
such information.
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(l)
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Where it is necessary or desirable for any purpose in connection with these
presents to convert any sum from one currency to another it shall (unless otherwise provided by these presents or required by law)
be converted at such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange,
as may be agreed by the Trustee in consultation with the Issuer or the Guarantor as relevant and any rate, method and date so agreed
shall be binding on the Issuer, the Guarantors, and the Bondholders.
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(m)
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The Trustee may certify that any of the conditions, events and acts set out in subparagraphs
(b) to (d) inclusive (other than the winding up or dissolution of the Issuer, any Guarantor or any of the Material
Subsidiaries), (e) to (g) inclusive and (k) and (l) of Condition 11.1 (Events of Default) (each of which conditions,
events and acts shall, unless in any case the Trustee in its absolute discretion shall otherwise determine, for all the
purposes of these presents be deemed to include the circumstances resulting therein and the consequences resulting therefrom)
is in its opinion materially prejudicial to the interests of the Bondholders and any such certificate shall be conclusive and
binding upon the Issuer, the Guarantors, and the Bondholders.
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(n)
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The Trustee as between itself and the Bondholders may determine all questions
and doubts arising in relation to any of the provisions of these presents. Every such determination, whether or not relating in
whole or in part to the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Bondholders.
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(o)
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In connection with the exercise by it of any of its trusts, powers, authorities
and discretions under these presents (including, without limitation, any modification, waiver, authorisation, determination or
substitution), the Trustee shall have regard to the general interests of the Bondholders as a class and shall not have regard to
any interests arising from circumstances particular to individual Bondholders (whatever their number) and, in particular but without
limitation, shall not have regard to the consequences of any such exercise for individual Bondholders (whatever their number) resulting
from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any
particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Bondholder
be entitled to claim, from the Issuer, the Guarantors, the Trustee or any other person any indemnification or payment in respect
of any tax consequence of any such exercise upon individual Bondholders except to the extent already provided for in Condition
9 (Taxation) and/or any undertaking given in addition thereto or in substitution therefor under these presents.
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(p)
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Any trustee of these presents being a lawyer, accountant, broker or other
person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for
business transacted and acts done by him or his firm in connection with the trusts of these presents and also his proper charges
in addition to disbursements for all other work and business done and all time spent by him or his firm in connection with matters
arising in connection with these presents.
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(q)
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The Trustee may whenever it thinks fit delegate by power of attorney or
otherwise to any person or persons or fluctuating body of persons (whether being a joint trustee of these presents or not) all
or any of its trusts, powers, authorities and discretions under these presents. Such delegation may be made upon such terms (including
power to sub-delegate) and subject to such conditions and regulations as the Trustee may in the interests of the Bondholders think
fit. The Trustee shall not be under any obligation to supervise the proceedings or acts of any such delegate or sub-delegate or
be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such delegate or
sub-delegate. The Trustee shall within a reasonable time after any such delegation or any renewal, extension or termination thereof
give notice thereof to the Issuer.
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(r)
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The Trustee may in the conduct of the trusts of these presents instead of
acting personally employ and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur
in transacting or conducting, any business and to do, or concur in doing, all acts required to be done in connection with these
presents (including the receipt and payment of money). The Trustee shall not be in any way responsible for any Liability incurred
by reason of any misconduct or default on the part of any such agent or be bound to supervise the proceedings or acts of any such
agent.
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(s)
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The Trustee may appoint and pay any person to act as a custodian or nominee
on any terms in relation to such assets of the trusts constituted by these presents as the Trustee may determine, including for
the purpose of depositing with a custodian these presents or any document relating to the trusts constituted by these presents
and the Trustee shall not be responsible for any Liability incurred by reason of the misconduct, omission or default on the part
of any person appointed by it hereunder or be bound to supervise the proceedings or acts of such person; the Trustee is not obliged
to appoint a custodian if the Trustee invests in securities payable to bearer.
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(t)
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The Trustee shall not be responsible for the execution, delivery, legality,
effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of these presents or any
other document relating or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence,
consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance,
enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto.
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(u)
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The Trustee may call for and shall be entitled to rely on any record,
certificate or other document to be issued by Euroclear or Clearstream, Luxembourg as to the principal amount of Bonds
represented by the Global Certificate standing to the account of any person. Any such record, certificate or other document
shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such record, certificate or other
document may comprise any form of statement or print out of electronic records provided by the relevant clearing system
(including Euroclear’s EUCLID or Clearstream, Luxembourg's Creation Online system) in accordance with its usual
procedures and in which the holder of a particular principal amount of Bonds is clearly identified together with the amount
of such holding. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected
any such record, certificate or other document to such effect purporting to be issued by Euroclear or Clearstream,
Luxembourg and subsequently found to be forged or not authentic.
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(v)
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The Trustee shall not be responsible to any person for failing to request,
require or receive any legal opinion relating to the Bonds or for checking or commenting upon the content of any such legal opinion
and shall not be responsible for any Liability incurred thereby.
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(w)
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Subject to the requirements, if any, of the London Stock Exchange, any
corporation into which the Trustee shall be merged or with which it shall be consolidated or any company resulting from any such
merger or consolidation shall be a party hereto and shall be the Trustee under these presents without executing or filing any paper
or document or any further act on the part of the parties thereto.
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(x)
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The Trustee shall not be bound to take any action in connection with these
presents or any obligations arising pursuant thereto, including, without prejudice to the generality of the foregoing, forming
any opinion or employing any financial adviser, where it is not satisfied that it will be indemnified against all Liabilities which
may be incurred in connection with such action and may demand prior to taking any such action that there be paid to it in advance
such sums as it considers (without prejudice to any further demand) shall be sufficient so to indemnify it.
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(y)
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No provision of these presents shall require the Trustee to do anything
which may (i) be illegal or contrary to applicable law or regulation; or (ii) cause it to expend or risk its own funds or otherwise
incur any Liability in the performance of any of its duties or in the exercise of any of its rights, powers or discretions (including
obtaining any advice which it might otherwise have thought appropriate or desirable to obtain), if it shall believe that repayment
of such funds or adequate indemnity against such risk or Liability is not assured to it.
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(z)
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Unless notified to the contrary, the Trustee shall be entitled to assume
without enquiry (other than requesting a certificate pursuant to subclause 14(p)) that no Bonds are held by, for the benefit of,
or on behalf of, the Issuer, any Guarantor, any Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary
of any such holding company.
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(aa)
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The Trustee shall have no responsibility whatsoever to
the Issuer, the Guarantors, any Bondholder or any other person for the maintenance of or failure to maintain any rating of any
of the Bonds by any rating agency.
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(bb)
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Any certificate, advice, opinion or report of the Auditors
or any other expert or professional adviser called for by or provided to the Trustee (whether or not addressed to the Trustee)
in accordance with or for the purposes of these presents may be relied upon by the Trustee as sufficient evidence of the facts
stated therein notwithstanding that such certificate, advice, opinion or report and/or any engagement letter or other document
entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the Auditors or such
other expert or professional adviser in respect thereof and notwithstanding that the scope and/or basis of such certificate, advice,
opinion or report may be limited by any engagement or similar letter or by the terms of the certificate, advice, opinion or report
itself.
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(cc)
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The Trustee shall not be responsible for, or for investigating
any matter which is the subject of, any recital, statement, representation, warranty or covenant of any person contained in these
presents, or any other agreement or document relating to the transactions contemplated in these presents or under such other agreement
or document.
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(dd)
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The Trustee shall not be liable or responsible for any
Liabilities or inconvenience which may result from anything done or omitted to be done by it in accordance with the provisions
of these presents.
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(ee)
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The Trustee shall not incur any liability to the Issuer,
Bondholders or any other person in connection with any approval given by it pursuant to Clause 14(n) to any notice to be given
to Bondholders by the Issuer; the Trustee shall not be deemed to have represented, warranted, verified or confirmed that the contents
of any such notice are true, accurate or complete in any respects or that it may be lawfully issued or received in any jurisdiction.
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(ff)
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When determining whether an indemnity or any security
or pre-funding is satisfactory to it, the Trustee shall be entitled to evaluate its risk in any given circumstance by considering
the worst-case scenario and, for this purpose, it may take into account, without limitation, the potential costs of defending
or commencing proceedings in England or elsewhere and the risk, however remote, of any award of damages against it in England
or elsewhere.
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(gg)
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The Trustee shall be entitled to require that any indemnity
or security given to it by the Bondholders or any of them be given on a joint and several basis and be supported by evidence satisfactory
to it as to the financial standing and creditworthiness of each counterparty and/or as to the value of the security and an opinion
as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security.
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(hh)
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The Trustee shall not be responsible for monitoring whether
any notices to Bondholders are given in compliance with the requirements of the London Stock Exchange or with any other legal
or regulatory requirements.
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(ii)
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The Trustee shall be entitled to deduct FATCA Withholding
Tax, and shall have no obligation to gross-up any payment hereunder or to pay any additional amount as a result of such FATCA
Withholding Tax.
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(jj)
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Notwithstanding anything in these presents to the contrary,
the Trustee shall not do, or be authorised or required to do, anything which might constitute a regulated activity for the purpose
of the FSMA, unless it is authorised under the FSMA to do so. The Trustee shall have the discretion at any time (i) to delegate
any of the functions which fall to be performed by an authorised person under the FSMA to any agent or person which has the necessary
authorisations and licences and (ii) to apply for authorisation under the FSMA and perform any or all such functions itself if,
in its absolute discretion, it considers it necessary, desirable or appropriate to do so.
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17.1
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Nothing in these presents shall exempt the Trustee from or indemnify it
against any liability which by virtue of any rule of law would otherwise attach to it in respect of any gross negligence, wilful
default or fraud of which it may be guilty in relation to its duties under these presents where the Trustee has failed to show
the degree of care and diligence required of it as trustee having regard to the provisions of these presents conferring on it any
trusts, powers, authorities or discretions.
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17.2
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Notwithstanding any provision of these presents to the contrary, the Trustee
shall not in any event be liable for:
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(a)
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loss of profit, loss of business, loss of goodwill, loss of opportunity,
whether direct or indirect; and
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(b)
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special, indirect, punitive or consequential loss or damage of any kind whatsoever, whether or not foreseeable,
whether or not the Trustee can reasonably be regarded as having assumed responsibility at the time this Trust Deed is entered into,
even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss or damage is made in respect
of fraud on the part of the Trustee.
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18.
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TRUSTEE CONTRACTING WITH THE ISSUER AND THE GUARANTORS
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Neither the Trustee nor
any director or officer or holding company, Subsidiary or associated company of a corporation acting as a trustee under these presents
shall by reason of its or his fiduciary position be in any way precluded from:
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(a)
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entering into or being interested in any contract or financial or other
transaction or arrangement with the Issuer or any Guarantor or any person or body corporate associated with the Issuer or any Guarantor
(including without limitation any contract, transaction or arrangement of a banking or insurance nature or any contract, transaction
or arrangement in relation to the making of loans or the provision of financial facilities or financial advice to, or the purchase,
placing or underwriting of or the subscribing or procuring subscriptions for or otherwise acquiring, holding or dealing with, or
acting as paying agent in respect of, the Bonds or any other bonds, notes stocks, shares, debenture stock, debentures or other
securities of, the Issuer or any Guarantor or any person or body corporate associated as aforesaid); or
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(b)
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accepting or holding the trusteeship of any other trust deed constituting or securing any other securities issued
by or relating to the Issuer or any Guarantor or any such person or body corporate so associated or any other office of
profit under the Issuer or any Guarantor or any such person or body corporate so associated,
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and shall be entitled to
exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such
contract, transaction or arrangement as is referred to in (a) above or, as the case may be, any such trusteeship or office of
profit as is referred to in (b) above without regard to the interests of the Bondholders and notwithstanding that the same
may be contrary or prejudicial to the interests of the Bondholders and shall not be responsible for any Liability occasioned
to the Bondholders thereby and shall be entitled to retain and shall not be in any way liable to account for any profit made
or share of brokerage or commission or remuneration or other amount or benefit received thereby or in connection
therewith.
Where any holding company,
subsidiary or associated company of the Trustee or any director or officer of the Trustee acting other than in his capacity as
such a director or officer has any information, the Trustee shall not thereby be deemed also to have knowledge of such information
and, unless it shall have actual knowledge of such information, shall not be responsible for any loss suffered by Bondholders resulting
from the Trustee's failing to take such information into account in acting or refraining from acting under or in relation to these
presents.
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19.
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WAIVER, AUTHORISATION AND DETERMINATION
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19.1
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The Trustee may without the consent or sanction of the Bondholders and
without prejudice to its rights in respect of any subsequent breach, Event of Default or Potential Event of Default from time to
time and at any time but only if and in so far as in its opinion the interests of the Bondholders shall not be materially prejudiced
thereby waive or authorise any breach or proposed breach by the Issuer or any Guarantor of any of the covenants or provisions contained
in these presents or the Agency Agreement or determine that any Event of Default or Potential Event of Default shall not be treated
as such for the purposes of these presents PROVIDED ALWAYS THAT the Trustee shall not exercise any powers conferred on it by this
clause in contravention of any express direction given by Extraordinary Resolution or by a request under Condition 12 (Enforcement)
but so that no such direction or request
shall affect any waiver, authorisation or determination previously given or made. Any such waiver, authorisation or determination
may be given or made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding on the
Bondholders and, if, but only if, the Trustee shall so require, shall be notified by the Issuer to the Bondholders in accordance
with Condition 14 (Notices) as soon as practicable thereafter.
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MODIFICATION
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19.2
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The Trustee may without the consent or sanction of the Bondholders at any
time and from time to time concur with the Issuer and the Guarantors in making any modification (i) to these presents or the Agency
Agreement (including, without limitation, any Basic Terms Modification) which in the opinion of the Trustee it may be proper to
make PROVIDED THAT the Trustee is of the opinion that such modification is not materially prejudicial to the interests of the Bondholders
or (ii) to these presents or the Agency Agreement if in the opinion of the Trustee such modification is of a formal, minor or technical
nature or to correct a manifest error or an error which is, in the opinion of the Trustee, proven. Any such modification may be
made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding upon the Bondholders
and, unless the Trustee agrees otherwise, shall be notified by the Issuer to the Bondholders in accordance with Condition 14 (Notices)
as soon as practicable thereafter.
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BREACH
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19.3
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Any breach of or failure to comply with any such terms and conditions as
are referred to in subclauses 19.1 and 19.2 shall constitute a default by the Issuer or the relevant Guarantor (as the case may
be) in the performance or observance of a covenant or provision binding on it under or pursuant to these presents.
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20.
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ENTITLEMENT TO TREAT HOLDER AS ABSOLUTE OWNER
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The Issuer, the Guarantors,
the Trustee, the Paying Agents, the Registrar and the Transfer Agents may (to the fullest extent permitted by applicable laws)
deem and treat the holder of any Bond or of a particular principal amount of the Bonds as the absolute owner of such Bond or principal
amount for all purposes (whether or not such Bond or principal amount shall be overdue and notwithstanding any notice of ownership
thereof or of trust or other interest with regard thereto, any notice of loss or theft thereof or any writing thereon), and the
Issuer, the Guarantors, the Trustee, the Paying Agents, the Registrar and the Transfer Agents shall not be affected by any notice
to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective to satisfy
and discharge the liability for the moneys payable in respect of such Bond or principal amount.
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21.1
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(a)
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The Trustee may without the consent of the Bondholders at any time
agree with the Issuer and the Guarantors to the substitution in place of the Issuer (or of the previous substitute under this clause)
as the principal debtor under these presents of BCL or any of its other Subsidiaries (such substituted company being hereinafter
called the New Company) provided that a trust deed is executed or some other form of undertaking is given by the New Company
in form and manner satisfactory to the Trustee, agreeing to be bound by the provisions of these presents with any consequential
amendments which the Trustee may deem appropriate as fully as if the New Company had been named in these presents as the principal
debtor in place of the Issuer (or of the previous substitute under the clause) and provided further that each Guarantor (other
than a Guarantor substituted in place of the Issuer) continues to unconditionally and irrevocably guarantee all amounts payable
under these presents to the satisfaction of the Trustee.
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(b)
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The following further conditions shall apply to (a) above:
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(i)
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the Issuer, each Guarantor and the New Company shall comply with such other
requirements as the Trustee may direct in the interests of the Bondholders;
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(ii)
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without prejudice to the rights of reliance of the Trustee under the immediately
following paragraph (iii), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests
of the Bondholders; and
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(iii)
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if two Directors of the New Company (or other officers acceptable to the
Trustee) shall certify that the New Company is solvent both at the time at which the relevant transaction is proposed to be effected
and immediately thereafter (which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to
have regard to the financial condition, profits or prospects of the New Company or to compare the same with those of the Issuer
or the previous substitute under this clause as applicable.
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21.2
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Any such trust deed or undertaking shall, if so expressed, operate to release
the Issuer or the previous substitute as aforesaid from all of its obligations as principal debtor under these presents. Not later
than 14 days after the execution of such documents and compliance with such requirements, the New Company shall give notice thereof
in a form previously approved by the Trustee to the Bondholders in the manner provided in Condition 14 (Notices). Upon the
execution of such documents and compliance with such requirements, the New Company shall be deemed to be named in these presents
as the principal debtor in place of the Issuer (or in place of the previous substitute under this clause) under these presents
and these presents shall be deemed to be modified in such manner as shall be necessary to give effect to the above provisions and,
without limitation, references in these presents to the Issuer shall, unless the context otherwise requires, be deemed to be or
include references to the New Company.
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Each of the Issuer and
each of the Guarantors shall severally indemnify the Trustee, every Appointee and the Bondholders and keep them indemnified against:
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(a)
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any Liability incurred by any of them arising from the non-payment by the
Issuer or the Guarantors of any amount due to the Trustee or the Bondholders under these presents by reason of any variation in
the rates of exchange between those used for the purposes of calculating the amount due under a judgment or order in respect thereof
and those prevailing at the date of actual payment by the Issuer or the Guarantors; and
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(b)
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any deficiency arising or resulting from any variation in rates of exchange
between (i) the date as of which the local currency equivalent of the amounts due or contingently due under these presents (other
than this clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer or any Guarantor and
(ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency
shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any
distribution of assets in connection with any such bankruptcy, insolvency or liquidation.
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The above
indemnities shall constitute obligations of the Issuer and the Guarantors separate and independent from their obligations
under the other provisions of these presents and shall apply irrespective of any indulgence granted by the Trustee or the
Bondholders from time to time and shall continue in full force and effect notwithstanding the judgment or filing of any proof
or proofs in any bankruptcy, insolvency or liquidation of the Issuer or the Guarantors for a liquidated sum or sums in
respect of amounts due under these presents (other than this clause). Any such deficiency as aforesaid shall be deemed to
constitute a loss suffered by the Bondholders and no proof or evidence of any actual loss shall be required by the Issuer or
the Guarantors or their liquidator or liquidators.
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23.1
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The power to appoint a new trustee of these presents shall, subject as
hereinafter provided, be vested in the Issuer but no person shall be appointed who shall not previously have been approved by an
Extraordinary Resolution. One or more persons may hold office as trustee or trustees of these presents but such trustee or trustees
shall be or include a Trust Corporation. Whenever there shall be more than two trustees of these presents the majority of such
trustees shall be competent to execute and exercise all the duties, powers, trusts, authorities and discretions vested in the Trustee
by these presents provided that a Trust Corporation shall be included in such majority. Any appointment of a new trustee of these
presents shall as soon as practicable thereafter be notified by the Issuer to the Principal Paying Agent, the Registrar, the Transfer
Agents and the Bondholders.
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SEPARATE AND CO-TRUSTEES
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23.2
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Notwithstanding the provisions of subclause 23.1 above, the Trustee may,
upon giving prior notice to the Issuer and the Guarantors (but without the consent of the Issuer, the Guarantors or the Bondholders),
appoint any person established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate
trustee or as a co-trustee jointly with the Trustee:
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(a)
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if the Trustee considers such appointment to be in the interests of the Bondholders;
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(b)
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for the purposes of conforming to any legal requirements, restrictions
or conditions in any jurisdiction in which any particular act or acts is or are to be performed; or
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(c)
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for the purposes of obtaining a judgment in any jurisdiction or the enforcement
in any jurisdiction of either a judgment already obtained or any of the provisions of these presents against the Issuer and/or
any Guarantor.
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The Issuer and each of
the Guarantors irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument
of appointment. Such a person shall (subject always to the provisions of these presents) have such trusts, powers, authorities
and discretions (not exceeding those conferred on the Trustee by these presents) and such duties and obligations as shall be conferred
or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any such person. Such reasonable
remuneration as the Trustee may pay to any such person, together with any attributable Liabilities incurred by it in performing
its function as such separate trustee or co-trustee, shall for the purposes of these presents be treated as Liabilities incurred
by the Trustee.
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24.
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TRUSTEE'S RETIREMENT AND REMOVAL
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A trustee of these
presents may retire at any time on giving not less than 90 days' prior written notice to the Issuer and the Guarantors
without giving any reason and without being responsible for any Liabilities incurred by reason of such retirement. The
Bondholders may by Extraordinary Resolution remove any trustee or trustees for the time being of these presents. The Issuer
and each Guarantor undertake that in the event of the only trustee of these presents which is a Trust Corporation (for the
avoidance of doubt, disregarding for this purpose any separate or co-trustee appointed under subclause 23.2) giving notice
under this clause or being removed by Extraordinary Resolution they will use their best endeavours to procure that a new
trustee of these presents being a Trust Corporation is appointed as soon as reasonably practicable thereafter. The retirement
or removal of any such trustee shall not become effective until a successor trustee being a Trust Corporation is appointed.
If, in such circumstances, no appointment of such a new trustee has become effective within 60 days of the date of such
notice or Extraordinary Resolution, the Trustee shall be entitled to appoint a Trust Corporation as trustee of these
presents, but no such appointment shall take effect unless previously approved by an Extraordinary Resolution.
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25.
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TRUSTEE'S POWERS TO BE ADDITIONAL
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The powers conferred upon
the Trustee by these presents shall be in addition to any powers which may from time to time be vested in the Trustee by the general
law or as a holder of any of the Bonds.
Any notice or demand
to the Issuer, BCL or the Trustee to be given, made or served for any purposes under these presents shall be given, made or served
by sending the same by pre-paid post (first class if inland, first class airmail if overseas) or facsimile transmission or by delivering
it by hand as follows:
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to the Issuer:
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Burford Capital PLC
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24 Cornhill
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London EC3V 3ND
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(Attention: Leslie Paster)
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Facsimile No. 020 70609977
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to BCL:
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Burford Capital Limited
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Regency Court
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Glategny Esplanade
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St Peter Port
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GY1 1WW
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(Attention: Mark Woodall)
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Facsimile No. (0)1481716868
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to the Trustee:
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U.S. Bank Trustees Limited
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125 Old Broad Street
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Fifth Floor
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London
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EC2N 1AR
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(Attention: Structured Finance Relationship Management)
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Facsimile No. +44 (0)20 7354 2577
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or to such other
address or facsimile number as shall have been notified (in accordance with this clause) to the other parties hereto and any
notice or demand sent by post as aforesaid shall be deemed to have been given, made or served two days in the case of inland
post or seven days in the case of overseas post after despatch and any notice or demand sent by facsimile transmission as
aforesaid shall be deemed to have been given, made or served at the time of despatch provided that in the case of a notice or
demand given by facsimile transmission a confirmation of transmission is received by the sending party and such notice or
demand shall forthwith be confirmed by post. The failure of the addressee to receive such confirmation shall not invalidate
the relevant notice or demand given by facsimile transmission.
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27.
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CONFIDENTIALITY UNDERTAKING
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27.1
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The Trustee undertakes that it, and each of its directors, officers and affiliates, will:
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(a)
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keep the Confidential Information confidential and not disclose it to any
person except as permitted under sub-clause 27.2 below or with the written consent of the Issuer; and
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(b)
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use the Confidential Information solely to perform its role of Trustee pursuant
to the provisions of these presents upon and subject to the terms and conditions of these presents.
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27.2
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The Trustee may disclose Confidential Information only in the following
circumstances and only if and to the extent that the Trustee reasonably determines that: (i) it is both relevant and necessary
to do so in the relevant circumstances and (ii) in the case of (d) and (f) below (and in the case of (e) below, to the extent it
relates to disclosure to the Bondholders), it is necessary for Bondholders to be aware of such Confidential Information when considering
any matter, making any relevant decision or when determining to give any relevant directions to the Trustee:
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(a)
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to its professional advisers or auditors, or to any separate or co-trustee
or Appointee, provided that the recipient is subject to professional obligations to maintain the confidentiality of the Confidential
Information or is otherwise bound by requirements of confidentiality (in mutatis mutandis the same form as this Clause 27)
in relation to the Confidential Information;
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(b)
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to comply with any court order or applicable law or regulation;
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(c)
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to defend itself (in legal proceedings or otherwise) against any allegations
of negligence, default or misconduct (howsoever described) where failure by the Trustee to disclose the Confidential Information
would otherwise materially prejudice the Trustee’s defence;
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(d)
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for the purpose of investigating the occurrence of any Event of Default
or Potential Event of Default (where it knows, or has reasonable grounds to suspect, that such an event has occurred);
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(e)
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for the purpose of enforcing any of its rights or the rights of the Bondholders
under these presents and/or the Bonds against the Issuer and/or any Guarantor (including, without limitation, in any court proceedings);
or
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(f)
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to enable it to seek directions from the Bondholders, in circumstances
where it determines that such directions are necessary or desirable.
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27.3
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To the extent permitted by applicable law, the Trustee agrees to inform
the Issuer of each disclosure of Confidential Information pursuant to paragraphs (b) to (f) of sub-clause 27.2 above as soon as
reasonably practicable after making its decision to disclose or upon becoming aware that Confidential Information has been disclosed
in breach of Clause 27.1.
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27.4
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The obligations in this Clause 27 are continuing and shall remain in full
force and effect notwithstanding redemption of the Bonds or termination of these presents.
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These presents and any
non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance with,
English law.
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29.
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SUBMISSION TO JURISDICTION
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29.1
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Each of the Guarantors irrevocably agrees for the benefit of the Trustee
and the Bondholders that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of
or in connection with these presents and accordingly submit to the exclusive jurisdiction of the English courts. Each of the Guarantors
waives any objection to the courts of England on the grounds that they are an inconvenient or inappropriate forum. To the extent
permitted by law, the Trustee and the Bondholders may take any suit, action or proceeding arising out of or in connection with
these presents (together referred to as Proceedings) against the Guarantors in any other court of competent jurisdiction
and concurrent Proceedings in any number of jurisdictions.
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29.2
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BCL irrevocably and unconditionally appoints the Issuer at its registered
office for the time being as its agent for service of process in England in respect of any Proceedings and undertakes that in the
event of it ceasing so to act it will appoint such other person as the Trustee may approve as its agent for that purpose. BCL:
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(a)
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agrees to procure that, so long as any of the Bonds remains liable to prescription,
there shall be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept
service as aforesaid;
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(b)
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agrees that failure by any such person to give notice of such service of
process to BCL shall not impair the validity of such service or of any judgment based thereon;
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(c)
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consents to the service of process in respect of any Proceedings by the
airmailing of copies, postage prepaid, to BCL in accordance with clause 26; and
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(d)
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agrees that nothing in these presents shall affect the right to serve process
in any other manner permitted by law.
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This Trust Deed and any
trust deed supplemental hereto may be executed and delivered in any number of counterparts, all of which, taken together, shall
constitute one and the same deed and any party to this Trust Deed or any trust deed supplemental hereto may enter into the same
by executing and delivering a counterpart.
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31.
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CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
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A person who is not a
party to these presents has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these presents,
but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
IN WITNESS whereof this Trust Deed has been
executed as a deed by the Issuer, BCL and the Trustee and delivered on the date first stated on page 1.
SCHEDULE 1
FORM OF GLOBAL CERTIFICATE
[THIS GLOBAL CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS AND
THE ISSUER HAS NOT BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(THE 1940 ACT). NEITHER THIS GLOBAL CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND UNDER CIRCUMSTANCES WHICH DO NOT REQUIRE THE ISSUER TO REGISTER UNDER THE 1940 ACT.]
ISIN: XS1614096425
BURFORD CAPITAL PLC
(Incorporated with limited
liability under the laws of England and Wales with registered number 09077893)
GLOBAL CERTIFICATE
representing
£175,000,000
5.0 PER CENT. GUARANTEED
BONDS DUE 2026
unconditionally and
irrevocably guaranteed
as to payment of principal and interest by
BURFORD CAPITAL LIMITED
(Incorporated with limited
liability under the laws of Guernsey with registered number 50877)
and any Subsidiary of Burford
Capital Limited which becomes a Guarantor from time to time
Burford Capital PLC (the
Issuer) hereby certifies that USB Nominees (UK) Limited is, at the date hereof, entered in the Register as the holder of
the aggregate principal amount of £175,000,000 of a duly authorised issue of Bonds (the Bonds) described above of
the Issuer. References herein to the Conditions (or to any particular numbered Condition) shall be to the Conditions (or that particular
one of them) set out in Schedule 2 to the Trust Deed referred to below. Words and expressions defined in the Conditions shall bear
the same meanings when used in this Global Certificate. This Global Certificate is issued subject to, and with the benefit of,
the Conditions and a Trust Deed dated 1 June 2017 and made between the Issuer and U.S. Bank Trustees Limited (the Trustee)
as trustee for the Bondholders.
The Issuer, subject to
and in accordance with the Conditions and the Trust Deed, promises to pay to the registered holder hereof on 1 December 2026
and/or on such earlier date(s) as all or any of the Bonds represented by this Global Certificate may become due and repayable
in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Bonds on
each such date and to pay interest (if any) on the principal amount of the Bonds outstanding from time to time represented by
this Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with any other sums
payable under the Conditions and the Trust Deed. At maturity, and prior to the payment of any amount due, the registered
holder hereof shall surrender this Global Certificate at the specified office of the Principal Paying Agent at 125 Old Broad
Street, London EC2N 1AR or such other office as may be specified by the Issuer and approved by the Trustee. On any redemption
or purchase and cancellation of any of the Bonds represented by this Global Certificate, details of such redemption or
purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in the Schedule hereto and the
relevant space in the Schedule hereto recording any such redemption or purchase and cancellation (as the case may be) shall
be signed by or on behalf of the Principal Paying Agent. Upon any such redemption or purchase and cancellation the principal
amount outstanding of this Global Certificate and the Bonds held by the registered holder hereof shall be reduced by the
principal amount of such Bonds so redeemed or purchased and cancelled. The principal amount outstanding of this Global
Certificate and of the Bonds held by the registered holder hereof following any such redemption or purchase and cancellation
as aforesaid or any exchange as referred to below shall be the outstanding principal amount most recently entered in the
fourth column in the Schedule hereto.
Bonds represented by this
Global Certificate are exchangeable and transferable only in accordance with, and subject to, the provisions hereof and the rules
and operating procedures of Euroclear Bank SA/NV (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg).
Upon the exchange of the
whole or a part of this Global Certificate for Definitive Certificates (only where Euroclear or Clearstream, Luxembourg notifies
the Issuer and the Guarantors that it is unwilling or unable to continue as a clearing system in connection with a Global Certificate,
and a successor clearing system approved by the Trustee is not appointed by the Issuer and the Guarantors within 90 days after
receiving such notice from Euroclear, Clearstream, Luxembourg), details of such exchange shall be entered by or on behalf of the
Issuer in the third column of the Schedule hereto and the relevant space in the Schedule hereto recording such exchange shall be
signed by or on behalf of the Principal Paying Agent, whereupon the outstanding principal amount of this Global Certificate and
the Bonds held by the registered holder hereof shall be increased or reduced (as the case may be) by the principal amount so exchanged.
Subject as provided in the
following paragraph, until the exchange of the whole of this Global Certificate as aforesaid, the registered holder hereof shall
in all respects be entitled to the same benefits as if he were the registered holder of Definitive Certificates in the form set
out in Part 1 of Schedule 2 to the Trust Deed.
Subject as provided in the
Trust Deed, each person who is for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg as entitled
to a particular principal amount of the Bonds represented by this Global Certificate (in which regard any certificate or other
document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Bonds standing to the account of any
person shall be conclusive and binding for all purposes save in the case of manifest error) shall be deemed to be the holder of
such principal amount of such Bonds for all purposes other than with respect to payments of principal and interest on the Bonds
for which purpose the registered holder of this Global Certificate shall be deemed to be the holder of such principal amount of
the Bonds in accordance with and subject to the terms of this Global Certificate and the Trust Deed. Whilst the Bonds are represented
by this Global Certificate payments will be made to the registered holder appearing on the Register at the close of the business
day (being for this purpose a day on which Euroclear and Clearstream, Luxembourg are open for business) preceding such due date.
For so long as all of the
Bonds are represented by this Global Certificate and this Global Certificate is held on behalf of Euroclear and/or Clearstream,
Luxembourg, notices to Bondholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg
(as the case may be) for communication to the relative accountholders rather than by publication as required by Condition 14 (Notices)
provided that, so long as the Bonds are admitted to the official list maintained by the Financial Conduct Authority in its capacity
as the UK Listing Authority (the UKLA) and admitted to trading on the London Stock Exchange plc's market for listed securities,
all requirements of the UKLA have been complied with. Any such notice shall be deemed to have been given to the Bondholders on
the second day after the day on which such notice is delivered to Euroclear and/or Clearstream, Luxembourg (as the case may be)
as aforesaid.
Whilst any Bonds held by
a Bondholder are represented by this Global Certificate, notices to be given by such Bondholder may be given by such Bondholder
to the Principal Paying Agent through Euroclear and/or Clearstream, Luxembourg, as the case may be, in such a manner as the Principal
Paying Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.
Claims against the Issuer
and the Guarantors in respect of principal and interest on the Bonds represented by this Global Certificate will be prescribed
after 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date (as defined in Condition
9 (Taxation)).
References herein to Euroclear
and/or Clearstream, Luxembourg shall be deemed to include references to any other clearing system approved by the Trustee.
No rights are conferred
on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Global Certificate but this does
not affect any right or remedy of any person which exists or is available apart from that Act.
This Global Certificate
and any non-contractual obligations arising out of or in connection with it is governed by, and shall be construed in accordance
with, English law.
This Global Certificate
shall not be valid unless authenticated by Elavon Financial Services DAC as Principal Paying Agent.
IN WITNESS whereof the Issuer has caused this Global
Certificate to be signed on its behalf.
BURFORD CAPITAL PLC
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By:
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(Duly authorised)
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Issued in London, England on 1 June 2017
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Certificate of authentication
This Global Certificate is duly authenticated
without recourse, warranty or liability.
Duly
authorised
for and on behalf of
Elavon Financial Services DAC
as Principal Paying Agent
SCHEDULE
Outstanding Principal Amount
The following (i) exchanges
of this Global Certificate for Definitive Certificates (only in the limited circumstances set forth in this Global Certificate),
(ii) payments of any redemption amount in respect of this Global Certificate and/or (iii) cancellations of interests in this Global
Certificate have been made, resulting in the principal amount outstanding hereof being the amount specified in the latest entry
in the fourth column:
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Date
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Amount of increase/ decrease in outstanding principal amount of this Global Certificate
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Reasons for increase/ decrease in outstanding principal
amount of this Global Certificate (initial issue, cancellation,
redemption or payment)
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Outstanding principal amount of this Global Certificate following such increase/ decrease
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Notation made by or on behalf of the Principal Paying Agent
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SCHEDULE 2
FORM OF DEFINITIVE CERTIFICATE
AND CONDITIONS OF THE BONDS
PART 1
FORM OF DEFINITIVE CERTIFICATE
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[£100]
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[ISIN: XS1614096425]
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[SERIES]
[SERIAL NO.]
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BURFORD CAPITAL PLC
(Incorporated with limited
liability under the laws of England and Wales with registered number 09077893)
£175,000,000
5.0 PER CENT.
GUARANTEED BONDS DUE 2026
unconditionally and
irrevocably guaranteed as to payment of principal and interest by
BURFORD CAPITAL LIMITED
(Incorporated with limited
liability under the laws of Guernsey with registered number 50877)
and any Subsidiary of Burford
Capital Limited which becomes a Guarantor from time to time
The issue of the Bonds
was authorised by a resolution of the Board of Directors of Burford Capital PLC (the Issuer) passed on 10 May 2017 and the
giving of the guarantee in respect of the Bonds was authorised by a resolution of the Board of Directors of Burford Capital Limited
(BCL) passed on 16 May 2017.
This Bond forms one of a
series of Bonds constituted by a Trust Deed (the Trust Deed) dated 1 June 2017 made between the Issuer, the Guarantor and
U.S. Bank Trustees Limited as trustee for the holders of the Bonds and issued as Registered Bonds in the denomination of £100
each, in an aggregate principal amount of £175,000,000.
THIS
IS TO CERTIFY that
is/are the registered holder(s) of one of the above-mentioned Registered Bonds, such Bond being in the denomination
of £100 (one hundred Pounds Sterling) and is/are entitled on the Interest Payment Date (as defined in Condition 6 (Interest)
endorsed hereon) falling on 1 December 2026 (or on such earlier date as the principal sum hereinafter mentioned may become repayable
in accordance with the Conditions endorsed hereon) to the repayment of such principal sum of:
£100 (one hundred Pounds
Sterling)
together with such other
amounts (if any) as may be payable, all subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
Interest at rates determined
in accordance with the said Conditions is payable on the said principal sum semi- annually in arrear on 1 June and 1 December in
each year, subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
IN WITNESS whereof this Registered Bond has
been executed on behalf of the Issuer.
BURFORD CAPITAL PLC
By:
Director
By:
Director
Dated as of [l]
Issued in London, England.
Certificate
of authentication
This Bond is duly authenticated
without recourse,
warranty or liability.
Duly
authorised
for and on behalf of
Elavon Financial Services DAC
as Registrar
FORM OF TRANSFER OF REGISTERED
BOND
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) to
(Please print or type name and address (including
postal code) of transferee)
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£100 principal amount of this Bond and all rights hereunder, hereby irrevocably constituting
and appointing
as attorney to transfer such principal amount of this Bond in the register maintained by BURFORD CAPITAL PLC with full
power of substitution.
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Date: [20 ]
N.B.:
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1.
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This form of transfer must be accompanied by such documents, evidence and
information as may be required pursuant to the Conditions and must be executed under the hand of the transferor or, if the transferor
is a corporation, either under its common seal or under the hand of two of its officers duly authorised in writing and, in such
latter case, the document so authorising such officers must be delivered with this form of transfer.
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2.
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The signature(s) on this form of transfer must correspond with the name(s)
as it/they appear(s) on the face of this Bond in every particular, without alteration or enlargement or any change whatever.
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PART 2
CONDITIONS
OF THE BONDS
The sterling denominated 5.0 per cent. Guaranteed
Bonds due 2026 (the “Bonds”, which expression shall in these Conditions, unless the context otherwise requires,
include any further bonds issued pursuant to Condition 18 and forming a single series with the Bonds of Burford Capital PLC (the
“Issuer”)) are constituted by a Trust Deed dated the Issue Date (the “Trust Deed”) made between
the Issuer, Burford Capital Limited (“BCL”) as guarantor and U.S. Bank Trustees Limited (the “Trustee”,
which expression shall include its successor(s)) as trustee for the holders of the Bonds (the “Bondholders”).
References in these Conditions to the “Guarantors” shall be references to BCL and each Subsidiary of BCL which
becomes a Guarantor pursuant to Condition 4.3 but shall not include any Subsidiary of BCL which has ceased to be a Guarantor pursuant
to Condition 4.4.
The statements in these Conditions include summaries
of, and are subject to, the detailed provisions of and definitions in the Trust Deed. Copies of the Trust Deed and the Agency Agreement
dated the Issue Date (the “Agency Agreement”) made between the Issuer, BCL, the Registrar, the initial Transfer
Agent, the initial Paying Agent and the Trustee are available for inspection during normal business hours by the Bondholders at
the registered office for the time being of the Trustee, being at the date of issue of the Bonds at 125 Old Broad Street, London
EC2N 1AR and at the specified office of each of the Paying Agents. The Bondholders are entitled to the benefit of, are bound by,
and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them.
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1.
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Form, Denomination and Title
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1.1
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Form and Denomination
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The Bonds are issued in
registered form in amounts of £100 (referred to as the “principal amount” of a Bond). A certificate (each
a “Certificate”) will be issued to each Bondholder in respect of its registered holding of Bonds. Each Certificate
will be numbered serially with an identifying number which will be recorded on the relevant Certificate and in the register of
Bondholders which the Issuer will procure to be kept by the Registrar.
Title to the Bonds passes
only by registration in the register of Bondholders. The holder of any Bond will (except as otherwise required by law) be treated
as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest
or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be liable for so treating
the holder. In these Conditions “Bondholder” and (in relation to a Bond) “holder” means the
person in whose name a Bond is registered in the register of Bondholders.
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2.
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Transfers of Bonds and Issue of Certificates
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A Bond may be transferred
by depositing the Certificate issued in respect of that Bond, with the form of transfer on the back duly completed and signed,
at the specified office of any Transfer Agent.
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2.2
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Delivery of new Certificates
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Each new Certificate to
be issued upon transfer of Bonds will, within five business days of receipt by the relevant Transfer Agent of the duly completed
form of transfer endorsed on the relevant Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Bond
to the address specified in the form of transfer. For the purposes of this Condition, “business day” shall mean
a day on which banks are open for business in the city in which the specified office of the Transfer Agent with whom a Certificate
is deposited in connection with a transfer is located.
Where some but not all
of the Bonds in respect of which a Certificate is issued are to be transferred a new Certificate in respect of the Bonds not so
transferred will, within five business days of receipt by the relevant Transfer Agent of the original Certificate, be mailed by
uninsured mail at the risk of the holder of the Bonds not so transferred to the address of such holder appearing on the register
of Bondholders or as specified in the form of transfer.
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2.3
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Formalities free of charge
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Registration of transfer
of Bonds will be effected without charge by or on behalf of the Issuer or any Transfer Agent but upon payment (or the giving of
such indemnity as the Issuer or the relevant Transfer Agent may reasonably require) in respect of any tax or other governmental
charges which may be imposed in relation to such transfer.
No Bondholder may require
the transfer of a Bond to be registered during the period of 15 days ending on the due date for any payment of principal, premium
or interest on that Bond.
All transfers of Bonds and
entries on the register of Bondholders will be made subject to the detailed regulations concerning transfer of Bonds scheduled
to the Trust Deed. The regulations may be changed by the Issuer with the prior written approval of the Transfer Agents and the
Trustee. A copy of the current regulations will be mailed (free of charge) by the Registrar to any Bondholder who requests one.
The Bonds are direct, unconditional
and (subject to the provisions of Condition 5.1) unsecured obligations of the Issuer and (subject as provided above) rank and will
rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated obligations
of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to
creditors’ rights.
The
payment of the principal and interest in respect of the Bonds and all other moneys payable by the Issuer under or pursuant to
the Trust Deed has been jointly and severally unconditionally and irrevocably guaranteed by BCL (such guarantee together with
any additional guarantees provided pursuant to Condition 4.3, the “Guarantee”) in the Trust Deed.
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4.2
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Status of the Guarantee
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The obligations of each
Guarantor under the Guarantee constitute direct, unconditional and (subject to the provisions of Condition 5.1) unsecured obligations
of such Guarantor and (subject as provided above) rank and will rank pari passu with all other outstanding unsecured and
unsubordinated obligations of such Guarantor, present and future, but, in the event of insolvency, only to the extent permitted
by applicable laws relating to creditors’ rights.
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4.3
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Addition of Subsidiary Guarantors
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Without prejudice to Condition
5, if any Subsidiary of BCL (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate (without duplication)
amounts to more than £2,000,000 (or its equivalent in any other currency), BCL covenants that it shall procure that such
Subsidiary shall as soon as reasonably practicable, but in any event no later than 60 days after the date on which it incurs such
Financial Indebtedness, provide a Guarantee in respect of the Trust Deed and the Bonds by procuring the delivery to the Trustee
of a deed of accession substantially in the form scheduled to the Trust Deed or otherwise as the Trustee may agree, duly executed,
and relevant legal opinions having been delivered to the Trustee in accordance with the Trust Deed.
Notice of any addition
of a Subsidiary Guarantor (as defined below) pursuant to this Condition 4.3 will promptly be given by the Issuer to the Bondholders
in accordance with Condition 14.
Upon execution of the deed
of accession referred to above and relevant legal opinions having been delivered to the Trustee (and subject to Condition 4.4)
the relevant acceding Subsidiary shall be referred to as a “Subsidiary Guarantor”.
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4.4
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Release of Subsidiary Guarantors
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A Subsidiary Guarantor
which has Financial Indebtedness which in aggregate (without duplication) amounts to £2,000,000 (or its equivalent in any
other currency) or less shall be immediately, automatically and (subject to Condition 4.3) irrevocably released and relieved of
all its future obligations under the Guarantee and all of its future obligations as a Subsidiary Guarantor under the Trust Deed
upon BCL giving written notice to the Trustee signed by two directors of BCL or by a director and the secretary of BCL. Such notice
must also contain the following certifications:
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(i)
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that no Event of Default or Potential Event of Default (as defined in the Trust
Deed) is continuing; and
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(ii)
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that such Subsidiary Guarantor has Financial Indebtedness which in aggregate
(without duplication) amounts to £2,000,000 (or its equivalent in any other currency) or less.
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None of the Issuer,
BCL or any Subsidiary Guarantor will be required to execute or provide any other document in relation to any release pursuant
to this Condition 4.4 but, if the Issuer requests in writing, the Trustee shall (at the expense of the Issuer) enter into any
documentation in relation to the release of any Subsidiary Guarantor which the Issuer (acting reasonably) considers necessary
or desirable and in a form satisfactory to the Trustee to evidence the release of that Subsidiary Guarantor, provided that,
the Trustee shall not be obliged to enter into any documentation which, in the sole opinion of the Trustee, would have the
effect of:
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(i)
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exposing the Trustee to any liability against which it has not been indemnified
and/or secured and/or pre-funded to its satisfaction; or
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(ii)
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increasing or imposing new and/or additional obligations or duties, or reducing
the protections, of the Trustee in the Trust Deed, the Agency Agreement and the Bonds.
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Notice of any release of
a Subsidiary Guarantor pursuant to this Condition 4.4 will promptly be given by the Issuer to the Bondholders in accordance with
Condition 14.
If any Subsidiary of BCL
released from the Guarantee as described above subsequently has Financial Indebtedness which in aggregate (without duplication)
amounts to more than £2,000,000 (or its equivalent in any other currency) at any time after such release, such Subsidiary
of BCL shall (unless it is an Excluded Subsidiary) be required to provide a Guarantee as described in Condition 4.3.
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4.5
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No Requirement to monitor
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The Trustee shall not be
obliged to monitor compliance by BCL with Conditions 4.3 or 4.4 and shall have no liability to any person for not doing so. The
Trustee shall be entitled to rely without further enquiry or evidence, without liability to any person, on any notice provided
by BCL in relation to this Condition 4, and until it receives such notice shall be entitled to assume that no other Subsidiary
of BCL (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate (without duplication) amounts to more
than £2,000,000 (or its equivalent in any other currency).
So long as any of the Bonds remain
outstanding (as defined in the Trust Deed):
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(a)
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the Issuer will not, create, assume or permit to subsist any mortgage, charge,
lien, pledge or other security interest (each a “Security Interest”, provided that (for the avoidance of doubt),
a “Security Interest” shall not include any arrangement by which the Issuer, Guarantor, or any Subsidiary enters into
a title transfer collateral arrangement governed by English law or a comparable arrangement in any other jurisdiction that is no
more permissive for that Issuer, Guarantor or Subsidiary than an English law title transfer collateral arrangement) upon, or with
respect to, the whole or any part of its present or future business, undertaking, assets or revenues (including any uncalled capital)
to secure any Financial Indebtedness of any person other than an Excluded Subsidiary1 unless the Issuer, in the case
of the creation of a Security Interest, before or at the same time and, in any other case, promptly, takes any and all action necessary
to ensure that:
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(i)
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all amounts payable by it under the Bonds and the Trust Deed are secured by
the Security Interest equally and rateably with the Financial Indebtedness to the satisfaction of the Trustee; or
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1 In relation
to Financial Indebtedness of Excluded Subsidiaries please see Condition 5.1(c) below.
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(ii)
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such other Security Interest or guarantee or other arrangement (whether or
not it includes the giving of a Security Interest) is provided either (A) as the Trustee in its absolute discretion deems not materially
less beneficial to the interests of the Bondholders or (B) as is approved by an Extraordinary Resolution (as defined in the Trust
Deed) of the Bondholders;
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(b)
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no Guarantor will, and each Guarantor will procure, so far as it can by the
proper exercise of voting and other rights or powers of control exercisable by it in relation to its Subsidiaries that none of
its Subsidiaries (other than Excluded Subsidiaries) will, create, assume or permit to subsist any Security Interest upon, or with
respect to, the whole or any part of the present or future business, undertaking, assets or revenues (including any uncalled capital)
of such Guarantor and/or any of its respective Subsidiaries (other than Excluded Subsidiaries) to secure any Financial Indebtedness
of any person other than an Excluded Subsidiary1 unless the relevant Guarantor, in the case of the creation of a Security
Interest, before or at the same time and, in any other case, promptly, takes any and all action necessary to ensure that:
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(i)
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all amounts payable by it under the Guarantee are secured by the Security
Interest equally and rateably with the Financial Indebtedness to the satisfaction of the Trustee; or
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(ii)
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such other Security Interest or guarantee or other arrangement (whether or
not it includes the giving of a Security Interest) is provided either (A) as the Trustee in its absolute discretion deems not materially
less beneficial to the interests of the Bondholders or (B) as is approved by an Extraordinary Resolution of the Bondholders; and
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(c)
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neither the Issuer nor any Guarantor will, and each Guarantor will procure,
so far as it can by the proper exercise of voting and other rights or powers of control exercisable by it in relation to its Subsidiaries
that none of its Subsidiaries (other than Excluded Subsidiaries) will:
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(i)
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create, assume or permit to subsist any Security Interest upon, or with respect
to, the whole or any part of the present or future business, undertaking, assets or revenues (including any uncalled capital) of
the Issuer, any Guarantor and/or any of their respective Subsidiaries (other than Excluded Subsidiaries) to secure any Financial
Indebtedness of any Excluded Subsidiary; or
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(ii)
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create, assume or permit to subsist any guarantee or indemnity of any Financial
Indebtedness of any Excluded Subsidiary,
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So long as any Bond remains
outstanding (as defined in the Trust Deed), BCL shall ensure that, as at each Reference Date the Leverage Ratio is no more than
1:2.
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5.3
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Compliance Certificate
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BCL shall, concurrently
with the delivery of each of the annual and semi-annual Consolidated Financial Statements referred to in Condition 5.4, provide
to the Trustee a Directors’ Certificate confirming compliance with the covenant contained in Condition 5.2 with respect to
the most recent Reference Date.
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5.4
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Financial Information
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BCL has agreed in the Trust
Deed, so long as any of the Bonds remain outstanding, to supply to the Trustee:
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(a)
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as soon as they may become available, but in any event within six months of
its most recent financial year-end, a copy of its audited Consolidated Financial Statements for such
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financial year, together with the report thereon
of BCL’s independent auditors; and
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(b)
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as soon as they may become available, but in any event within three months
of the end of the first half of each financial year, a copy of its unaudited Consolidated Financial Statements for such period.
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5.5
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No Requirement to Monitor
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The Trustee shall not be
obliged to review any Consolidated Financial Statements provided to it pursuant to Condition 5.4, nor to monitor the Leverage Ratio
on any Reference Date for the purposes of Condition 5.2.
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6.1
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Interest Rate and Interest Payment Dates
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The Bonds bear interest
from (and including) 1 June 2017 at the rate of 5.0 per cent. per annum, payable semi-annually in arrear on 1 December and 1 June
(each an “Interest Payment Date”) in each year until (and including) the Maturity Date. The first payment (for
the period from (and including) 1 June 2017 to (but excluding) 1 December 2017 and amounting to £2.50 per £100 principal
amount of Bonds) shall be made on 1 December 2017.
Each Bond will cease to
bear interest from (and including) its due date for redemption unless upon due presentation payment of the principal in respect
of the Bond is improperly withheld or refused or unless default is otherwise made in respect of payment, in which event interest
shall continue to accrue as provided in the Trust Deed.
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6.3
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Calculation of Broken Interest
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When interest is required
to be calculated in respect of a Bond for a period of less than a full half- year, it shall be calculated by applying the rate
of interest on the Bonds to the denomination of the Bonds and multiplying the sum by the Day Count Fraction, and rounding the resultant
figure to the nearest pence wherein the “Day Count Fraction” is calculated on the basis of (a) the actual number
of days in the period from (and including) the date from which interest begins to accrue (the “Accrual Date”)
to (but excluding) the date on which it falls due divided by (b) the actual number of days from (and including) the Accrual Date
to (but excluding) the next following Interest Payment Date multiplied by two.
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6.4
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Interest Rate Step-up
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If following the
Issue Date a Step-Up Event occurs, the rate of interest payable on the Bonds under Condition 6.1 shall increase by 1.00 per cent.
per annum from (and including) the Interest Payment Date following the occurrence of such Step-Up Event and the Bonds shall thereafter
bear interest at an increased rate of interest of 6.0 per cent. per annum.
Notice of any increase
in the rate of interest pursuant to this Condition 6.4 will promptly be given by the Issuer to the Bondholders in accordance with
Condition 14.
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7.1
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Payments in respect of Bonds
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Payments of principal and
interest in respect of each Bond will be made by transfer to the registered account of the Bondholder or by a cheque in Sterling
drawn on a bank that processes payment in Sterling mailed to the registered address of the Bondholder if it does not have a registered
account. Payments of principal and payments of interest due otherwise than on an Interest Payment Date will only be made against
surrender of the relevant Certificate at the specified office of any of the Paying Agents. Interest on Bonds due on an Interest
Payment Date will be paid to the holder shown on the register of Bondholders at the close of business on the date (the “record
date”) being the fifteenth day before the relevant Interest Payment Date.
For the purposes of this
Condition, a Bondholder’s registered account means the Sterling account maintained by or on behalf of it with a bank that
processes payments in Sterling, details of which appear on the register of Bondholders at the close of business, in the case of
principal and interest due otherwise than on an Interest Payment Date, on the second Payment Business Day before the due date for
payment and, in the case of interest due on an Interest Payment Date, on the relevant record date, and a Bondholder’s registered
address means its address appearing on the register of Bondholders at that time.
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7.2
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Payments subject to Applicable Laws
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Payments will be subject
in all cases, to any fiscal or other laws and regulations applicable thereto, but without prejudice to the provisions of Condition
9, in the place of payment. Any such amounts withheld or deducted will be treated as paid for all purposes under the Bonds, and
no additional amounts will be paid on the Bonds with respect to any such withholding or deduction.
No commissions or expenses
shall be charged to the Bondholders in respect of any payments made in accordance with this Condition.
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7.4
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Payment on Payment Business Days
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Where payment is to be
made by transfer to a registered account, payment instructions (for value the due date or, if that is not a Payment Business Day,
for value the first following day which is a Payment Business Day) will be initiated and, where payment is to be made by cheque,
the cheque will be mailed, on the Business Day preceding the due date for payment or, in the case of a payment of principal or
a payment of interest due otherwise than on an Interest Payment Date, if later, on the Business Day on which the relevant Certificate
is surrendered at the specified office of a Paying Agent.
Bondholders will not be
entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due date is not a
Payment Business Day, if the Bondholder is late in surrendering its Certificate (if required to do so) or if a cheque mailed in
accordance with this Condition arrives after the due date for payment.
If the amount of principal
or interest which is due on the Bonds is not paid in full, the Registrar will annotate the register of Bondholders with a record
of the amount of principal or interest in fact paid.
The names of the initial
Agents and their initial specified offices are set out at the end of these Conditions. The Issuer and the Guarantors reserve the
right, subject to the prior written approval of the Trustee, at any time to vary or terminate the appointment of any Agent and
to appoint additional or other Agents provided that:
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(a)
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there will at all times be a Principal Paying Agent, a Transfer Agent and a Registrar; and
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(b)
there will at all times be at least one Paying Agent (which may be the Principal Paying Agent) having its specified office
in a European city.
Notice of any termination
or appointment and of any changes in specified offices will be given to the Bondholders promptly by the Issuer in accordance with
Condition 14.
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8.
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Redemption and Purchase
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8.1
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Redemption at Maturity
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Unless previously redeemed
or purchased and cancelled as provided below, the Issuer will redeem the Bonds at their principal amount on the Maturity Date.
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8.2
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Redemption for Taxation Reasons
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If the Issuer satisfies the Trustee
immediately before the giving of the notice referred to below that:
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(a)
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as a result of any change in, or amendment to, the laws or regulations of
a Relevant Jurisdiction, or any change in the application or official interpretation of the laws or regulations of a Relevant Jurisdiction,
which change or amendment becomes effective after (i)
in the case of the Issuer or BCL, the Issue Date; or (ii) in the case of any Subsidiary Guarantor, the first day on which
such Subsidiary Guarantor becomes a Guarantor pursuant to Condition 4.3, on the next Interest Payment Date either the Issuer would
be required to pay additional amounts as provided or referred to in Condition 9.1 or any Guarantor could, if the Guarantee was called,
be required to pay such additional amounts ; and
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(b)
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the requirement cannot be avoided by the Issuer or any Guarantor taking reasonable
measures available to them (including by BCL procuring payment by the Issuer, itself or any other Guarantor),
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the Issuer may at its
option, having given not less than 30 nor more than 60 days’ notice to the Bondholders in accordance with Condition 14
(which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all the Bonds, but not some only,
at any time at their principal amount together with interest accrued to (but excluding) the date of redemption, provided that
no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the
case may be, the relevant Guarantor would be required to pay such additional amounts, were a payment in respect of the Bonds
then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the
Trustee a Directors’ Certificate from the Issuer or, as the case may be, the relevant Guarantor stating that the
requirement referred to in (a) above will apply on the next Interest Payment Date and cannot be avoided by the Issuer or the
Guarantors taking reasonable measures available to them, and the Trustee shall be entitled to accept the certificate as
sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and
binding on the Bondholders.
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8.3
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Redemption at the Option of the Issuer
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The Issuer may, having given:
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(a)
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not less than 15 nor more than 30 days’ notice to the Bondholders in
accordance with Condition 14; and
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(b)
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notice to the Registrar, the Trustee and the Principal Paying Agent not less
than 15 days before the giving of the notice referred to in (a);
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(which notices shall be
irrevocable and shall specify the date fixed for redemption), redeem all (but not some only) of the Bonds, at any time prior to
the Maturity Date at an amount (together with interest accrued to (but excluding) the date of redemption) being the higher of:
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(i)
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100 per cent. of the principal amount of the Bonds; and
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(ii)
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the principal amount of the Bonds multiplied by the price, as reported to the
Issuer and the Trustee by the Financial Adviser, at which the Gross Redemption Yield on the Bonds on the Make-Whole Reference Date
is equal to the Gross Redemption Yield (determined by reference to the middle market price) at 11.00 a.m. (London time) on the
Make-Whole Reference Date of the Reference Bond, plus 1.00 per cent., all as determined by the Financial Adviser.
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References to the payment
of “principal” in respect of the Bonds in these Conditions shall, to the extent relevant, be deemed to include
any premium payable pursuant to this Condition 8.3.
The Issuer, any Guarantor
or any other member of the Group may at any time purchase Bonds in any manner and at any price. Such Bonds may be held, reissued
or resold, or at the option of the Issuer or BCL, surrendered to any Paying Agent for cancellation.
All Bonds which are redeemed
or purchased by the Issuer, any Guarantor or any member of the Group and surrendered for cancellation in accordance with Condition
8.4 above will forthwith be cancelled, and accordingly may not be held, reissued or resold.
Upon the expiry of any notice
as is referred to in Conditions 8.2 or 8.3 above the Issuer shall be bound to redeem the Bonds to which the notice refers in accordance
with the terms of such Condition.
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9.1
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Payment without Withholding
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All payments in respect
of the Bonds by or on behalf of the Issuer or any Guarantor shall be made without withholding or deduction for, or on account of,
any present or future taxes, duties, assessments or governmental charges of whatever nature (“Taxes”) imposed
or levied by or on behalf of any of the Relevant Jurisdictions, unless the withholding or deduction of the Taxes is required by
law. In that event, the Issuer or, as the case may be, the relevant Guarantor will pay such additional amounts as may be necessary
in order that the net amounts received by the Bondholders after the withholding or deduction shall equal the respective amounts
which would have been receivable in respect of the Bonds in the absence of the withholding or deduction; except that no additional
amounts shall be payable in relation to any payment in respect of any Bond:
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(a)
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presented for payment by or on behalf of, a holder who is liable to the Taxes
in respect of the Bond by reason of his having some connection with any Relevant Jurisdiction other than the mere holding of the
Bond; or
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(b)
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where such withholding or deduction is imposed in respect of FATCA; or
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(c)
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where such withholding or deduction for United States federal income taxes
would not have been required but for the failure of the holder or beneficial owner to provide upon request a valid U.S. IRS Form
W-8 or W-9 (or successor forms) or other documentation as required by official IRS guidance; or
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(d)
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presented for payment more than 30 days after the Relevant Date except to the
extent that a holder would have been entitled to additional amounts on presenting the same for payment on the last day of the period
of 30 days assuming, whether or not such is in fact the case, that day to have been a Payment Business Day.
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Any reference in these
Conditions to any amounts in respect of the Bonds shall be deemed also to refer to any additional amounts which may be payable
under this Condition or under any undertakings given in addition to, or in substitution for, this Condition pursuant to the Trust
Deed.
Claims in respect of principal
and interest will become prescribed unless made within periods of 10 years (in the case of principal) and five years (in the case
of interest) from the Relevant Date in respect of the Bonds subject to the provisions of Condition 7.
The Trustee at its
discretion may, and if so requested in writing by the holders of at least one-fifth in principal amount of the Bonds then
outstanding or if so directed by an Extraordinary Resolution of the Bondholders shall (subject in each case to being
indemnified and/or secured and/or pre-funded to its satisfaction) (but, in the case of the happening of any of the events
described in subparagraphs (b) to (d) inclusive (other than the winding up or dissolution of the Issuer, any Guarantor or any
of the Material Subsidiaries), (e) to (g) inclusive and (k) and (l) below, only if the Trustee shall have certified in
writing to the Issuer and the Guarantors that such event is, in its opinion, materially prejudicial to the interests of the
Bondholders) give notice to the Issuer and the Guarantors that the Bonds are, and they shall accordingly forthwith become,
immediately due and repayable at their principal amount, together with accrued interest as provided in the Trust Deed, in any
of the following events (“Events of Default”):
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(a)
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if default is made in the payment of any principal or interest due in respect
of the Bonds or any of them and the default continues for a period of 7 days in the case of principal or 14 days in the case of
interest; or
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(b)
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if the Issuer or any Guarantor fails to perform or observe any of its other
obligations under these Conditions or the Trust Deed and (except in any case where the Trustee considers the failure to be incapable
of remedy, when no continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of
30 days (or such longer period as the Trustee may permit) following the service by the Trustee on the Issuer or such Guarantor
(as the case may be) of notice requiring the same to be remedied; or
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(c)
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if (i) any Financial Indebtedness of the Issuer, any Guarantor or any of Material
Subsidiaries becomes due and repayable prematurely or becomes capable of being declared due and repayable prematurely in each case
by reason of an event of default (however described); or (ii) the Issuer, any Guarantor or any of the
Material Subsidiaries fails to make any payment in respect of any Financial Indebtedness on the due date for payment as extended
by any originally applicable grace period; provided that the amount of Financial Indebtedness in respect of which one or more of
the events mentioned in this paragraph 11.1(c) have occurred and are continuing, individually or in aggregate exceeds £2,000,000
(or its equivalent in any other currency); or
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(d)
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(i) if any order is made by any competent court or resolution is passed for
the winding up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries; or (ii) if the Issuer, any Guarantor
or the Group ceases or threatens to cease to carry on all or substantially all of its business or operations, save (in either case)
(x) for the purposes of and followed by a reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation
on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material
Subsidiary, for the purposes of and followed by a Permitted Reorganisation; or
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(e)
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the Issuer, any Guarantor or any of the Material Subsidiaries is (or is deemed
(other than where a demand is made for less than £1,000,000 under section 123(l)(a) of the Insolvency Act 1986) by law or
a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all
or a material part of its debts;
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(i)
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proceedings are initiated against the Issuer, any Guarantor or any of the Material
Subsidiaries under any applicable liquidation, insolvency, composition, reorganisation or other similar laws or an application
is made (or documents filed with a court) for the appointment of an administrative or other receiver, manager, administrator or
other similar official, or an administrative or other receiver, manager, administrator or other similar official is appointed,
in relation to the Issuer, any Guarantor or any of the Material Subsidiaries or, as the case may be, in relation to the whole or
any material part of the undertaking or assets of any of them or an encumbrancer takes possession of the whole or any material
part of the undertaking or assets of any of them, or a distress, execution,
attachment, sequestration or other process is levied, enforced upon, sued out or put in force against the whole or any material
part of the undertaking or assets of any of them, and
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(ii)
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in any such case (other than the appointment of an administrator or an administrative
receiver appointed following presentation of a petition for an administration order) unless initiated by the relevant company,
is not discharged or stayed within 45 days,
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save (x) for the purposes of and followed
by a reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation on terms approved in writing by the Trustee
or by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material Subsidiary, for the purposes of and followed
by a Permitted Reorganisation; or
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(g)
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if the Issuer, any Guarantor or any of the Material Subsidiaries (or their respective
directors or shareholders) initiates or consents to judicial proceedings relating to itself under any applicable liquidation, insolvency,
composition, reorganisation or other similar laws (including the obtaining of a moratorium) or makes a conveyance or assignment
for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors)
or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class
of its creditors) save (in any case) (x) for the purposes of and followed by a reconstruction, amalgamation, reorganisation, restructuring,
merger or consolidation on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Bondholders, or (y)
in the case of a Material Subsidiary, for the purposes of and followed by a Permitted Reorganisation; or
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(h)
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any action, condition or thing (including the obtaining or effecting of any
necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required
to be taken, fulfilled or done in order (i) to enable the Issuer or any Guarantor lawfully to enter into, exercise their respective
rights and perform and comply with their respective obligations under the Bonds and the Trust Deed; (ii) to ensure that those obligations
are legally binding and enforceable; and (iii) to make the Bonds and the Trust Deed, as the case may be, admissible in evidence
in the courts of England is not taken, fulfilled or done; or
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(i)
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if the Guarantee ceases to be, or is claimed by the Issuer or any Guarantor
not to be, in full force and effect; or
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(j)
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it is or will become unlawful for the Issuer or any Guarantor to perform or
comply with any one or more of its obligations under the Conditions; or
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(k)
|
if the Issuer or any Subsidiary Guarantor ceases to be a Subsidiary of BCL; or
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(l)
|
if any event occurs which, under the laws of any Relevant Jurisdiction, has
or may have, in the Trustee’s opinion, an analogous effect to any of the events referred to in
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subparagraphs (d) to (g) above.
A report by two
directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion a
Subsidiary of BCL is or is not or was or was not at any particular time or throughout any specified period a Material
Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall,
in the absence of manifest error, be conclusive and binding on all parties.
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12.1
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Enforcement by the Trustee
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The Trustee may at any
time, at its discretion and without notice, take such proceedings and/or other steps or action (including lodging an appeal in
any proceedings) against or in relation to the Issuer and/or any one or more of the Guarantors as it may think fit to enforce the
provisions of the Trust Deed and the Bonds or otherwise, but it shall not be bound to take any such proceedings or other steps
or action unless (a) it has been so directed by an Extraordinary Resolution of the Bondholders or so requested in writing by the
holders of at least one-fifth in principal amount of the Bonds then outstanding and (b) it has been indemnified and/or secured
and/or pre-funded to its satisfaction.
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12.2
|
Limitation on Trustee actions
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The Trustee may refrain
from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion based upon legal
advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may also refrain from
taking such action if it would otherwise render it liable to any person in that jurisdiction or if, in its opinion based upon such
legal advice, it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable law in that
jurisdiction or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power.
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12.3
|
Enforcement by the Bondholders
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No Bondholder shall be entitled
to (i) take any steps or action against the Issuer or any Guarantor to enforce the performance of any of the provisions of the
Trust Deed or the Bonds or (ii) take any other proceedings (including lodging an appeal in any proceedings) in respect of or concerning
the Issuer or any Guarantor, in each case unless the Trustee, having become bound so to take any such action, steps or proceedings,
fails so to do within a reasonable period and the failure shall be continuing.
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13.
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Replacement of Certificates
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Should any Certificate
be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Registrar upon payment by the
claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnify as the Issuer
and the Guarantors may reasonably require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.
All notices to the Bondholders
will be valid if mailed to them at their respective addresses in the register of Bondholders maintained by the Registrar. The Issuer
shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange
or the relevant authority on which the Bonds are for the time being listed. Any such notice will be deemed to have been given on
the date of the first publication or, where required to be published in more than one newspaper, on the second day after being
so mailed or on the date of publication or, if so published more than once or on different dates, on the date of first publication.
The Trustee may, without
the consent of the Bondholders, agree with the Issuer and the Guarantors to the substitution in place of the Issuer (or of any
previous substitute under this Condition) as the principal debtor under the Bonds and the Trust Deed, of BCL or any other Subsidiaries
of BCL subject to:
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(a)
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the Bonds remaining jointly and severally, unconditionally and irrevocably
guaranteed by the Guarantors (other than a Guarantor substituted in place of the Issuer);
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(b)
|
the Trustee being satisfied that the substitution is not materially prejudicial
to the interests of the Bondholders; and
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(c)
|
certain other conditions set out in the Trust Deed being complied with.
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16.
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Meetings of Bondholders, Modification, Waiver, Authorisation and Determination
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16.1
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Meetings of Bondholders
|
The Trust Deed contains
provisions for convening meetings of the Bondholders to consider any matter affecting their interests, including the modification
or abrogation by Extraordinary Resolution of any of these Conditions or any of the provisions of the Trust Deed. The quorum at
any meeting for passing an Extraordinary Resolution will be one or more persons present holding or representing more than 50 per
cent. in principal amount of the Bonds for the time being outstanding, or at any adjourned such meeting one or more persons present
whatever the principal amount of the Bonds held or represented by him or them, except that, at any meeting the business of which
includes any matter defined in the Trust Deed as a Basic Terms Modification, including the modification or abrogation of certain
of the provisions of these Conditions and certain of the provisions of the Trust Deed, the necessary quorum for passing an Extraordinary
Resolution will be one or more persons present holding or representing not less than two-thirds, or at any adjourned such meeting
not less than one-third, of the principal amount of the Bonds for the time being outstanding. The Trust Deed provides that (i)
a resolution passed at a meeting duly convened and held in accordance with the Trust Deed by a majority consisting of not less
than three-fourths of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of
not less than three-fourths in principal amount of the Bonds for the time being outstanding or (iii) consent given by way of electronic
consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not
less than three-fourths in principal amount of the Bonds for the time being outstanding, shall, in each case, be effective as an
Extraordinary Resolution of the Bondholders. An Extraordinary Resolution passed by the Bondholders will be binding on all Bondholders,
whether or not they are present at any meeting and whether or not they voted on the resolution.
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16.2
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Modification, Waiver, Authorisation and Determination
|
The Trustee may agree,
without the consent of the Bondholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach
of, any of these Conditions or any of the provisions of the Trust Deed or the Agency Agreement, or determine, without any such
consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated
as such (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of
the Bondholders) or may agree, without any such consent as aforesaid, to any modification which, in its opinion, is of a formal,
minor or technical nature or to correct a manifest error or an error which is, in the opinion of the Trustee, proven.
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16.3
|
Trustee to have Regard to Interests of Bondholders as a Class
|
In connection with the
exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver,
authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Bondholders as a class
but shall not have regard to any interests arising from circumstances particular to individual Bondholders (whatever their number)
and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Bondholders
(whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject
to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to
require, nor shall any Bondholder be entitled to claim, from the Issuer, any Guarantor, the Trustee or any other person any indemnification
or payment in respect of any tax consequence of any such exercise upon individual Bondholders except to the extent already provided
for in Condition 9 and/or any undertaking given in addition to, or in substitution for, Condition 9 pursuant to the Trust Deed.
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16.4
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Notification to the Bondholders
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Any modification, abrogation,
waiver, authorisation, determination or substitution shall be binding on the Bondholders and, unless the Trustee agrees otherwise,
any modification or substitution shall be notified by the Issuer to the Bondholders as soon as practicable thereafter in accordance
with Condition 14.
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17.
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Indemnification and Protection of the Trustee and its Contracting with the
Issuer and the Guarantors
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17.1
|
Indemnification and protection of the Trustee
|
The Trust Deed contains
provisions for the indemnification of the Trustee and for its relief from responsibility and liability towards the Issuer, the
Guarantors and the Bondholders, including (i) provisions relieving it from taking action unless indemnified and/or secured and/or
pre-funded to its satisfaction and (ii) provisions limiting or excluding its liability in certain circumstances. The Trust Deed
provides that, when determining whether an indemnity or any security or pre-funding is satisfactory to it, the Trustee shall be
entitled (i) to evaluate its risk in any given circumstance by considering the worst-case scenario and (ii) to require that any
indemnity or security given to it by the Bondholders or any of them be given on a joint and several basis and be supported by evidence
satisfactory to it as to the financial standing and creditworthiness of each counterparty and/or as to the value of the security
and an opinion as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security.
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17.2
|
Trustee Contracting with the Issuer and the Guarantors
|
The Trust Deed also contains
provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions with the Issuer
and/or any Guarantor and/or any other member of the Group and to act as trustee for the holders of any other securities issued
or guaranteed by, or relating to, the Issuer and/or any Guarantor and/or any other member of the Group, (b) to exercise and enforce
its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may
be, any such trusteeship without regard to the interests of, or consequences for, the Bondholders, and (c) to retain and not be
liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
The Issuer is at liberty
from time to time without the consent of the Bondholders to create and issue further notes or bonds (whether in bearer or registered
form) either (a) ranking pari passu in all respects (or in all respects save for the first payment of interest thereon)
and so that the same shall be consolidated and form a single series with the outstanding notes or bonds of any series (including
the Bonds) constituted by the Trust Deed or any supplemental deed or (b) upon such terms as to ranking, interest, conversion, redemption
and otherwise as the Issuer may determine at the time of the issue. Any further notes or bonds which are to form a single series
with the outstanding notes or bonds of any series (including the Bonds) constituted by the Trust Deed or any supplemental deed
shall, and any other further notes or bonds may (with the consent of the Trustee), be constituted by a deed supplemental to the
Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Bondholders and the holders of notes or bonds
of other series in certain circumstances where the Trustee so decides.
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19.
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Governing Law and Submission to Jurisdiction
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|
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The Trust Deed (including
the Guarantee), the Bonds and any non-contractual obligations arising out of or in connection with them are governed by, and will
be construed in accordance with, English law.
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19.2
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Jurisdiction of English Courts
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Each of the Guarantors
has in the Trust Deed, irrevocably agreed (or will be required to agree) for the benefit of the Trustee and the Bondholders that
the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the
Trust Deed or the Bonds (including a dispute relating to any non-contractual obligations arising out of or in connection with the
Trust Deed or the Bonds) and accordingly has submitted (or will be required to submit) to the exclusive jurisdiction of the English
courts.
Each of the Guarantors
has, in the Trust Deed, waived (or will be required to waive) any objection to the courts of England on the grounds that they are
an inconvenient or inappropriate forum. To the extent permitted by law, the Trustee and the Bondholders may take any suit, action
or proceeding arising out of or in connection with the Trust Deed or the Bonds respectively (including any suit, action or proceedings
relating to any non-contractual obligations arising out of or in connection with the Trust Deed or the Bonds) (together referred
to as “Proceedings”) against the Issuer or any Guarantor in any other court of competent jurisdiction and concurrent
Proceedings in any number of jurisdictions.
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19.3
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Appointment of Process Agent
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Each of the Guarantors incorporated
in a jurisdiction other than England and Wales has in the Trust Deed irrevocably and unconditionally appointed (or will be required
to appoint) the Issuer at the latter’s registered office for the time being as its agent for service or process in England
in respect of any Proceedings and has undertaken that in the event of such agent ceasing so to act it will appoint such other person
as the Trustee may approve as its agent for that purpose.
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20.
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Rights of Third Parties
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No rights are conferred
on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Bond, but this does not affect
any right or remedy of any person which exists or is available apart from that Act.
In these Conditions:
“Business Day” means, in
relation to any place, a day on which commercial banks and foreign exchange markets settle payments and are open for general business
(including dealing in foreign exchange and foreign currency deposits) in that place.
“Cash and Cash Equivalents”
as at any Reference Date shall be equal to the amount recorded as “Cash and cash equivalents” in the relevant Consolidated
Financial Statements; minus (ii) any such “Cash and cash equivalents” to which any Excluded Subsidiary is beneficially
entitled; and (iii) any such “Cash and cash equivalents” upon which there is any Security Interest.
“Cash Management Investments”
as at any Reference Date shall be equal to the amount recorded as “Cash management investments at fair value through profit
or loss” in the relevant Consolidated Financial Statements; minus (ii) any such “Cash management investments at fair
value through profit or loss” to which any Excluded Subsidiary is beneficially entitled; and (iii) any such “Cash management
investments at fair value through profit or loss” upon which there is a Security Interest.
“Consolidated Financial Statements”
means BCL’s audited annual consolidated financial statements or its unaudited semi-annual consolidated financial statements,
as the case may be, including the relevant accounting policies and notes to the accounts in each case prepared in accordance with
IFRS from time to time.
“Directors’ Certificate”
means a certificate addressed to the Trustee, signed on behalf of the Issuer or the relevant Guarantor (as the case may be) (but
without personal liability) by two directors of the Issuer or the relevant Guarantor (as applicable) or any one director and the
secretary of the Issuer or the relevant Guarantor (as applicable).
“Excluded Financial Indebtedness”
means Financial Indebtedness of any Excluded Subsidiary which is not also Financial Indebtedness of a member of the Group which
is not an Excluded Subsidiary.
A report by two directors of BCL or by a director
and the secretary of BCL whether or not addressed to the Trustee that in their opinion Financial Indebtedness is or is not or was
or was not at any particular time or throughout any specified period Excluded Financial Indebtedness may be relied upon by the
Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest error, be conclusive
and binding on all parties.
“Excluded Subsidiary” means
Burford Lending LLC and its Subsidiaries, provided that BCL may by irrevocable notice to the Trustee permanently deem any entity
which could otherwise be an Excluded Subsidiary not to be an Excluded Subsidiary and such entity shall no longer be an Excluded
Subsidiary for the purposes of these Conditions.
A report by two directors of BCL or by a director
and the secretary of BCL whether or not addressed to the Trustee that in their opinion a Subsidiary of BCL is or is not or was
or was not at any particular time or throughout any specified period an Excluded Subsidiary may be relied upon by the Trustee without
further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest error, be conclusive and binding
on all parties.
“FATCA” means Sections 1471
through 1474 of the U.S. Internal Revenue Code of 1986 (the “Code”) (including an agreement described in Section
1471(b) thereof) together with any regulations thereunder or any official interpretations thereof, any intergovernmental agreement
between the U.S. and another jurisdiction facilitating the implementation thereof or any law implementing such an intergovernmental
agreement.
“Financial Adviser” means a
financial adviser selected by the Issuer after consultation with the Trustee.
“Financial Conduct Authority” means
the United Kingdom Financial Conduct Authority.
“Financial Indebtedness”
means any indebtedness (other than indebtedness owed by any member of the Group which is not an Excluded Subsidiary to another
member of the Group which is also not an Excluded Subsidiary) whether or not contingent, for or in respect of:
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(b)
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any amount raised by acceptance under any acceptance credit facility or dematerialised
equivalent;
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(c)
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any amount raised pursuant to any note purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar instrument;
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(d)
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the amount of any liability in respect of any lease or hire purchase contract
which would, in accordance with IFRS, be treated as a finance or capital lease;
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(e)
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receivables sold or discounted (other than any receivables to the extent they
are sold on a non-recourse basis);
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(f)
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any amount raised under any other transaction (including any forward sale or
purchase agreement) having the commercial effect of a borrowing;
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(g)
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any derivative transaction entered into in connection with protection against
or benefit from fluctuation in any rate, index or price (and, when calculating the value of any derivative transaction, only the
marked-to-market value shall be taken into account);
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(h)
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any counter-indemnity obligation in respect of a guarantee, indemnity, bond
or any other instrument issued by a bank or financial institution; and
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(i)
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the amount of any liability in respect of any guarantee or indemnity for any
of the items referred to in paragraphs (a) to (h) above.
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“Gross
Redemption Yield” means, with respect to a security, the gross redemption yield on such security, expressed as a
percentage and calculated by the Financial Adviser on the basis set out by the UK Debt Management Office in the paper
“Formulae for Calculating Gilt Prices from Yields”, page 4, Section One: Price/Yield Formulae “Conventional
Gilts; Double dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date” (published 8 June,
1998, as amended or updated from time to time) on a semi-annual compounding basis (converted to an annualised yield and
rounded up (if necessary) to four decimal places) or on such other basis as the Trustee may approve.
“Group” means BCL and its Subsidiaries
taken as a whole.
“Group Net Debt” means (i) the
aggregate of all Financial Indebtedness of the Group (other than Excluded Financial Indebtedness) at the relevant time less (ii)
the sum of (x) Cash and Cash Equivalents; and (y) Cash Management Investments (other than any Cash and Cash Equivalents and Cash
Management Investments to which any Excluded Subsidiary is beneficially entitled).
“Group Total Assets” as at any
Reference Date shall be equal to:
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(i)
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the amount recorded as “Total assets” in the relevant Consolidated
Financial Statements; minus
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(ii)
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the sum (without duplication) of (x) any `Total assets” referred to
in (a) above to which any Excluded Subsidiary is beneficially entitled and (y) any goodwill and intangible assets which are included
in the “Total assets” referred to in (a) above.
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“IFRS” means the generally
accepted accounting practice and principles applicable to the business BCL conducts, currently International Financial Reporting
Standards.
“Issue Date”
means 1 June 2017.
“Leverage Ratio” means the ratio of:
“Make-Whole Reference Date”
means the date which is three London Business Days prior to the date fixed for redemption pursuant to Condition 8.3 by the Issuer.
“Material Subsidiary” means
at any time a Subsidiary (other than an Excluded Subsidiary) of BCL:
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(a)
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whose gross assets (consolidated in the case of a Subsidiary which itself has
Subsidiaries) represent (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest
audited consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less than 5.00 per cent. of the consolidated
gross assets of the Group, all as calculated respectively by reference to the then latest Directors’ Certificate relating
to such Subsidiary delivered to the Trustee in accordance with the relevant provisions of the Trust Deed and the then latest audited
consolidated accounts of BCL and its Subsidiaries, provided that:
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(A)
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in the event that the relevant Subsidiary itself has Subsidiaries which
are Excluded Subsidiaries, the gross assets of such Excluded Subsidiaries are excluded from the calculation of the consolidated
gross assets of such Subsidiary;
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(B)
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the gross assets of all Excluded Subsidiaries are excluded from the calculation
of the consolidated gross assets of the Group; and
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(C)
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in the case of a Subsidiary of BCL acquired after the end of the financial
period to which the then latest audited consolidated accounts of BCL and its Subsidiaries relate, the reference to the then latest
audited consolidated accounts of BCL and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts
for the financial period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference
to such first-mentioned accounts as if such Subsidiary had been shown in such accounts by reference to the then latest Directors’
Certificate relating to such Subsidiary delivered to the Trustee in accordance with the relevant provisions of the Trust Deed,
adjusted as deemed appropriate by BCL; or
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(b)
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to which is transferred the whole or substantially the whole of the undertaking
and assets of a Subsidiary of BCL which immediately prior to such transfer is a Material Subsidiary, provided that the transferor
Subsidiary shall upon such transfer forthwith cease to be a Material Subsidiary and the transferee Subsidiary shall cease to be
a Material Subsidiary pursuant to this subparagraph (b) on the date on which the consolidated accounts of BCL and its Subsidiaries
for the financial period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor
Subsidiary or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such consolidated
accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after
such date, by virtue of any other applicable provision of this definition; or
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(c)
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to which is transferred an undertaking or assets which, taken together
with the undertaking or assets of the transferee Subsidiary, represent (or, in the case of the transferee Subsidiary being
acquired after the end of the financial period to which the then latest audited consolidated accounts of BCL and its
Subsidiaries relate, are equal to) not less than 5 per cent. of the consolidated gross assets of the Group, all as calculated
as referred to in subparagraph (a) above, provided that the transferor Subsidiary (if a Material Subsidiary) shall upon such
transfer forthwith cease to be a Material Subsidiary unless immediately following such transfer its undertaking and assets
represent (or, in the case aforesaid, are equal to) not less than 5 per cent. of the consolidated gross assets of the Group,
all as calculated as referred to in subparagraph (a) above, and the transferee Subsidiary shall cease to be a Material
Subsidiary pursuant to this subparagraph (c) on the date on which the consolidated accounts of BCL and its Subsidiaries for
the financial period current at the date of such transfer have been prepared and audited but so that such transferor
Subsidiary or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such
consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or,
prior to or after such date, by virtue of any other applicable provision of this definition,
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all as more particularly defined in the Trust Deed.
In accordance with the provisions of the Trust
Deed, BCL has agreed to give to the Trustee a Director’s Certificate which provides a list of Material Subsidiaries (a)
on the Issue Date; (b) within three business days after demand by the Trustee therefor and (c) (without the necessity for
such demand) within six months of its most recent financial year-end commencing with the financial period ending 31 December
2016 and within three months of the end of the first half of each financial year commencing with the financial period ending
30 June 2017.
“Maturity Date” means 1 December
2026.
“Payment Business Day” means
a day (other than a Saturday or Sunday) on which commercial banks are open for business in London and, in the case of presentation
of a Certificate, in the place in which the Certificate is presented.
“Permitted Reorganisation”
means, in the case of a Material Subsidiary, any reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation
the result of which will be that all or substantially all of the assets and undertaking of such Material Subsidiary will be transferred
to or otherwise vested in the Issuer, any Guarantor or another Subsidiary of BCL (other than an Excluded Subsidiary).
“Rating Agency” means Moody’s
Investors Services Limited, Fitch Ratings Ltd. or Standard & Poor’s Credit Market Services Europe Limited (or any of
their respective affiliates).
“Reference Date” means such
annual or semi-annual date or dates as at which BCL prepares its audited annual Consolidated Financial Statements or unaudited
semi-annual Consolidated Financial Statements, as the case may be and as at the Issue Date those are 31 December and 30 June in
each year, respectively.
“Reference Bond” means the
1.5 per cent. Treasury Stock due 2026, or if such stock is no longer in issue such other U.K. government stock with a maturity
date as near as possible to the Maturity Date as the Financial Adviser may determine to be appropriate by way of substitution for
the 1.5 per cent. Treasury Stock due 2026.
“Relevant Date” means the
date on which the payment first becomes due but, if the full amount of the money payable has not been received by the Principal
Paying Agent or the Trustee on or before the due date, it means the date on which, the full amount of the money having been so
received, notice to that effect has been duly given to the Bondholders by the Issuer in accordance with Condition 14.
“Relevant Jurisdiction” means:
(i) in the case of the Issuer, the U.K. or any political subdivision or any authority thereof or therein having power to tax; (ii)
in the case of BCL, Guernsey or any political subdivision or any authority thereof or therein having power to tax; and (iii) in
the case of any Subsidiary Guarantor, any jurisdiction under the laws of which that Subsidiary Guarantor for the time being is
organised or in which it is treated as resident for tax purposes or any political subdivision or any authority thereof or therein
having power to tax or (in each case) any other jurisdiction or any political subdivision or any authority thereof or therein having
power to tax to which the Issuer or the relevant Guarantor, as the case may be, is or becomes subject in respect of payments made
by it of principal and interest on the Bonds.
“Step-Up Event” means that
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(i)
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any member of the Group (other than an Excluded Subsidiary); or
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(ii)
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any Financial Indebtedness of any member of the Group (other than Excluded
Financial Indebtedness), is assigned a credit rating solicited by a member
of the Group by any Rating Agency and, in either case, the credit rating initially assigned by such Rating Agency is below:
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(a)
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Ba3 in the case of Moody’s Investors Services Limited (or any of its affiliates);
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(b)
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BB- in the case of Fitch Ratings Ltd. (or any of its affiliates); or
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(c)
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BB- in the case of Standard & Poor’s Credit Market Services Europe
Limited (or any of its affiliates)
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(or, in each case, their respective equivalent ratings
for the time being).
“Subsidiary” means a subsidiary
within the meaning of Section 1159 of the Companies Act 2006 as amended.
“U.K.” means the United Kingdom.
“U.S.” means the United States
of America.
PRINCIPAL PAYING AGENT
Elavon Financial Services
DAC (acting through its UK Branch)
125 Old Broad
Street
Fifth Floor
London
EC2N 1AR
REGISTRAR
Elavon Financial Services
DAC
2nd Floor
Block E
Cherrywood Business
Park
Loughlinstown
Dublin, Ireland
TRANSFER AGENT
Elavon Financial Services
Limited DAC (acting
through its UK Branch)
125 Old Broad Street
Fifth Floor
London
EC2N 1AR
and/or such other or further
Principal Paying Agent and other Paying Agents, Registrar and Transfer Agents and/or specified offices as may from time to time
be appointed by the Issuer and the Guarantors with the approval of the Trustee and notice of which has been given to the Bondholders.
SCHEDULE 3
REGISTER AND TRANSFER OF
BONDS
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1.
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The Issuer shall at all times ensure that the Registrar maintains in London,
or at such other place in the United Kingdom as the Trustee may agree, a register showing the amount of the Bonds from time to
time outstanding and the dates of issue and all subsequent transfers and changes of ownership thereof and the names and addresses
of the holders of the Bonds. The Trustee and the holders of the Bonds or any of them and any person authorised by it or any of
them may at all reasonable times during office hours inspect the register and take copies of or extracts from it. The register
may be closed by the Issuer for such periods at such times (not exceeding in total 30 days in any one year) as it may think fit.
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2.
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Each Bond shall have an identifying serial number which shall be entered on the register.
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3.
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The Bonds are transferable by execution of the form of transfer endorsed
thereon under the hand of the transferor or, where the transferor is a corporation, under its common seal or under the hand of
two of its officers duly authorised in writing.
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4.
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The Bonds to be transferred must be delivered for registration to the specified
office of the Registrar or any Transfer Agent with the form of transfer endorsed thereon duly completed and executed and must be
accompanied by such documents, evidence and information as may be required pursuant to the Conditions and such other evidence as
the Issuer may reasonably require to prove the title of the transferor or his right to transfer the Bonds and, if the form of transfer
is executed by some other person on his behalf or in the case of the execution of a form of transfer on behalf of a corporation
by its officers, the authority of that person or those persons to do so.
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5.
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The executors or administrators of a deceased holder of Bonds (not being
one of several joint holders) and in the case of the death of one or more of several joint holders the survivor or survivors of
such joint holders shall be the only person or persons recognised by the Issuer as having any title to such Bonds.
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6.
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Any person becoming entitled to Bonds in consequence of the death or bankruptcy
of the holder of such Bonds may upon producing such evidence that he holds the position in respect of which he proposes to act
under this paragraph or of his title as the Issuer shall require be registered himself as the holder of such Bonds or, subject
to the preceding paragraphs as to transfer, may transfer such Bonds. The Issuer shall be at liberty to retain any amount payable
upon the Bonds to which any person is so entitled until such person shall be registered as aforesaid or shall duly transfer the
Bonds.
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7.
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Unless otherwise requested by him, the holder of Bonds shall be entitled
to receive only one Certificate in respect of his entire holding.
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8.
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The joint holders of Bonds shall be entitled to one Certificate only in
respect of their joint holding which shall, except where they otherwise direct, be delivered to the joint holder whose name appears
first in the register of the holders of Bonds in respect of such joint holding.
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9.
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Where a holder of Bonds has transferred part only of his holding there
shall be delivered to him without charge a Certificate in respect of the balance of such holding.
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10.
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The Issuer shall make no charge to the Bondholders for the registration
of any holding of Bonds or any transfer thereof or for the issue thereof or for the delivery thereof at the specified office of
the Registrar or of any Transfer Agent or by post to the address specified by the Bondholder. If any Bondholder entitled to
receive a Certificate wishes to have the same delivered to him otherwise than at the specified office of the Registrar or of any
Transfer Agent, such delivery shall be made, upon his written request to the Registrar or such Transfer Agent, at his risk and
(except where sent by post to the address specified by the Bondholder) at his expense.
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11.
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The holder of a Bond may (to the fullest extent permitted by applicable
laws) be treated at all times, by all persons and for all purposes as the absolute owner of such Bond notwithstanding any notice
any person may have of the right, title, interest or claim of any other person thereto. The Issuer, each Guarantor and the Trustee
shall not be bound to see to the execution of any trust to which any Bond may be subject and no notice of any trust shall be entered
on the register. The holder of a Bond will be recognised by the Issuer and each Guarantor as entitled to his Bond free from any
equity, set-off or counterclaim on the part of the Issuer or each Guarantor against the original or any intermediate holder of
such Bond.
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SCHEDULE 4
PROVISIONS FOR MEETINGS OF
BONDHOLDERS
DEFINITIONS
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1.
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As used in this Schedule the following expressions shall have the following meanings unless the context otherwise requires:
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Block Voting Instruction
means an English language document issued by a Paying Agent in which:
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(a)
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it is certified that on the date thereof Bonds represented by the Global
Certificate or Definitive Certificates which are held in an account with any Clearing System (in each case not being Bonds in respect
of which a Voting Certificate has been issued and is outstanding in respect of the meeting specified in such Block Voting Instruction)
are blocked in an account with a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1)
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the conclusion of the meeting specified in such Block Voting Instruction; and
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(2)
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the Bonds ceasing with the agreement of the Paying Agent to be so blocked
and the giving of notice by the Paying Agent to the Issuer in accordance with paragraph 3(E) of the necessary amendment to the
Block Voting Instruction;
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(b)
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it is certified that each holder of such Bonds has instructed such Paying
Agent that the vote(s) attributable to the Bonds so blocked should be cast in a particular way in relation to the resolution(s)
to be put to such meeting and that all such instructions are, during the period commencing 48 Hours prior to the time for which
such meeting is convened and ending at the conclusion or adjournment thereof, neither revocable nor capable of amendment;
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(c)
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the aggregate principal amount of the Bonds so blocked is listed distinguishing
with regard to each such resolution between those in respect of which instructions have been given that the votes attributable
thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes
attributable thereto should be cast against the resolution; and
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(d)
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one or more persons named in such Block Voting Instruction (each hereinafter
called a proxy) is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Bonds so
listed in accordance with the instructions referred to in (c) above as set out in such Block Voting Instruction;
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Clearing System means
Euroclear and/or Clearstream, Luxembourg and includes in respect of any Bond any clearing system on behalf of which such Bond is
held or which is the holder or (directly or through a nominee) registered owner of a Bond, in either case whether alone or jointly
with any other Clearing System(s). For the avoidance of doubt, the provisions of subclause 1.2(g) shall apply to this definition;
Eligible Person means
any one of the following persons who shall be entitled to attend and vote at a meeting:
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(a)
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a holder of a Bond in definitive form which is not held in an account with
any Clearing System;
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(b)
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a bearer of any Voting Certificate;
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(c)
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a proxy specified in any Block Voting Instruction; and
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(d)
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a proxy appointed by a holder of a Bond in definitive form which is not
held in an account with any Clearing System;
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Extraordinary Resolution
means:
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(a)
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a resolution passed at a meeting duly convened and held in accordance with
these presents by a majority consisting of not less than three-fourths of the Eligible Persons voting thereon upon a show of hands
or, if a poll is duly demanded, by a majority consisting of not less than three-fourths of the votes cast on such poll;
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(b)
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a resolution in writing signed by or on behalf of the holders of not less
than three fourths in principal amount of the Bonds for the time being outstanding which resolution may be contained in one document
or in several documents in like form each signed by or on behalf of one or more of the holders; or
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(c)
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consent given by way of electronic consents through the relevant Clearing
System(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in principal amount
of the Bonds for the time being outstanding;
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Voting Certificate
means an English language certificate issued by a Paying Agent in which it is stated:
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(a)
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that on the date thereof Bonds represented by the Global Certificate or
Definitive Certificates which are held in an account with any Clearing System (in each case not being Bonds in respect of which
a Block Voting Instruction has been issued and is outstanding in respect of the meeting specified in such Voting Certificate) are
blocked in an account with a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1)
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the conclusion of the meeting specified in such Voting Certificate; and
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(2)
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the surrender of the Voting Certificate to the Paying Agent who issued the same; and
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(b)
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that the bearer thereof is entitled to attend and vote at such meeting in
respect of the Bonds represented by such Voting Certificate;
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24 Hours means
a period of 24 hours including all or part of a day upon which banks are open for business in both the place where the relevant
meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose
the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more
periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of
the places as aforesaid; and
48 Hours means
a period of 48 hours including all or part of two days upon which banks are open for business both in the place where the relevant
meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose
the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more
periods of 24 hours until there is included as aforesaid all or part of two days upon which banks are open for business in all
of the places as aforesaid.
For the purposes of calculating
a period of Clear Days in relation to a meeting, no account shall be taken of the day on which the notice of such meeting
is given (or, in the case of an adjourned meeting, the day on which the meeting to be adjourned is held) or the day on which such
meeting is held.
All references in this
Schedule to a "meeting" shall, where the context so permits, include any relevant adjourned meeting.
EVIDENCE OF ENTITLEMENT TO ATTEND AND VOTE
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2.
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A holder of a Bond represented by the Global Certificate or a Definitive
Certificate which is held in an account with any Clearing System may require the issue by a Paying Agent of Voting Certificates
and Block Voting Instructions in accordance with the terms of paragraph 3.
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For the purposes of paragraph
3, the Principal Paying Agent and each Paying Agent shall be entitled to rely, without further enquiry, on any information or instructions
received from a Clearing System and shall have no liability to any holder or other person for any loss, damage, cost, claim or
other liability occasioned by its acting in reliance thereon, nor for any failure by a Clearing System to deliver information or
instructions to the Principal Paying Agent or any Paying Agent.
The holder of any Voting
Certificate or the proxies named in any Block Voting Instruction shall for all purposes in connection with the relevant meeting
be deemed to be the holder of the Bonds to which such Voting Certificate or Block Voting Instruction relates.
PROCEDURE FOR ISSUE OF VOTING CERTIFICATES,
BLOCK VOTING INSTRUCTIONS AND PROXIES
|
3.
|
(A)
|
Definitive Certificates not held in a Clearing System
|
If Bonds have been issued
in definitive form and are not held in an account with any Clearing System, the Trustee may from time to time prescribe further
regulations (in accordance with paragraph 23) to enable the holders of such Bonds to attend and/or vote at a meeting in respect
of such Bonds.
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|
(B)
|
Global Certificate and Definitive Certificates held in a Clearing System - Voting Certificate
|
A holder of a Bond (not
being a Bond in respect of which instructions have been given to the Principal Paying Agent in accordance with paragraph 3(C))
represented by the Global Certificate or which is in definitive form and is held in an account with any Clearing System may procure
the delivery of a Voting Certificate in respect of such Bond by giving notice to the Clearing System through which such holder's
interest in the Bond is held specifying by name a person (an Identified Person) (which need not be the holder himself) to
collect the Voting Certificate and attend and vote at the meeting. The relevant Voting Certificate will be made available at or
shortly prior to the commencement of the meeting by the Principal Paying Agent against presentation by such Identified Person of
the form of identification previously notified by such holder to the Clearing System. The Clearing System may prescribe forms of
identification (including, without limitation, a passport or driving licence) which it deems appropriate for these purposes. Subject
to receipt by the Principal Paying Agent from the Clearing System, no later than 24 Hours prior to the time for which such meeting
is convened, of notification of the principal amount of the Bonds to be represented by any such Voting Certificate and the form
of identification against presentation of which such Voting Certificate should be released, the Principal Paying Agent shall, without
any obligation to make further enquiry, make available Voting Certificates against presentation of the form of identification corresponding
to that notified.
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|
(C)
|
Global Certificate and Definitive Certificates held in a Clearing System
- Block Voting Instruction
|
A holder of a Bond (not
being a Bond in respect of which a Voting Certificate has been issued) represented by the Global Certificate or which is in definitive
form and is held in an account with any Clearing System may require the Principal Paying Agent to issue a Block Voting Instruction
in respect of such Bond by first instructing the Clearing System through which such holder's interest in the Bond is held to procure
that the votes attributable to such Bond should be cast at the meeting in a particular way in relation to the resolution or resolutions
to be put to the meeting. Any such instruction shall be given in accordance with the rules of the Clearing System then in effect.
Subject to receipt by the Principal Paying Agent of instructions from the Clearing System, no later than 24 Hours prior to the
time for which such meeting is convened, of notification of the principal amount of the Bonds in respect of which instructions
have been given and the manner in which the votes attributable to such Bonds should be cast, the Principal Paying Agent shall,
without any obligation to make further enquiry, appoint a proxy to attend the meeting and cast votes in accordance with such instructions.
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|
(D)
|
Each Block Voting Instruction, together (if so requested by the Trustee)
with proof satisfactory to the Trustee of its due execution on behalf of the relevant Paying Agent shall be deposited by the relevant
Paying Agent or (as the case may be) by the Registrar or the relevant Transfer Agent at such place as the Trustee shall approve
not less than 24 Hours before the time appointed for holding the meeting at which the proxy or proxies named in the Block Voting
Instruction proposes to vote, and in default the Block Voting Instruction shall not be treated as valid unless the Chairman of
the meeting decides otherwise before such meeting proceeds to business. A copy of each Block Voting Instruction shall be deposited
with the Trustee before the commencement of the meeting but the Trustee shall not thereby be obliged to investigate or be concerned
with the validity of or the authority of the proxy or proxies named in any such Block Voting Instruction.
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|
|
(E)
|
Any vote given in accordance with the terms of a Block Voting Instruction
shall be valid notwithstanding the previous revocation or amendment of the Block Voting Instruction or of any of the instructions
of the relevant holder or the relevant Clearing System (as the case may be) pursuant to which it was executed provided that no
intimation in writing of such revocation or amendment has been received from the relevant Paying Agent by the Issuer at its registered
office (or such other place as may have been required or approved by the Trustee for the purpose) by the time being 24 Hours (in
the case of a Block Voting Instruction) or 48 Hours (in the case of a proxy) before the time appointed for holding the meeting
at which the Block Voting Instruction is to be used.
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CONVENING OF MEETINGS, QUORUM AND ADJOURNED MEETINGS
|
4.
|
The Issuer, the Guarantors or the Trustee may at any time, and the Issuer
shall upon a requisition in writing in the English language signed by the holders of not less than ten per cent. in principal amount
of the Bonds for the time being outstanding, convene a meeting and if the Issuer makes default for a period of seven days in convening
such a meeting the same may be convened by the Trustee or the requisitionists. Whenever the Issuer or any Guarantor is about to
convene any such meeting the Issuer or the relevant Guarantor, as the case may be, shall forthwith give notice in writing to the
Trustee of the day, time and place thereof and of the nature of the business to be transacted thereat. Every such meeting shall
be held at such time and place as the Trustee may appoint or approve in writing.
|
|
5.
|
At least 21 Clear Days' notice specifying the place, day and hour of
meeting shall be given to the holders prior to any meeting in the manner provided by Condition 14 (Notices). Such
notice, which shall be in the English
language, shall state generally the nature of the business to be transacted at the meeting thereby convened and, where an Extraordinary
Resolution will be proposed at the meeting, shall either specify in such notice the terms of such resolution or state fully the
effect on the holders of such resolution, if passed. Such notice shall include statements as to the manner in which holders may
arrange for Voting Certificates or Block Voting Instructions to be issued and, if applicable, appoint proxies. A copy of the notice
shall be sent by post to the Trustee (unless the meeting is convened by the Trustee), to the Issuer (unless the meeting is convened
by the Issuer) and to each of the Guarantors (unless the meeting is convened by that Guarantor).
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|
6.
|
A person (who may but need not be a holder) nominated in writing by the
Trustee shall be entitled to take the chair at the relevant meeting, but if no such nomination is made or if at any meeting the
person nominated shall not be present within 15 minutes after the time appointed for holding the meeting the holders present shall
choose one of their number to be Chairman, failing which the Issuer may appoint a Chairman. The Chairman of an adjourned meeting
need not be the same person as was Chairman of the meeting from which the adjournment took place.
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|
7.
|
At any such meeting one or more Eligible Persons present and holding or
representing in the aggregate more than 50 per cent. in principal amount of the Bonds for the time being outstanding shall (subject
as provided below) form a quorum for the transaction of business (including the passing of an Extraordinary Resolution) PROVIDED
THAT at any meeting the business of which includes any Basic Terms Modification (which shall, subject only to subclause 19.2 and
clause 21, only be capable of being effected after having been approved by Extraordinary Resolution) the quorum shall be one or
more Eligible Persons present and holding or representing in the aggregate not less than two-thirds of the principal amount of
the Bonds for the time being outstanding. No business (other than the choosing of a Chairman) shall be transacted at any meeting
unless the requisite quorum is present at the commencement of the relevant business.
|
|
8.
|
If within 15 minutes (or such longer period not exceeding 30 minutes as
the Chairman may decide) after the time appointed for any such meeting a quorum is not present for the transaction of any particular
business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting
shall if convened upon the requisition of holders be dissolved. In any other case it shall stand adjourned for such period, being
not less than 13 Clear Days nor more than 42 Clear Days, and to such place as may be appointed by the Chairman either at or subsequent
to such meeting and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman
may decide) after the time appointed for any adjourned meeting a quorum is not present for the transaction of any particular business,
then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairman may
either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period, being not less than 13 Clear
Days (but without any maximum number of Clear Days), and to such place as may be appointed by the Chairman either at or subsequent
to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall apply to all further adjourned
such meetings.
|
|
9.
|
At any adjourned meeting one or more Eligible Persons present (whatever
the principal amount of the Bonds so held or represented by them) shall (subject as provided below) form a quorum and shall have
power to pass any resolution and to decide upon all matters which could properly have been dealt with at the meeting from which
the adjournment took place had the requisite quorum been present PROVIDED THAT at any adjourned meeting the quorum for the transaction
of business comprising any Basic Terms Modification shall be one or more Eligible Persons present and holding or representing in
the aggregate not less than one-third of the principal amount of the Bonds for the time being outstanding.
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|
10.
|
Notice of any adjourned meeting shall be given in the same manner as notice
of an original meeting but as if 10 were substituted for 21 in paragraph 5 and such notice shall state the required quorum.
|
CONDUCT OF BUSINESS AT MEETINGS
|
11.
|
Every question submitted to a meeting shall be decided in the first instance
by a show of hands. A poll may be demanded (before or on the declaration of the result of the show of hands) by the Chairman, the
Issuer, any Guarantor, the Trustee or any Eligible Person (whatever the amount of the Bonds so held or represented by him).
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|
12.
|
At any meeting, unless a poll is duly demanded, a declaration by the Chairman
that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
|
|
13.
|
Subject to paragraph 15, if at any such meeting a poll is so demanded it
shall be taken in such manner and, subject as hereinafter provided, either at once or after an adjournment as the Chairman directs
and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of
the taking of the poll. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business
other than the motion on which the poll has been demanded.
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|
14.
|
The Chairman may, with the consent of (and shall if directed by) any such
meeting, adjourn the same from time to time and from place to place; but no business shall be transacted at any adjourned meeting
except business which might lawfully have been transacted at the meeting from which the adjournment took place.
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|
15.
|
Any poll demanded at any such meeting on the election of a Chairman or
on any question of adjournment shall be taken at the meeting without adjournment.
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|
16.
|
Any director or officer of the Trustee, its lawyers and financial advisors,
any director or officer of the Issuer or, as the case may be, the Guarantors, their lawyers and financial advisors, any director
or officer of any of the Paying Agents and any other person authorised so to do by the Trustee may attend and speak at any meeting.
Save as aforesaid, no person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting unless
he is an Eligible Person. No person shall be entitled to vote at any meeting in respect of Bonds which are deemed to be not outstanding
by virtue of the proviso to the definition of "outstanding" in clause 1.
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|
|
(a)
|
on a show of hands every Eligible Person present shall have one vote; and
|
|
|
(b)
|
on a poll every Eligible Person present shall have one vote in respect
of each £1 or such other amount as the Trustee may in its absolute discretion stipulate in principal amount of the Bonds
held or represented by such Eligible Person.
|
Without prejudice to the
obligations of the proxies named in any Block Voting Instruction, any Eligible Person entitled to more than one vote need not use
all his votes or cast all the votes to which he is entitled in the same way.
|
18.
|
The proxies named in any Block Voting Instruction need not be holders.
Nothing herein shall prevent any of the proxies named in any Block Voting Instruction from being a director, officer or representative
of or otherwise connected with the Issuer or any Guarantor.
|
|
19.
|
The Bondholders shall in addition to the powers hereinbefore given
have the following powers exercisable (without prejudice to any powers conferred on other persons by these presents) only by Extraordinary Resolution (subject, in the
case of an Extraordinary Resolution to be proposed at a meeting, to the provisions relating to quorum contained in paragraphs 7
and 9) namely:
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|
|
(a)
|
Power to sanction any compromise or arrangement proposed to be made between
the Issuer, the Guarantors, the Trustee, any Appointee and the holders or any of them.
|
|
|
(b)
|
Power to sanction any abrogation, modification, compromise or arrangement
in respect of the rights of the Trustee, any Appointee, the holders, the Issuer or the Guarantors against any other or others of
them or against any of their property whether such rights arise under these presents or otherwise.
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|
|
(c)
|
Power to assent to any modification of the provisions of these presents
which is proposed by the Issuer, the Guarantors, the Trustee or any holder.
|
|
|
(d)
|
Power to give any authority or sanction which under the provisions of these
presents is required to be given by Extraordinary Resolution.
|
|
|
(e)
|
Power to appoint any persons (whether holders or not) as a committee or
committees to represent the interests of the holders and to confer upon such committee or committees any powers or discretions
which the holders could themselves exercise by Extraordinary Resolution.
|
|
|
(f)
|
Power to approve of a person to be appointed a trustee and power to remove
any trustee or trustees for the time being of these presents.
|
|
|
(g)
|
Power to discharge or exonerate the Trustee and/or any Appointee from all
liability in respect of any act or omission for which the Trustee and/or such Appointee may have become responsible under these
presents.
|
|
|
(h)
|
Power to authorise the Trustee and/or any Appointee to concur in and execute
and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution.
|
|
|
(i)
|
Power to sanction any scheme or proposal for the exchange or sale of the
Bonds for or the conversion of the Bonds into or the cancellation of the Bonds in consideration of shares, stock, notes, bonds,
debentures, debenture stock and/or other obligations and/or securities of the Issuer or any other company formed or to be formed,
or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures,
debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration of cash and
for the appointment of some person with power on behalf of the holders to execute an instrument of transfer of the Bonds held by
them in favour of the persons with or to whom the Bonds are to be exchanged or sold respectively.
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|
|
(j)
|
Power to approve the substitution of any entity for the Issuer (or any
previous substitute) as principal debtor under these presents.
|
|
20.
|
Any Extraordinary Resolution (i) passed at a meeting of the holders duly
convened and held in accordance with these presents, (ii) passed as an Extraordinary Resolution in writing in accordance with these
presents or (iii) passed by way of electronic consents given by holders through the relevant Clearing System(s) in accordance with
these presents shall be binding upon all the holders whether or not present or whether or not represented at any meeting and whether
or not voting on such Extraordinary Resolution and each of them shall be bound to give effect thereto accordingly and the passing
of any such Extraordinary Resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of
the result of the voting on any Extraordinary Resolution duly considered
by the holders shall be published in accordance with Condition 14 (Notices) by the Issuer within 14 days of such result
being known, PROVIDED THAT the non- publication of such notice shall not invalidate such result.
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|
21.
|
Minutes of all resolutions and proceedings at every meeting shall be made
and entered in books to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid, if purporting
to be signed by the Chairman of the meeting at which such resolutions were passed or proceedings transacted, shall be conclusive
evidence of the matters therein contained and, until the contrary is proved, every such meeting in respect of the proceedings of
which minutes have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted
thereat to have been duly passed or transacted.
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|
22.
|
(A)
|
If and whenever the Issuer has issued and has outstanding Bonds of more than one series the foregoing provisions of this Schedule
shall have effect subject to the following modifications:
|
|
|
(i)
|
a resolution which in the opinion of the Trustee affects the Bonds of only
one series shall be deemed to have been duly passed if passed at a separate meeting (or by a separate resolution in writing or
by a separate resolution passed by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds
of that series;
|
|
|
(ii)
|
a resolution which in the opinion of the Trustee affects the Bonds of more
than one series but does not give rise (in the opinion of the Trustee) to an actual or potential conflict of interest between the
holders of Bonds of any of the series so affected shall be deemed to have been duly passed if passed at a single meeting (or by
a single resolution in writing or by a single resolution passed by way of consents received through the relevant Clearing System(s))
of the holders of the Bonds of all the series so affected;
|
|
|
(iii)
|
a resolution which in the opinion of the Trustee affects the Bonds of more
than one series and gives or may give rise (in the opinion of the Trustee) to a conflict of interest between the holders of the
Bonds of one series or group of series so affected and the holders of the Bonds of another series or group of series so affected
shall be deemed to have been duly passed only if passed at separate meetings (or by separate resolutions in writing or by separate
resolutions passed by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds of each series
or group of series so affected; and
|
|
|
(iv)
|
to all such meetings all the preceding provisions of this Schedule shall
mutatis mutandis apply as though references therein to Bonds and holders were references to the Bonds of the series or group
of series in question or to the holders of such Bonds, as the case may be.
|
|
|
(B)
|
Subject as provided below, if the Issuer has issued and has outstanding
Bonds which are not denominated in Pounds Sterling, or in the case of any meeting of Bonds of more than one currency, the principal
amount of such Bonds shall
|
|
|
(i)
|
for the purposes of paragraph 4, be the equivalent in Pounds Sterling at
the spot rate of a bank nominated by the Trustee for the conversion of the relevant currency or currencies into Pounds Sterling
on the seventh dealing day prior to the day on which the requisition in writing is received by the Issuer; and
|
|
|
(ii)
|
for the purposes of paragraphs 7, 9 and 17 (whether in respect of the meeting
or any adjourned such meeting or any poll resulting therefrom), be the equivalent at such spot rate on the seventh dealing day
prior to the day of such meeting.
|
In such circumstances,
on any poll each person present shall have one vote for each £1 (or such other Pounds Sterling amount as the Trustee may
in its absolute discretion stipulate) in principal amount of the Bonds (converted as above) which he holds or represents. For the
avoidance of doubt, in the case of a meeting of Bonds which are denominated in a single currency which is not pounds sterling,
the Trustee (in its sole discretion) may agree with the Issuer that the relevant currency for the purposes of the meeting (including,
without limitation, the quorum and voting calculations) shall be the currency of the relevant Bonds, in which case the provisions
of this Schedule shall be construed accordingly.
|
23.
|
Subject to all other provisions of these presents the Trustee may (after
consultation with the Issuer and the Guarantors where the Trustee considers such consultation to be practicable but without the
consent of the Issuer, the Guarantors or the holders) prescribe such further or alternative regulations regarding the requisitioning
and/or the holding of meetings and attendance and voting thereat as the Trustee may in its sole discretion reasonably think fit
(including, without limitation, the substitution for periods of 24 Hours and 48 Hours referred to in this Schedule of shorter periods).
Such regulations may, without prejudice to the generality of the foregoing, reflect the practices and facilities of any relevant
Clearing System. Notice of any such further or alternative regulations may, at the sole discretion of the Trustee, be given to
holders in accordance with Condition 14 (Notices) at the time of service of any notice convening a meeting or at such other
time as the Trustee may decide.
|
SCHEDULE 5
FORM OF DIRECTORS' CERTIFICATE
[ON THE HEADED PAPER OF THE ISSUER/GUARANTOR]
To: [Trustee]
[Date]
Dear Sirs
£175,000,000 5.0 per cent. Guaranteed Bonds
due 2026
This certificate is delivered
to you in accordance with Clause 14(f) of the Trust Deed dated 1 June 2017 (the Trust Deed) and made between Burford Capital
PLC (the Issuer), Burford Capital Limited (BCL) and U.S. Bank Trustees Limited (the Trustee). All words and
expressions defined in the Trust Deed shall (save as otherwise provided herein or unless the context otherwise requires) have the
same meanings herein.
We hereby certify that:
|
(a)
|
as at [ ]2, no Event of Default or Potential Event of Default
existed [other than [ ]]3 and no Event of Default or Potential Event of Default had existed or happened at any time
since [ ]4 [the certification date (as defined in the Trust Deed) of the last certificate delivered under Clause [14(f)]]5
[other than [ ]]6; and
|
|
(b)
|
from and including [ ]3 [the certification date of the last certificate
delivered under Clause [14(f)]]4 to and including [ ]1, [each of] the Issuer and the Guarantors have complied
in all respects with its obligations under these presents (as defined in the Trust Deed) [other than [ ]]7.
|
For and on behalf of
[BURFORD
CAPITAL PLC / BURFORD CAPITAL LIMITED]
|
|
|
|
|
Director
|
|
Director[/Secretary]
|
2 Specify
a date not more than 7 days before the date of delivery of the certificate.
3 If
any Event of Default or Potential Event of Default did exist, give details; otherwise delete.
4 Insert
date of Trust Deed in respect of the first certificate delivered under Clause 14(f), otherwise delete.
5 Include
unless the certificate is the first certificate delivered under Clause 14(f) , in which case delete.
6 If
any Event of Default or Potential Event of Default did exist or had happened, give details; otherwise delete.
7 If
the Issuer and/or Guarantors have failed to comply with any obligation(s), give details; otherwise delete.
SCHEDULE 6
FORM OF MATERIAL SUBSIDIARIES
CERTIFICATE
[ON THE HEADED PAPER OF BCL]
To: [Trustee]
[Date]
Dear Sirs
£175,000,000 5.0 per cent. Guaranteed Bonds
due 2026
Please note that the
contents of this certificate constitutes Confidential Information (as defined in the Trust Deed) and is subject to the confidentiality
provisions set out in clause 27 of the Trust Deed.
This certificate is delivered
to you in accordance with Clause 14(s) of the Trust Deed dated 1 June 2017 (the Trust Deed) and made between Burford Capital
PLC (the Issuer), Burford Capital Limited (BCL) and U.S. Bank Trustees Limited (the Trustee). All words and
expressions defined in the Trust Deed shall (save as otherwise provided herein or unless the context otherwise requires) have the
same meanings herein.
We hereby
certify that as at [insert date] the following Subsidiaries were Material Subsidiaries:
[insert list of Material
Subsidiaries]
For and on behalf of
BURFORD CAPITAL LIMITED
|
|
|
|
|
Director
|
|
Director/Secretary
|
|
|
|
SCHEDULE 7
FORM OF SUPPLEMENTAL DEED
|
DEED
|
|
[l]
20[l]
|
|
BURFORD CAPITAL PLC
and
BURFORD CAPITAL LIMITED
and
[enter name of Subsidiary
Guarantor]
(as the Subsidiary Guarantor)
and
U.S. BANK TRUSTEES
LIMITED
relating to
£175,000,000
5.0 per cent. Guaranteed
Bonds due 2026
unconditionally and irrevocably
guaranteed by
Burford Capital Limited
|
THIS SUPPLEMENTAL DEED is made on [l]
20[l]
BETWEEN:
|
(1)
|
BURFORD CAPITAL PLC, a company incorporated under the laws of England
and Wales with company number 09077893, whose registered office is at 24 Cornhill, London EC3V 3ND (the Issuer);
|
|
(2)
|
BURFORD CAPITAL LIMITED, a company incorporated under the laws of
Guernsey with company number 50877, whose registered office is at Regency Court, Glategny Esplanade, St Peter Port GY1 1WW, Guernsey
(BCL);
|
|
(3)
|
[l] a company incorporated under
the laws of [l] whose registered office is at [l]
(the Subsidiary Guarantor);
|
|
(4)
|
U.S. BANK TRUSTEES LIMITED, a limited liability company registered
in England and Wales with company number 02379632 having its registered office at 125 Old Broad Street, Fifth Floor, London EC2N
1AR (the Trustee, which expression shall, wherever the context so admits, include such company and all other persons or
companies for the time being the trustee or trustees of these presents) as trustee for the Bondholders (each as defined
below);
|
|
(5)
|
ELAVON FINANCIAL SERVICES DAC (the Registrar); and
|
|
(6)
|
ELAVON FINANCIAL SERVICES DAC (the Paying Agent and the Transfer Agent).
|
WHEREAS:
|
(A)
|
This Supplemental Deed is supplemental to the Trust Deed dated 1 June 2017
(the Principal Trust Deed) made between the Issuer, BCL and the Trustee constituting the £175,000,000 5.0 per cent.
Guaranteed Bonds due 2026 (the Bonds) and the Agency Agreement dated 1 June 2017 (the Principal Agency Agreement)
made between the Issuer, BCL, the Trustee and the various Agents set out therein.
|
|
(B)
|
Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors)
of the Bonds provides that, BCL may from time to time appoint or procure to be appointed, a Subsidiary (as defined in the Principal
Trust Deed) of BCL which is not a Guarantor (as defined in the Principal Trust Deed) as a Subsidiary Guarantor in order to comply
with its obligations under Condition 4.1 (Guarantee) of the Bonds.
|
|
(C)
|
Clause 7.11 of the Principal Trust Deed provides that in connection with
the proposed admission of any Subsidiary of BCL as a Guarantor pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary
Guarantors) of the Bonds, no such admission shall be effective until the Trustee shall have received (inter alia) a
duly executed deed supplemental to the Principal Trust Deed (or in such other form as may be necessary or appropriate to comply
with any applicable law, rule or regulation, including the law of any jurisdiction where that Subsidiary is organised or carries
on business) containing a joint and several guarantee (in terms substantially similar to the Guarantee) and otherwise in form and
manner satisfactory to the Trustee pursuant to which such Subsidiary agrees to be bound by the provisions of the Principal Trust
Deed as fully as if such Subsidiary had been named in the Principal Trust Deed as a Guarantor.
|
|
(D)
|
The Subsidiary Guarantor is a Subsidiary of the Guarantor and is not an Excluded Subsidiary.
|
|
(E)
|
By [a resolution of the shareholders of the
Subsidiary Guarantor passed on [l] and] a resolution of the Board of Directors
of the Subsidiary Guarantor passed on [l], and pursuant to Condition 4.3 (Guarantee
– Addition of Subsidiary Guarantors) of the Bonds and Clause 7.11 of the Principal Trust Deed, the Subsidiary Guarantor
(being of the opinion that it will be to its benefit and interest and in the furtherance of its objects to do so) has agreed to
guarantee the said Bonds and to enter into certain covenants as set out or referred to in this Supplemental Deed and BCL has procured
that the Subsidiary Guarantor will be a party to this Supplemental Deed for such purposes.
|
NOW THIS SUPPLEMENTAL
DEED WITNESSES AND IT IS HEREBY AGREED AND DECLARED as follows:
|
1.
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INTERPRETATION AND CONSTRUCTION
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1.1
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Save as herein otherwise provided and unless there is something in the
subject or context inconsistent therewith all words and expressions defined in the Principal Trust Deed shall have the same meanings
in this Supplemental Deed.
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1.2
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The Principal Trust Deed and the Agency Agreement shall henceforth be read
and construed as one document with this Supplemental Deed.
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1.1
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The Subsidiary Guarantor hereby irrevocably and unconditionally, and notwithstanding
the release of any other guarantor or any other person under the terms of any composition or arrangement with any creditors of
the Issuer, BCL or any other Subsidiary of BCL, guarantees on a joint and several basis with each of the current Guarantors set
out in the Schedule hereto to the Trustee:
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(a)
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the due and punctual payment in accordance with the provisions of these
presents of the principal of and interest on the Bonds and of any other amounts payable by the Issuer under these presents; and
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(b)
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the due and punctual performance and observance by the Issuer of each of
the other provisions of these presents on the Issuer's part to be performed or observed.
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[Insert
any legally applicable limitations on guarantee for jurisdiction of Subsidiary Guarantor, as appropriate]
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1.2
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If the Issuer fails for any reason whatsoever punctually to pay any such
principal, interest or other amount, the Subsidiary Guarantor shall cause each and every such payment to be made as if the Subsidiary
Guarantor instead of the Issuer were expressed to be the primary obligor under these presents and not merely as surety (but without
affecting the nature of the Issuer's obligations) to the intent that the holder of the relevant Bond or the Trustee (as the case
may be) shall receive the same amounts in respect of principal interest or such other amount as would have been receivable had
such payments been made by the Issuer.
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1.3
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If any payment received by the Trustee or any Bondholder under the provisions
of these presents shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without
limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or
diminishing the liability of the Subsidiary Guarantor and this guarantee shall continue to apply as if such payment had at all
times remained owing by the Issuer and each other Guarantor shall severally indemnify the Trustee and the Bondholders (as the case
may be) in respect thereof PROVIDED THAT the obligations of the Issuer and/or the Subsidiary Guarantor under this subclause shall,
as regards each payment made to the Trustee or any Bondholder which is avoided
or set aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled through the Issuer.
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1.4
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The Subsidiary Guarantor hereby agrees that its obligations under this clause
shall be unconditional and that the Subsidiary Guarantor shall be fully liable irrespective of the validity, regularity, legality
or enforceability against the Issuer of, or of any defence or counter-claim whatsoever available to the Issuer in relation to,
its obligations under these presents, whether or not any action has been taken to enforce the same or any judgment obtained against
the Issuer, whether or not any of the other provisions of these presents have been modified, whether or not any time, indulgence,
waiver, authorisation or consent has been granted to the Issuer by or on behalf of the Bondholders or the Trustee, whether or not
any determination has been made by the Trustee pursuant to subclause 19.1 of the Principal Trust Deed, whether or not there have
been any dealings or transactions between the Issuer, any of the Bondholders or the Trustee, whether or not the Issuer has been
dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control or ownership, whether or
not the Issuer has been prevented from making payment by foreign exchange provisions applicable at its place of registration or
incorporation and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge
of or defence to a guarantor. Accordingly the validity of this guarantee shall not be affected by reason of any invalidity, irregularity,
illegality or unenforceability of all or any of the obligations of the Issuer under these presents and this guarantee shall not
be discharged nor shall the liability of the Subsidiary Guarantor under these presents be affected by any act, thing or omission
or means whatever whereby its liability would not have been discharged if it had been the principal debtor.
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1.5
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Without prejudice to the provisions of subclause 9.1 of the Principal Trust
Deed the Trustee may determine from time to time whether or not it will enforce this guarantee which it may do without making any
demand of or taking any proceedings against the Issuer and may from time to time make any arrangement or compromise with the Subsidiary
Guarantor in relation to this guarantee which the Trustee may consider expedient in the interests of the Bondholders.
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1.6
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The Subsidiary Guarantor waives diligence, presentment, demand of payment,
filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Issuer, any right to require
a proceeding first against the Issuer, protest or notice with respect to these presents or the indebtedness evidenced thereby and
all demands whatsoever and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate balance
of all sums payable and obligations owed by the Issuer under these presents, shall not be discharged except by complete performance
of the obligations in these presents and is additional to, and not instead of, any security or other guarantee or indemnity at
any time existing in favour of any person, whether from the Subsidiary Guarantor or otherwise.
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1.7
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If any moneys shall become payable by the Subsidiary Guarantor under this
guarantee the Subsidiary Guarantor shall not, so long as the same remain unpaid, without the prior written consent of the Trustee:
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(a)
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in respect of any amounts paid or payable by it under this guarantee, exercise
any rights of subrogation or contribution or, without limitation, any other right or remedy which may accrue to it in respect of
or as a result of any such payment or any such obligation to make payment; or
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(b)
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in respect of any other moneys for the time being due to the Guarantors
by the Issuer, claim payment thereof or exercise any other right or remedy;
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(including in either
case claiming the benefit of any security or right of set-off or contribution or, on the liquidation of the Issuer, proving
in competition with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the
Issuer, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or
securities, shall be received by the Subsidiary Guarantor before payment in full of all amounts payable under these presents
shall have been made to the Bondholders and the Trustee, such payment or distribution shall be received by the Subsidiary
Guarantor on trust to pay the same over immediately to the Trustee for application in or towards the payment of all sums due
and unpaid under these presents in accordance with clause 10 of the Principal Trust Deed.
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1.8
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Until all amounts which may be or become payable by the Issuer under these
presents have been irrevocably paid in full, the Trustee may:
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(a)
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refrain from applying or enforcing any other moneys, security or rights
held or received by the Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees
fit (whether against those amounts or otherwise), and the Subsidiary Guarantor shall not be entitled to the benefit of the same;
and
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(b)
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hold in a suspense account any moneys received from the Subsidiary Guarantor
or on account of the Subsidiary Guarantor's liability under this guarantee, without liability to pay interest on those moneys.
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1.9
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If any sum which, although expressed to be payable by the Issuer under these
presents or the Bonds, is for any reason (whether or not now existing and whether or not now known or becoming known to the Issuer,
the Subsidiary Guarantor, the Trustee or any Bondholder) not recoverable from the Subsidiary Guarantor on the basis of a guarantee
then (a) it will nevertheless be recoverable from it as if it were the sole principal debtor and will be paid by it to the Trustee
on demand and (b) as a separate and additional liability under these presents the Subsidiary Guarantor agrees, as a primary obligation
and on a joint and several basis, to indemnify each of the Trustee and each Bondholder in respect of such sum by way of a full
indemnity in the manner and currency as is provided for in the Bonds or these presents (as the case may be) and to indemnify each
Bondholder against all losses, claims, costs, charges and expenses to which it may be subject or which it may incur in recovering
such sum.
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1.10
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The obligations of the Subsidiary Guarantor under these presents constitute
direct, unconditional and (subject to the provisions of Condition 5.1 (Negative Pledges)) unsecured obligations of the Subsidiary
Guarantor and (subject as aforesaid) rank and will rank pari passu with all other outstanding unsecured and unsubordinated
obligations of the Subsidiary Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable
laws relating to creditors' rights.
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2.
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APPLICABILITY OF PROVISION OF TRUST DEEDS AND AGENCY AGREEMENT
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2.1
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On and from the date hereof, the Subsidiary Guarantor will become a Guarantor
for the purposes of the Trust Deed and the Agency Agreement (as amended and restated pursuant to this Supplemental Deed) pursuant
to Clause 7 of the Principal Trust Deed and Clause 21.10 of the Principal Agency Agreement respectively.
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2.2
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All the provisions of the Principal Trust Deed relating to each other Guarantor
shall apply to the Subsidiary Guarantor and to the guarantee given by the Subsidiary Guarantor under Clause 2 hereof in all respects
as if the Subsidiary Guarantor had been a party to the Principal Trust Deed and references therein to the Guarantors had included
the Subsidiary Guarantor and the Subsidiary Guarantor hereby covenants with the Trustee that it will henceforth duly observe and
perform and be bound by all such of the covenants, conditions and provisions contained in the Principal Trust Deed as are expressed
to be binding on the Guarantors.
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2.3
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All the provisions of the Principal Agency Agreement relating to each other
Guarantor shall apply to the Subsidiary Guarantor as if the Subsidiary Guarantor had been a party to the Principal Agency Agreement
and references therein to the Guarantors had included the Subsidiary Guarantor and the Subsidiary Guarantor hereby covenants with
the Trustee, the Registrar, the Paying Agent and the Transfer Agent that it will henceforth duly observe and perform and be bound
by all such of the covenants, conditions and provisions contained in the Principal Agency Agreement as are expressed to be binding
on the Guarantors.
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The Issuer and the Subsidiary
Guarantor shall, at their own cost, take such action and execute such documentation as the Trustee shall reasonably request in
respect of the matters contemplated by this Supplemental Deed.
Any notice or demand to the Subsidiary Guarantor
to be given, made or served for any purposes under these presents shall be given, made or served by sending the same by pre-paid
post (first class if inland, first class airmail if overseas) or facsimile transmission or by delivering it by hand as follows:
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to
the Additional
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[Name
of Subsidiary Guarantor]
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Guarantor:
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[Address]
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(Attention:
l)
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Facsimilie
No. l
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These presents and any non-contractual obligations
arising out of or in connection with these presents are governed by, and shall be construed in accordance with, English law.
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6.
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CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
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A person who is not a party to these presents
has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these presents, but this does not affect
any right or remedy of a third party which exists or is available apart from that Act.
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7.
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[SUBMISSION TO JURISDICTION
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7.1
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The Subsidiary Guarantor irrevocably agrees for the benefit of the Trustee
and the Bondholders that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of
or in connection with these presents and that accordingly any suit, action or proceedings arising out of or in connection with
these presents (together referred to as Proceedings) may be brought in the courts of England. The Subsidiary Guarantor irrevocably
and unconditionally waives and agrees not to raise any objection which it may have now or subsequently to the laying of the venue
of any Proceedings in the courts of England and any claims that any Proceedings have been brought in an inconvenient or inappropriate
forum and unconditionally agrees that a judgement in any Proceedings brought in the courts of England shall be conclusive and binding
upon it and may be enforced in the courts of any other jurisdiction. To the extent permitted by law, the Trustee and the Bondholders
may take any Proceedings against the Subsidiary Guarantor in any other court of competent jurisdiction and concurrent Proceedings
in any number of jurisdictions.
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7.2
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The Subsidiary Guarantor irrevocably and unconditionally appoints [l]
at its registered office for the time being and in the event of its ceasing so to act will appoint such other person as the Trustee
may approve and as the Subsidiary
Guarantor may nominate in writing to the Trustee for the purpose to accept service of process on its behalf in England in respect
of any Proceedings. The Subsidiary Guarantor:
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(a)
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agrees to procure that, so long as any of the Bonds remains liable to prescription,
there shall be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept
service as aforesaid;
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(b)
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agrees that failure by any such person to give notice of such service of
process to the Issuer or any Subsidiary Guarantor shall not impair the validity of such service or of any judgment based thereon;
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(c)
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consents to the service of process in respect of any Proceedings by the
airmailing of copies, postage prepaid, to the Issuer or the Subsidiary Guarantor in accordance with Clause 26 of the Principal
Trust Deed; and
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(d)
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agrees that nothing in these presents shall affect the right to serve process
in any other manner permitted by law.]
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This Supplemental Deed may be executed and delivered
in any number of counterparts, all of which, taken together, shall constitute one and the same deed and any party to this Supplemental
Deed may enter into the same by executing and delivering a counterpart.
IN WITNESS whereof this Supplemental Deed
has been executed as a deed by the Issuer, the Subsidiary Guarantor and the Trustee and delivered on the date first stated on page
1.
SCHEDULE
THE CURRENT GUARANTORS
Burford Capital Limited
[insert
names of the other current Guarantors (if any)]
SIGNATORIES
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EXECUTED as a deed
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)
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by BURFORD CAPITAL PLC,
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)
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acting by:
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Director:
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Director/Secretary:
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EXECUTED as a deed
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)
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by BURFORD CAPITAL LIMITED,
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)
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acting by:
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Director:
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Director/Secretary:
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EXECUTED as a deed
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)
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by [SUBSIDIARY GUARANTOR],
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)
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acting
by ● and ●
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)
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acting under the authority
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)
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of that company[ in the presence of:
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)
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Witness's signature
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Name
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Address
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Occupation]
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EXECUTED as a deed
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)
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by U.S. BANK TRUSTEES LIMITED,
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)
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acting by:
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)
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Name:
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Name:
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SIGNATORIES
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EXECUTED as a deed
by BURFORD CAPITAL PLC,
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)
)
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acting by:
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Director:
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/s/ Leslie Paster
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Director/Secretary:
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/s/ Hugo Marshall
(Witness)
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EXECUTED as a deed
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)
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by BURFORD CAPITAL LIMITED,
acting by:
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)
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Director:
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/s/ Charles
Parkinson
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Director/Secretary:
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/s/ International
Administration Group
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EXECUTED as a deed
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)
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by U.S. BANK TRUSTEES LIMITED,
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)
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acting by:
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)
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Name:
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/s/ Laurence Griffiths
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Name:
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/s/ Chris Hobbs
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Exhibit 4.3
execuTion
version
TRUST DEED
DATED 26 april 2016
BURFORD CAPITAL PLC
and
BURFORD CAPITAL LIMITED
and
U.S. BANK TRUSTEES
LIMITED
constituting
£100,000,000
6.125 per cent. Guaranteed
Bonds due 2024
contents
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Clause
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Page
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1.
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Definitions
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1
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2.
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Covenant to Repay and to Pay Interest on the Bonds
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8
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3.
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Form and Issue of Bonds
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11
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4.
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Fees, Duties and Taxes
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11
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5.
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Covenant of Compliance
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12
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6.
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Cancellation of Bonds and Records
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12
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7.
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Guarantee
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12
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8.
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Enforcement
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16
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9.
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Action, Proceedings and Indemnification
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16
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10.
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Application of Moneys
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16
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11.
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Notice of Payments
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17
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12.
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Investment by Trustee
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17
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13.
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Partial Payments
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18
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14.
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Covenants by the Issuer and the Guarantors
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18
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15.
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Remuneration and Indemnification of Trustee
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22
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16.
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Supplement to Trustee Acts
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24
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17.
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Trustee's Liability
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29
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18.
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Trustee Contracting with the Issuer and the Guarantors
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30
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19.
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Waiver, Authorisation and Determination
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30
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20.
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Entitlement to treat Holder as Absolute Owner
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31
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21.
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Substitution
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31
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22.
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Currency Indemnity
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32
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23.
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New Trustee
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33
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24.
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Trustee's Retirement and Removal
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34
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25.
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Trustee's Powers to be Additional
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34
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26.
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Notices
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34
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27.
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Confidentiality Undertaking
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35
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28.
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Governing Law
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36
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29.
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Submission to Jurisdiction
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36
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30.
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Counterparts
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37
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31.
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Contracts (Rights of Third Parties) Act 1999
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37
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Schedule
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1.
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Form of Global Certificate
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38
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2.
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Form of Definitive Certificate and Conditions of the Bonds
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42
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Part 1
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Form of Definitive Certificate
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42
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Part 2
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Conditions of the Bonds
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45
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3.
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Register and Transfer of Bonds
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67
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4.
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Provisions for Meetings of Bondholders
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69
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5.
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Form of Directors' Certificate
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78
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6.
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Form of Material Subsidiaries Certificate
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79
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7.
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Form of Supplemental Deed
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80
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THIS TRUST DEED
is made on 26 April, 2016
BETWEEN:
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(1)
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BURFORD CAPITAL PLC, a company incorporated under the laws of England and Wales with company
number 09077893, whose registered office is at 24 Cornhill, London EC3V 3ND (the Issuer);
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(2)
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BURFORD CAPITAL LIMITED, a company incorporated under the laws of Guernsey with company
number 50877, whose registered office is at Regency Court, Glategny Esplanade, St Peter Port GY1 1WW, Guernsey (BCL); and
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(3)
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U.S. BANK TRUSTEES LIMITED, a limited liability company registered in England and Wales
with company number 02379632 having its registered office at 125 Old Broad Street, Fifth Floor, London EC2N 1AR (the Trustee,
which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being
the trustee or trustees of these presents) as trustee for the Bondholders (each as defined below).
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WHEREAS:
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(A)
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By a resolution of the Board of Directors of the Issuer passed on 4 April, 2016 the Issuer has
resolved to issue £100,000,000 6.125 per cent. Guaranteed Bonds due 2024 to be constituted by this Trust Deed.
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(B)
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By a resolution of the Board of Directors of BCL passed on 3 February, 2016 and 4 April, 2016 BCL
has agreed to guarantee the said Bonds and to enter into certain covenants as set out in this Trust Deed.
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(C)
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The said Bonds in definitive form will be in registered form without coupons attached.
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(D)
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The Trustee has agreed to act as trustee of these presents for the benefit of the Bondholders upon
and subject to the terms and conditions of these presents.
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NOW THIS TRUST DEED
WITNESSES AND IT IS AGREED AND DECLARED as follows:
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1.1
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Terms defined in the Conditions and not otherwise defined herein shall have the same meaning in
this Trust Deed. In these presents unless there is anything in the subject or context inconsistent therewith the following expressions
shall have the following meanings:
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Agency Agreement
means the agreement appointing the initial Paying Agents, Registrar and/or Transfer Agents in relation to the Bonds and any other
agreement for the time being in force appointing Successor paying agents, successor registrars and/or transfer agents in relation
to the Bonds, or in connection with their duties, the terms of which have previously been approved in writing by the Trustee, together
with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the
aforesaid agreements in relation to the Bonds;
Appointee
means any attorney, manager, agent, delegate, nominee, custodian or other person appointed by the Trustee under these presents;
Auditors
means the independent auditors for the time being of the Issuer, or (as the case may be) the relevant Guarantor or, in the event
of their being unable or unwilling promptly to carry out any action requested of them pursuant to the provisions of these presents,
such other firm of accountants or such financial advisors as may be nominated or approved by the Trustee for the purposes of these
presents;
Basic Terms
Modification means any proposal to:
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(a)
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reduce or cancel the amount payable or, where applicable, modify, except where such modification
is in the opinion of the Trustee bound to result in an increase, the method of calculating the amount payable or modify the date
of payment or, where applicable, the method of calculating the date of payment in respect of any principal or interest in respect
of the Bonds;
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(b)
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alter the currency in which payments under the Bonds are to be made;
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(c)
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alter the majority required to pass an Extraordinary Resolution;
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(d)
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sanction any such scheme or proposal or substitution as is described in paragraphs 19(i) and 19(j)
of Schedule 4;
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(e)
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alter the proviso to paragraph 7 of Schedule 4 or the proviso to paragraph 9 of Schedule 4; or
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(f)
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alter the definition of a Basic Terms Modification;
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Bondholders
means the several persons who are for the time being holders of the Bonds (being the several persons whose names are entered
in the register of holders of the Bonds as the holders thereof) save that, for so long as such Bonds or any part thereof are represented
by the Global Certificate deposited with a common depositary for Euroclear and Clearstream, Luxembourg or, in respect of Bonds
in definitive form held in an account with Euroclear or Clearstream, Luxembourg, each person who is for the time being shown in
the records of Euroclear or Clearstream, Luxembourg (other than Clearstream, Luxembourg, if Clearstream, Luxembourg shall be an
accountholder of Euroclear, and Euroclear, if Euroclear shall be an accountholder of Clearstream, Luxembourg) as the holder of
a particular principal amount of the Bonds shall be deemed to be the holder of such principal amount of such Bonds (and the registered
holder of the relevant Bond shall be deemed not to be the holder) for all purposes of these presents other than with respect to
the payment of principal or interest on such principal amount of such Bonds, the rights to which shall be vested, as against the
Issuer and the Trustee, solely in such common depositary and for which purpose such common depositary shall be deemed to be the
holder of such principal amount of such Bonds in accordance with and subject to its terms and the provisions of these presents;
and the words holder and holders and related expressions shall (where appropriate) be construed accordingly;
Bonds
means the bonds in registered form comprising the said £100,000,000 6.125 per cent. Guaranteed Bonds due 2024 of the
Issuer hereby constituted or the principal amount thereof for the time being outstanding or, as the context may require, a specific
number thereof and includes any replacements for Bonds issued pursuant to Condition 13 (Replacement of Certificates) and
(except for the purposes of clause 2.4(d)) the Global Certificate;
Certificate
means a Global Certificate or a Definitive Certificate;
Clearstream,
Luxembourg means Clearstream Banking, société anonyme;
Conditions
means the Conditions in the form set out in Schedule 2 as the same may from time to time be modified in accordance with these presents
and any reference in these presents to a particular specified Condition or paragraph of a Condition shall in relation to the Bonds
be construed accordingly;
Confidential
Information means the legal name, legal or business address or any incorporation details or constitutive documents relating
to a Material Subsidiary or any other information that would enable a third party to determine any of the foregoing and that may
be given to the Trustee by the Issuer or any Guarantor pursuant to the provisions of these presents, provided that the Issuer or
the relevant Guarantor, as the case may be, has identified such information (other than the legal names of the Material Subsidiaries
and any such information that the Trustee may itself obtain from publicly available sources from the legal names of such Material
Subsidiaries) as “Confidential Information” at the time it is given to the Trustee.
Definitive
Certificates has the meaning set out in subclause 3.1;
Directors
means the Board of Directors for the time being of the Issuer or, as the case may be, the relevant Guarantor, and Director
means any of them;
Euroclear
means Euroclear Bank S.A./N.V.;
Event of
Default means any of the conditions, events or acts provided in Condition 11.1 (Events of Default) to be events upon
the happening of which the Bonds would, subject only to notice by the Trustee as therein provided, become immediately due and repayable;
Extraordinary
Resolution has the meaning set out in paragraph 1 of Schedule 4;
Global Certificate
means the global certificate in respect of the Bonds to be issued pursuant to subclause 3.1 in the form or substantially in
the form set out in Schedule 1;
Guarantee
has the meaning ascribed to it in Condition 4.1 (Guarantee);
Guarantors
means:
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(i)
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BCL;
and
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(ii)
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any Subsidiary Guarantor,
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and the term
Guarantor means any of them;
Liability
means any loss, damage, cost, fee, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including,
without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar
tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;
Material
Subsidiary means at any time a Subsidiary (other than an Excluded Subsidiary) of BCL:
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(a)
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whose gross assets (consolidated in the case of a Subsidiary which itself has Subsidiaries)
represent (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited
consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less than 5 per cent. of the consolidated
gross assets of the Group, all as calculated
respectively by reference to the then latest Directors’ Certificate relating to such Subsidiary delivered to the Trustee
in accordance with clause 14(s) below and the then latest audited consolidated accounts of BCL and its Subsidiaries, provided that:
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(i)
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in the event that the relevant Subsidiary itself has Subsidiaries which are Excluded Subsidiaries,
the gross assets of such Excluded Subsidiaries are excluded from the calculation of the consolidated gross assets of such Subsidiary;
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(ii)
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the gross assets of all Excluded Subsidiaries are excluded from the calculation of the consolidated
gross assets of the Group; and
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(iii)
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in the case of a Subsidiary of BCL acquired after the end of the financial period to which the
then latest audited consolidated accounts of BCL and its Subsidiaries relate, the reference to the then latest audited consolidated
accounts of BCL and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts for the financial
period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned
accounts as if such Subsidiary had been shown in such accounts by reference to the then latest Directors’ Certificate relating
to such Subsidiary delivered to the Trustee in accordance with clause 14(s) below, adjusted as deemed appropriate by BCL;
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(b)
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to which is transferred the whole or substantially the whole of the undertaking and assets of a
Subsidiary of BCL which immediately prior to such transfer is a Material Subsidiary, provided that the transferor Subsidiary shall
upon such transfer forthwith cease to be a Material Subsidiary and the transferee Subsidiary shall cease to be a Material Subsidiary
pursuant to this subparagraph (b) on the date on which the consolidated accounts of BCL and its Subsidiaries for the financial
period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary
or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such consolidated accounts
have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after such date,
by virtue of any other applicable provision of this definition; or
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(c)
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to which is transferred an undertaking or assets which, taken together with the undertaking or
assets of the transferee Subsidiary, represent (or, in the case of the transferee Subsidiary being acquired after the end of the
financial period to which the then latest audited consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less
than 5 per cent. of the consolidated gross assets of the Group, all as calculated as referred to in subparagraph (a)
above, provided that the transferor Subsidiary (if a Material Subsidiary) shall upon such transfer forthwith cease to be a Material
Subsidiary unless immediately following such transfer its undertaking and assets represent (or, in the case aforesaid are equal
to) not less than 5 per cent. of the consolidated gross assets of the Group, all
as calculated as referred to in subparagraph (a) above, and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant
to this subparagraph (c) on the date on which the consolidated accounts of BCL and its Subsidiaries for the financial period current
at the date of such transfer have been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary
may be a Material Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited
as aforesaid by virtue of the provisions of subparagraph
(a) above or, prior to or after such date, by virtue of any other applicable provision of this definition.
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A report by
two Directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion a
Subsidiary of BCL is or is not or was or was not at any particular time or throughout any specified period a Material Subsidiary
may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall in the absence
of manifest error, be conclusive and binding on all parties;
Official
List has the meaning set out in Section 103 of the Financial Services and Markets Act 2000;
outstanding
means in relation to the Bonds all the Bonds issued other than:
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(a)
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those Bonds which have been redeemed pursuant to these presents;
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(b)
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those Bonds in respect of which the date for redemption in accordance with the Conditions has occurred
and the redemption moneys (including all interest payable thereon) have been duly paid to the Trustee or to the Principal Paying
Agent in the manner provided in the Agency Agreement (and where appropriate notice to that effect has been given to the Bondholders
in accordance with Condition 14 (Notices)) and remain available for payment (against presentation of the relevant Bond,
if required);
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(c)
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those Bonds which have been purchased and cancelled in accordance with Condition 8 (Redemption
and Purchase);
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(d)
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those Bonds which have become void under Condition 10 (Prescription);
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(e)
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those mutilated or defaced Bonds which have been surrendered and cancelled and in respect of which
replacements have been issued pursuant to Condition 13 (Replacement of Certificates);
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(f)
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(for the purpose only of ascertaining the principal amount of the Bonds outstanding and without
prejudice to the status for any other purpose of the relevant Bonds) those Bonds which are alleged to have been lost, stolen or
destroyed and in respect of which replacements have been issued pursuant to Condition 13 (Replacement of Certificates);
and
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(g)
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the Global Certificate to the extent that it shall have been exchanged for Bonds in definitive
form pursuant to its provisions;
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PROVIDED THAT
for each of the following purposes, namely:
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(i)
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the right to attend and vote at any meeting of the Bondholders or any of them, an Extraordinary
Resolution in writing or an Extraordinary Resolution by way of electronic consents given through the relevant Clearing System(s)
as envisaged by paragraph 1 of Schedule 4 and any direction or request by the holders of the Bonds;
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(ii)
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the determination of how many and which Bonds are for the time being outstanding for the purposes
of subclause 9.1, Conditions 11 (Events of Default), 12 (Enforcement) and 16 (Meeting of Bondholders, Modification,
Waiver, Authorisation and Determination) and paragraphs 4, 7 and 9 of Schedule 4;
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(iii)
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any discretion, power or authority (whether contained in these presents or vested by operation
of law) which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Bondholders
or any of them; and
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(iv)
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the determination by the Trustee whether any event, circumstance, matter or thing is, in its opinion,
materially prejudicial to the interests of the Bondholders or any of them,
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those Bonds
(if any) which are for the time being held by or on behalf of or for the benefit of the Issuer, any Guarantor, any other Subsidiary
of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding company, in each case as beneficial
owner, shall (unless and until ceasing to be so held) be deemed not to remain outstanding;
Paying Agents
means the several institutions (including where the context permits the Principal Paying Agent) at their respective specified offices
initially appointed as paying agents in relation to the Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement
and/or, if applicable, any Successor paying agents in relation to such Bonds;
Potential
Event of Default means any condition, event or act which, with the lapse of time and/or the issue, making or giving of any
notice, certification, declaration, demand, determination and/or request and/or the taking of any similar action and/or the fulfilment
of any similar condition, would constitute an Event of Default;
Principal
Paying Agent means the institution at its specified office initially appointed as principal paying agent in relation to such
Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement or, if applicable, any Successor principal paying agent
in relation to such Bonds;
Registrar
means the institution at its specified office initially appointed as the registrar in relation to the Bonds by the Issuer and the
Guarantors pursuant to the Agency Agreement or, if applicable, any Successor registrar in relation to such Bonds;
Relevant
Date has the meaning set out in Condition 9 (Taxation);
repay,
redeem and pay shall each include both the others and cognate expressions shall be construed accordingly;
Subsidiary
means any company which is for the time being a subsidiary (within the meaning of Section 1159 of the Companies Act 2006);
Subsidiary
Guarantor means each Subsidiary of BCL that enters into a deed supplemental to the Trust Deed (or in such other form as may
be necessary or appropriate to comply with any applicable law, rule or regulation, including the law of any jurisdiction outside
England and Wales where that Subsidiary is organised or carries on business) for the purpose of giving a joint and several guarantee
(in the same terms, mutatis mutandis, as the Guarantee) in accordance with Condition 4.3 (Guarantee – Addition
of Subsidiary Guarantors) and Clause 7.11, and, which has not been released or discharged from its obligations as a Subsidiary
Guarantor in accordance with Condition 4.4 (Guarantee – Release of a Subsidiary Guarantor);
Successor means,
in relation to the Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents, any successor to
any one or more of them in relation to the Bonds which shall become such pursuant to the provisions of these presents or the
Agency Agreement and/or such other or further principal paying agent, paying agents, registrar and/or transfer agents (as the
case may be) in relation to such Bonds as may (with the prior approval of, and on terms previously approved by, the Trustee
in writing) from time to time be appointed as such, and/or, if applicable, such other or further specified offices (in the
former case being within the same place as those for which they are substituted) as may from time to time be nominated, in
each case by the Issuer and, if applicable, the Guarantors, and (except in the case of the initial appointments and specified
offices made under and specified in the Conditions and/or the Agency Agreement, as the case may be) notice of whose
appointment or, as the case may be, nomination has been given to the Bondholders pursuant to subclause 14(m) in accordance
with Condition 14 (Notices);
the London
Stock Exchange means the London Stock Exchange plc or any successor thereto;
these presents
means this Trust Deed and the Schedules and any trust deed supplemental hereto and the Schedules (if any) thereto and the Bonds
and the Conditions, all as from time to time modified in accordance with the provisions herein or therein contained;
Transfer
Agents means the institutions at their respective specified offices initially appointed as transfer agents in relation to the
Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement and/or, if applicable, any Successor transfer agents in
relation to such Bonds;
Trust Corporation
means a corporation entitled by rules made under the Public Trustee Act 1906 or entitled pursuant to any other comparable legislation
applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee;
Trustee
Acts means the Trustee Act 1925 and the Trustee Act 2000;
UK Listing
Authority means the Financial Conduct Authority in its capacity as competent authority under the Financial Services and Markets
Act 2000;
words denoting
the singular shall include the plural and vice versa;
words denoting
one gender only shall include the other genders; and
words denoting
persons only shall include firms and corporations and vice versa.
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1.2
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(a)
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All references in these presents to principal and/or interest in respect of the Bonds or to any moneys payable by the Issuer and/or
the Guarantors under these presents shall be deemed to include, in the case of amounts of principal payable, a reference to any
specific redemption price (as defined in the relevant Conditions), any premium which may be payable under or in respect of the
Bonds and, in any case, a reference to any additional amounts which may be payable under Condition 9 (Taxation).
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(b)
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All references in these presents to pounds sterling, Pounds Sterling or the sign
£ shall be construed as references to the lawful currency for the time being of the United Kingdom.
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(c)
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All references in these presents to any statute or any provision of any statute shall be deemed
also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder
or under any such modification or re-enactment.
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(d)
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All references in these presents to guarantees or to an obligation being guaranteed shall be deemed
to include respectively references to indemnities or to an indemnity being given in respect thereof.
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(e)
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All references in these presents to any action, remedy or method of proceeding for the enforcement
of the rights of creditors shall be deemed to include, in respect of any jurisdiction other than England, references to such action,
remedy or method of proceeding for the enforcement of the rights of creditors available or appropriate in such jurisdiction as
shall most nearly approximate to such action, remedy or method of proceeding described or referred to in these presents.
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(f)
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All references in these presents to taking proceedings against the Issuer and/or any Guarantor
shall be deemed to include references to proving in the winding up of the Issuer and/or such Guarantor (as the case may be).
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(g)
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All references in these presents to Euroclear and/or Clearstream, Luxembourg shall be deemed to
include references to any other clearing system as is approved by the Trustee.
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(h)
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Unless the context otherwise requires words or expressions used in these presents shall bear the
same meanings as in the Companies Act 2006.
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(i)
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In this Trust Deed references to Schedules, clauses, subclauses, paragraphs and subparagraphs shall
be construed as references to the Schedules to this Trust Deed and to the clauses, subclauses, paragraphs and subparagraphs of
this Trust Deed respectively.
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(j)
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In these presents tables of contents and clause headings are included for ease of reference and
shall not affect the construction of these presents.
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(k)
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Any reference in these presents to a written notice, consent or approval being given by the Trustee
shall, for the avoidance of doubt, be deemed to include such notice, consent or approval being given by e-mail.
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(l)
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All references in these presents to Bonds being listed or having a listing shall,
in relation to the London Stock Exchange, be construed to mean that such Bonds have been admitted to the Official List by the UK
Listing Authority and to trading on the London Stock Exchange's market for listed securities and all references in these presents
to listing or listed shall include references to quotation and quoted, respectively.
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(m)
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Any references to the records of Euroclear and Clearstream, Luxembourg shall be to the records
that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflects the amount of such customers' interests
in the Bonds.
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2.
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Covenant to Repay and to Pay Interest on the Bonds
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2.1
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The aggregate principal amount of the Bonds is limited to £100,000,000.
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2.2
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The Issuer covenants with the Trustee that it will, in accordance with these presents, on the due
date for the final maturity of the Bonds provided for in the Conditions, or on such earlier date as the same or any part thereof
may become due and repayable thereunder, pay or procure to be paid unconditionally to or to the order of the Trustee in pounds
sterling in immediately available funds the principal amount of the Bonds repayable on that date and shall in the meantime and until
such date (both before and after any judgment or other order of a court of competent jurisdiction) pay or procure to be paid unconditionally
to or to the order of the Trustee as aforesaid interest (which shall accrue from day to day) on the principal amount of the Bonds
at rates calculated from time to time in accordance with Condition 6 (Interest) and on the dates provided for in the Conditions
PROVIDED THAT:
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(a)
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every payment of principal or interest in respect of the Bonds to or to the account of the Principal
Paying Agent in the manner provided in the Agency Agreement shall operate in satisfaction pro tanto of the relative covenant
by the Issuer in this clause except to the extent that there is default in the subsequent payment thereof in accordance with the
Conditions to the Bondholders;
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(b)
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in any case where payment of principal is not made to the Trustee or the Principal Paying Agent
on or before the due date, interest shall continue to accrue on the principal amount of the Bonds (both before and after any judgment
or other order of a court of competent jurisdiction) at the rate aforesaid up to and including the date which the Trustee determines
to be the date on and after which payment is to be made to the Bondholders in respect thereof as stated in a notice given to the
Bondholders in accordance with Condition 14 (Notices) (such date to be not later than seven days after the day on which
the whole of such principal amount, together with an amount equal to the interest which has accrued and is to accrue pursuant to
this proviso up to and including that date, has been received by the Trustee or the Principal Paying Agent); and
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(c)
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in any case where payment of the whole or any part of the principal amount of any Bond is improperly
withheld or refused (other than in circumstances contemplated by proviso (b) above and provided that the relevant Bond is duly
presented (if required)) interest shall accrue on that principal amount payment of which has been so withheld or refused (both
before and after any judgment or other order of a court of competent jurisdiction) at the rate aforesaid from and including the
date of such withholding or refusal up to and including the date on which (upon further presentation of the relevant Bond, if required)
payment of the full amount (including interest as aforesaid) in pounds sterling payable in respect of such Bond is made or (in
respect of the payment of the principal amount and if earlier) the seventh day after notice is given to the relevant Bondholder
(either individually or in accordance with Condition 14 (Notices)) that the full amount (including interest as aforesaid)
in pounds sterling payable in respect of such Bond is available for payment, provided that, upon further presentation thereof being
duly made, such payment is made.
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The Trustee
will hold the benefit of this covenant on trust for the Bondholders and itself in accordance with these presents.
TRUSTEE'S
REQUIREMENTS REGARDING PAYING AGENTS
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2.3
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At any time after an Event of Default or a Potential Event of Default shall have occurred or if
there is failure to make payment of any amount in respect of any Bond when due or the Trustee shall have received any money which
it proposes to pay under clause 10 to the Bondholders, the Trustee may:
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(a)
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by notice in writing to the Issuer, any Guarantor, the Principal Paying Agent and the other Paying
Agents require the Principal Paying Agent and the other Paying Agents pursuant to the Agency Agreement:
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(i)
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to act thereafter as Principal Paying Agent and Paying Agents respectively of the Trustee in relation
to payments to be made by or on behalf of the Trustee under the provisions of these presents mutatis mutandis on the terms
provided in the Agency Agreement (with such consequential amendments as the Trustee shall deem necessary and save that the Trustee's
liability under any provisions thereof for the indemnification, remuneration and payment of out-of-pocket expenses of the Paying
Agents shall be limited to the amounts for the time being held by the Trustee on the trusts of these presents relating to the Bonds
and available for such purpose) and thereafter to hold all Bonds and all sums, documents and records held by them in respect of
the Bonds on behalf of the Trustee; or
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(ii)
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to deliver up all Bonds and all sums, documents and records held by them in respect of the Bonds
to the Trustee or as the Trustee shall direct in such notice provided that such notice shall be deemed not to apply to any documents
or records which the relative Paying Agent is obliged not to release by any law or regulation; and/or
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(b)
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by notice in writing to the Issuer and the Guarantors require each of them to make all subsequent
payments in respect of the Bonds to or to the order of the Trustee and not to the Principal Paying Agent; with effect from the
issue of any such notice to the Issuer and the Guarantors and until such notice is withdrawn proviso (a) to subclause 2.2 of this
clause relating to the Bonds shall cease to have effect.
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FURTHER
ISSUES
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2.4
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(a)
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The Issuer shall be at liberty from time to time (but subject always to the provisions of these presents) without the consent
of the Bondholders to create and issue further notes or bonds (whether in bearer or registered form) either (i) ranking pari
passu in all respects (or in all respects save for the first payment of interest thereon), and so that the same shall be consolidated
and form a single series, with the Bonds and/or the further notes or bonds of any series or (ii) upon such terms as to ranking,
interest, conversion, redemption and otherwise as the Issuer may at the time of issue thereof determine.
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(b)
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Any further notes or bonds which are to be created and issued pursuant to the provisions of paragraph
2.4(a) above so as to form a single series with the Bonds and/or the further notes or bonds of any series shall be constituted
by a trust deed supplemental to this Trust Deed and any other further notes or bonds which are to be created and issued pursuant
to the provisions of paragraph 2.4(a) above may (subject to the consent of the Trustee) be constituted by a trust deed supplemental
to this Trust Deed. In any such case the Issuer and the Guarantors shall prior to the issue of any further notes or bonds to be
so constituted execute and deliver to the Trustee a trust deed supplemental to this Trust Deed (in relation to which all applicable
stamp duties or other documentation fees, duties or taxes have been paid and, if applicable, duly stamped or denoted accordingly)
containing a covenant by the Issuer in the form mutatis mutandis of subclause 2.2 in relation to the principal and interest
in respect of such further notes or bonds and such other provisions (whether or not corresponding to any of the provisions contained
in this Trust Deed) as the Trustee shall require including making such consequential modifications to this Trust Deed as the Trustee
shall require in order to give effect to such issue of further notes or bonds.
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(c)
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A memorandum of every such supplemental trust deed shall be endorsed by the Trustee on this Trust
Deed and by the Issuer and the Guarantors on their duplicates of this Trust Deed.
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(d)
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Whenever it is proposed to create and issue any further notes or bonds the Issuer shall give to
the Trustee not less than 14 days' notice in writing of its intention so to do stating an indicative amount of further notes or
bonds proposed to be created and issued.
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3.
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Form and Issue of Bonds
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3.1
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The Bonds shall be represented initially by the Global Certificate which the Issuer shall issue
to a common depositary for Euroclear and Clearstream, Luxembourg on terms that such common depositary shall hold the same for the
account of the persons who would otherwise be entitled to receive the Bonds in definitive form (Definitive Certificates)
and the successors in title to such persons as appearing in the records of Euroclear and Clearstream, Luxembourg for the time being.
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3.2
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The Global Certificate shall be printed or typed in the form or substantially in the form set out
in Schedule 1 and may be a facsimile. The Global Certificate shall be in the aggregate principal amount of £100,000,000 and
shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated
by or on behalf of the Principal Paying Agent. The Global Certificate so executed and authenticated shall be a binding and valid
obligation of the Issuer and title thereto shall pass by registration of transfer in respect thereof in accordance with the provisions
of these presents.
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3.3
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The Issuer shall issue the Definitive Certificates in exchange for the Global Certificate in accordance
with the provisions thereof.
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3.4
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The Bonds in definitive form shall be in registered form and shall be issued in the form or substantially
in the form set out in Schedule 2 in the denomination and transferable in units of £100 each, shall be serially numbered
and shall be endorsed with a Form of Transfer in the form or substantially in the form also set out in Schedule 2 and with the
Conditions. Title to the Bonds in definitive form shall pass upon the registration of transfers in respect thereof in accordance
with the provisions of these presents.
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3.5
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The Definitive Certificates shall be signed manually or in facsimile by two of the Directors of
the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Principal Paying Agent.
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3.6
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The Issuer may use the facsimile signature of any person who at the date such signature is affixed
is a person duly authorised by the Issuer or is a Director of the Issuer as referred to in subclauses 3.2 and 3.5 above notwithstanding
that at the time of issue of the Global Certificate or any of the Definitive Certificates, as the case may be, he may have ceased
for any reason to be so authorised or to be the holder of such office. The Definitive Certificates so signed shall be binding and
valid obligations of the Issuer.
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4.
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Fees, Duties and Taxes
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The
Issuer will pay any stamp, issue, registration, documentary and other fees, duties and taxes, including interest and
penalties, payable in any relevant jurisdiction on or in connection with (a) the execution and delivery of these presents,
(b) the constitution and issue of the Bonds and (c) any action taken by or on behalf of the Trustee or (where permitted under
these presents so to do) any Bondholder to enforce, or to resolve any doubt concerning, or for any other purpose in relation
to, these presents.
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5.
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Covenant of Compliance
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Each of the
Issuer and the Guarantors severally covenants with the Trustee that it will comply with and perform and observe all the provisions
of these presents which are expressed to be binding on it. The Conditions shall be binding on the Issuer, the Guarantors and the
Bondholders. The Trustee shall be entitled to enforce the obligations of the Issuer and the Guarantors under the Bonds as if the
same were set out and contained in the trust deeds constituting the same, which shall be read and construed as one document with
the Bonds. The Trustee will hold the benefit of this covenant upon trust for itself and the Bondholders according to its and their
respective interests.
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6.
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Cancellation of Bonds and Records
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6.1
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The Issuer shall procure that all Bonds (a) redeemed or (b) purchased and surrendered for cancellation
by or on behalf of the Issuer, the Guarantors or any member of the Group or (c) which, being mutilated or defaced, have been surrendered
and replaced pursuant to Condition 13 (Replacement of Certificates) or (d) exchanged as provided in these presents shall
forthwith be cancelled by or on behalf of the Issuer and a certificate stating:
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(a)
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the aggregate principal amount of Bonds which have been redeemed;
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(b)
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the serial numbers of such Bonds in definitive form;
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(c)
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the aggregate amount of interest paid (and the due dates of such payments) on the Bonds;
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(d)
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the aggregate principal amount of Bonds (if any) which have been purchased by or on behalf of the
Issuer, BCL or any member of the Group and cancelled and the serial numbers of such Bonds in definitive form; and
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(e)
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the aggregate principal amounts of Bonds which have been so exchanged or surrendered and replaced
and the serial numbers of such Bonds in definitive form,
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shall be given
to the Trustee by or on behalf of the Issuer as soon as possible and in any event within four months after the date of any such
redemption, purchase, payment, exchange or replacement (as the case may be) takes place. The Trustee may accept such certificate
as conclusive evidence of redemption, purchase, exchange or replacement pro tanto of the Bonds or payment of interest thereon
respectively and of cancellation of the relative Bonds.
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6.2
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The Issuer shall procure (i) that the Principal Paying Agent shall keep a full and complete record
of all Bonds and of their redemption, cancellation, payment or exchange (as the case may be) and of all replacement notes issued
in substitution for lost, stolen, mutilated, defaced or destroyed Bonds and (ii) that such records shall be made available to the
Trustee at all reasonable times.
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7.1
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BCL hereby irrevocably and unconditionally, and notwithstanding the release of any other guarantor
or any other person under the terms of any composition or arrangement with any creditors of the Issuer or any other Subsidiary
of BCL, guarantees to the Trustee:
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(a)
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the due and punctual payment in accordance with the provisions of these presents of the principal
of and interest on the Bonds and of any other amounts payable by the Issuer under these presents; and
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(b)
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the due and punctual performance and observance by the Issuer of each of the other provisions of
these presents on the Issuer's part to be performed or observed.
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7.2
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If the Issuer fails for any reason whatsoever punctually to pay any such principal, interest or
other amount, BCL shall cause each and every such payment to be made as if BCL instead of the Issuer were expressed to be the primary
obligor under these presents and not merely as surety (but without affecting the nature of the Issuer's obligations) to the intent
that the holder of the relevant Bond or the Trustee (as the case may be) shall receive the same amounts in respect of principal,
interest or such other amount as would have been receivable had such payments been made by the Issuer.
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7.3
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If any payment received by the Trustee or any Bondholder under the provisions of these presents
shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without limitation, on any
other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability
of BCL and this guarantee shall continue to apply as if such payment had at all times remained owing by the Issuer and BCL shall
indemnify the Trustee and the Bondholders in respect thereof PROVIDED THAT the obligations of the Issuer and/or BCL under this
subclause shall, as regards each payment made to the Trustee or any Bondholder which is avoided or set aside, be contingent upon
such payment being reimbursed to the Issuer or other persons entitled through the Issuer.
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7.4
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BCL hereby agrees that its obligations under this clause shall be unconditional and that BCL shall
be fully liable irrespective of the validity, regularity, legality or enforceability against the Issuer of, or of any defence or
counter-claim whatsoever available to the Issuer in relation to, its obligations under these presents, whether or not any action
has been taken to enforce the same or any judgment obtained against the Issuer, whether or not any of the other provisions of these
presents have been modified, whether or not any time, indulgence, waiver, authorisation or consent has been granted to the Issuer
by or on behalf of the Bondholders or the Trustee, whether or not any determination has been made by the Trustee pursuant to subclause
19.1, whether or not there have been any dealings or transactions between the Issuer, any of the Bondholders or the Trustee, whether
or not the Issuer has been dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control
or ownership, whether or not the Issuer has been prevented from making payment by foreign exchange provisions applicable at its
place of registration or incorporation and whether or not any other circumstances have occurred which might otherwise constitute
a legal or equitable discharge of or defence to a guarantor. Accordingly the validity of this guarantee shall not be affected by
reason of any invalidity, irregularity, illegality or unenforceability of all or any of the obligations of the Issuer under these
presents and this guarantee shall not be discharged nor shall the liability of BCL under these presents be affected by any act,
thing or omission or means whatever whereby its liability would not have been discharged if it had been the principal debtor.
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7.5
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Without prejudice to the provisions of subclause 9.1 the Trustee may determine from time to time
whether or not it will enforce this guarantee which it may do without making any demand of or taking any proceedings against the
Issuer and may from time to time make any arrangement or compromise with BCL in relation to this guarantee which the Trustee may
consider expedient in the interests of the Bondholders.
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7.6
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BCL waives diligence, presentment, demand of payment, filing of claims with a court in the event
of dissolution, liquidation, merger or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest
or notice with respect to these presents or the indebtedness evidenced thereby and all demands whatsoever and covenants that this
guarantee shall be a continuing guarantee, shall extend to the ultimate balance of all sums payable and obligations owed by the
Issuer under these presents, shall not be discharged except by complete performance of the obligations in these presents and is
additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any person, whether
from BCL or otherwise.
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7.7
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If any moneys shall become payable by BCL under this guarantee BCL shall not, so long as the same
remain unpaid, without the prior written consent of the Trustee:
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(a)
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in respect of any amounts paid by it under this guarantee, exercise any rights of subrogation or
contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such
payment; or
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(b)
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in respect of any other moneys for the time being due to BCL by the Issuer, claim payment thereof
or exercise any other right or remedy;
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(including
in either case claiming the benefit of any security or right of set-off or, on the liquidation of the Issuer, proving in competition
with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer, any payment
or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be received by
BCL before payment in full of all amounts payable under these presents shall have been made to the Bondholders and the Trustee,
such payment or distribution shall be received by BCL on trust to pay the same over immediately to the Trustee for application
in or towards the payment of all sums due and unpaid under these presents in accordance with clause 10.
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7.8
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Until all amounts which may be or become payable by the Issuer under these presents have been irrevocably
paid in full, the Trustee may:
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(a)
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refrain from applying or enforcing any other moneys, security or rights held or received by the
Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those
amounts or otherwise), and BCL shall not be entitled to the benefit of the same; and
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(b)
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hold in a suspense account any moneys received from BCL or on account of BCL’s liability
under this guarantee, without liability to pay interest on those moneys.
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7.9
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If any sum which, although expressed to be payable by the Issuer under these presents or the Bonds,
is for any reason (whether or not now existing and whether or not now known or becoming known to the Issuer, BCL, the Trustee or
any Bondholder) not recoverable from BCL on the basis of a guarantee then (a) it will nevertheless be recoverable from it as if
it were the sole principal debtor and will be paid by it to the Trustee on demand and (b) as a separate and additional liability
under these presents BCL agrees, as a primary obligation and on a joint and several basis, to indemnify each of the Trustee and
each Bondholder in respect of such sum by way of a full indemnity in the manner and currency as is provided for in the Bonds or
these presents (as the case may be) and to indemnify each Bondholder against all losses, claims, costs, charges and expenses to
which it may be subject or which it may incur in recovering such sum.
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7.10
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The obligations of BCL under these presents constitute direct, unconditional and (subject to the
provisions of Condition 5.1 (Negative Pledges)) unsecured obligations of BCL and (subject as aforesaid) rank and will rank
pari passu with all other outstanding unsecured and unsubordinated obligations of BCL, present and future, but, in the event
of insolvency, only to the extent permitted by applicable laws relating to creditors' rights.
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7.11
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In connection with the proposed admission of any Subsidiary of BCL as a Subsidiary Guarantor pursuant
to Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors), no such admission shall be effective until the Trustee
shall have received:
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(a)
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a duly executed deed supplemental to this Trust Deed and the Agency Agreement (or in such other
form as may be necessary or appropriate to comply with any applicable law, rule or regulation, including the law of any jurisdiction
outside England and Wales where that Subsidiary is organised or carries on business) containing a joint and several guarantee (in
the same terms, mutatis mutandis, as the Guarantee) and otherwise in form and manner satisfactory to the Trustee pursuant
to which such Subsidiary agrees to be bound by the provisions of these presents and the Agency Agreement as fully as if such Subsidiary
had been named in these presents and the Agency Agreement as a Guarantor on the date hereof; and
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(b)
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such legal opinion(s) as the Trustee shall require from legal advisers satisfactory to the Trustee
and in a form and with substance satisfactory to the Trustee as to the enforceability under the laws of all relevant jurisdictions
of the guarantee to be given by such Subsidiary and all other obligations to be assumed by such Subsidiary in the agreements described
in paragraph (a) above,
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and such Subsidiary
and the Issuer shall have complied with such other requirements to assure more fully that the agreements in paragraph (a) above
are enforceable as the Trustee may direct in the interests of the Bondholders.
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7.12
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If any Subsidiary Guarantor ceases to be a Subsidiary Guarantor under the Bonds pursuant to Condition
4.4 (Guarantee –Release of Subsidiary Guarantors), such Subsidiary Guarantor will be deemed to be released simultaneously
from all of its future obligations under these presents, without prejudice to any obligations which may have accrued prior to that
time.
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7.13
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All the provisions of this Trust Deed relating to BCL and Guarantors shall apply to a Subsidiary
of BCL which gives a guarantee pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors) and to the
guarantee given by the Subsidiary Guarantor in all respects as if the Subsidiary Guarantor had been a party to this Trust Deed
and references herein to a Guarantor or Guarantors had included the Subsidiary Guarantor.
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7.14
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The Issuer and each Guarantor shall be deemed to have consented to the admission of any company
as a Subsidiary Guarantor and shall be deemed to be jointly and severally liable with any new Subsidiary Guarantor by virtue of
the giving by any Subsidiary Guarantor of a guarantee without the necessity for the Issuer or any Guarantor to concur in or consent
to any deed admitting any Subsidiary Guarantor.
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7.15
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BCL, excluding any express right contained in these presents, waives any existing or future right
which it may have:
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(a)
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to require that any liability under or in connection with these presents be divided or apportioned
with any other person or reduced in any manner whatsoever, whether by virtue of the "droit de division" or otherwise;
and
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(b)
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to require that recourse be had to the assets of any other person before any claim is enforced
against it in respect of the obligations assumed by it in or in connection with these presents, whether by virtue of "droit
de discussion" or otherwise.
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8.1
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The Trustee may at any time, at its discretion and without notice, take such proceedings and/or
other steps or action (including lodging an appeal in any proceedings) as it may think fit against or in relation to each of the
Issuer and the Guarantors to enforce their respective obligations under these presents or otherwise.
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8.2
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Proof that as regards any specified Bond the Issuer or any Guarantor (as the case may be) has made
default in paying any amount due in respect of such Bond shall (unless the contrary be proved) be sufficient evidence that the
same default has been made as regards all other Bonds in respect of which the relevant amount is due and payable.
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9.
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Action, Proceedings and Indemnification
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9.1
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The Trustee shall not be bound to take any action in relation to these presents (including but
not limited to the giving of any notice pursuant to Condition 11.1 (Events of Default) or the taking of any proceedings
and/or other steps mentioned in subclause 8.1) unless respectively directed or requested to do so (a) by an Extraordinary Resolution
or (b) in writing by the holders of at least one-fifth in principal amount of the Bonds then outstanding and in either case then
only if it shall be indemnified and/or secured and/or pre-funded to its satisfaction against all Liabilities to which it may render
itself liable or which it may incur by so doing.
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9.2
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The Trustee may refrain from taking any action in any jurisdiction if the taking of such action
in that jurisdiction would, in its opinion based upon legal advice in the relevant jurisdiction, be contrary to any law of that
jurisdiction. Furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person
in that jurisdiction or if, in its opinion based upon such legal advice, it would not have the power to take the relevant action
in that jurisdiction by virtue of any applicable law in that jurisdiction or if it is determined by any court or other competent
authority in that jurisdiction that it does not have such power.
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9.3
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Only the Trustee may enforce the provisions of these presents. No Bondholder shall be entitled
to (i) take any steps or action against the Issuer or any Guarantor to enforce the performance of any of the provisions of these
presents or (ii) take any other proceedings (including lodging an appeal in an proceedings) in respect of or concerning the Issuer
or any Guarantor, in each case unless the Trustee having become bound as aforesaid to take any such action, steps or proceedings
fails to do so within a reasonable period and such failure is continuing.
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9.4
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Notwithstanding anything else contained in these presents, the Trustee shall not be required to
take any action prior to making any declaration that the Bonds are immediately due and payable (save that it will procure notice
to be given to the Bondholders of any Event of Default of which it has actual knowledge or express notice) if such action would
require the Trustee to incur any expenditure or other financial liability or risk its own funds (including obtaining any advice
which it might otherwise have thought appropriate to obtain).
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10.
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Application of Moneys
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All moneys
received by the Trustee under these presents shall be held by the Trustee upon trust to apply them (subject to clause 12):
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(a)
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First, in payment or satisfaction of all amounts then due and unpaid under clause 15 to
the Trustee and/or any Appointee;
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(b)
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Secondly, in or towards retention of an amount which the Trustee considers necessary to
pay any amounts that may thereafter become due to be paid under clause 15 to it or any Appointee, to the extent it considers that
moneys received by it thereafter under these presents may be insufficient and/or may not be received in time to pay such amounts;
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(c)
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Thirdly, in or towards reimbursement pari passu and rateably of any amounts paid
by any Indemnifying Parties as contemplated by clause 15.7, together with interest thereon as provided in clause 15.8;
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(d)
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Fourthly, in or towards payment pari passu and rateably of all principal and interest
then due and unpaid in respect of the Bonds; and
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(e)
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Fifthly, in payment of the balance (if any) to the Issuer (without prejudice to, or liability
in respect of, any question as to how such payment to the Issuer shall be dealt with as between the Issuer, the Guarantors and
any other person).
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Without prejudice
to this clause 10, if the Trustee holds any moneys which represent principal or interest in respect of Bonds which have become
void or in respect of which claims have been prescribed under Condition 10 (Prescription), the Trustee will hold such moneys
on the above trusts.
The Trustee
shall give notice to the Bondholders in accordance with Condition 14 (Notices) of the day fixed for any payment to them
under clause 10. Such payment may be made in accordance with Condition 7 (Payment) and any payment so made shall be a good
discharge to the Trustee.
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12.
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Investment by Trustee
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12.1
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The Trustee may at its discretion and pending payment invest moneys at any time available for the
payment of principal and interest on the Bonds in some or one of the investments hereinafter authorised for such periods as it
may consider expedient with power from time to time at the like discretion to vary such investments and to accumulate such investments
and the resulting interest and other income derived therefrom. The accumulated investments shall be applied under clause 10. All
interest and other income deriving from such investments shall be applied first in payment or satisfaction of all amounts then
due and unpaid under clause 15 to the Trustee and/or any Appointee and otherwise held for the benefit of and paid to the Bondholders.
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12.2
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Any moneys which under the trusts of these presents ought to or may be invested by the Trustee
may be invested in the name or under the control of the Trustee in any investments or other assets in any part of the world whether
or not they produce income or by placing the same on deposit in the name or under the control of the Trustee at such bank or other
financial institution and in such currency as the Trustee may think fit. If that bank or institution is the Trustee or a subsidiary,
holding or associated company of the Trustee, it need only account for an amount of interest equal to the amount of interest which
would, at then current rates, be payable by it on such a deposit to an independent customer. The Trustee may at any time vary any
such investments for or into other investments or convert any moneys so deposited into any other currency and shall not be responsible
for any loss resulting from any such investments or deposits, whether
due to depreciation in value, fluctuations in exchange rates or otherwise.
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Upon any payment
under clause 10 (other than payment in full against surrender of a Bond) the Bond in respect of which such payment is made shall
be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall or shall cause such
Paying Agent to enface thereon a memorandum of the amount and the date of payment but the Trustee may dispense with such production
and enfacement upon such indemnity being given as it shall think sufficient.
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14.
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Covenants by the Issuer and the Guarantors
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So long as
any of the Bonds remains outstanding (or, in the case of paragraphs (h), (i), (m), (n), (o) and (q), so long as any of the Bonds
remains liable to prescription each of the Issuer and the Guarantors severally (but in the case of paragraph 14(c), the Issuer
only) covenants with the Trustee that it shall:
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(a)
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promptly give or procure to be given to the Trustee such opinions, certificates, information and
evidence as it shall reasonably require and in such form as it shall require (including without limitation the procurement by the
Issuer or the Guarantors (as the case may be) of all such certificates reasonably called for by the Trustee pursuant to subclause
16(c)) for the purpose of the discharge or exercise of the duties, trusts, powers, authorities and discretions vested in it under
these presents or by operation of law except that the provision of any financial statements or evidence and information relating
to financial statements shall, for the avoidance of doubt, only extend to the provision of financial statements for an accounting
period prepared in relation to the Group (and in no circumstances shall extend to any specific entity within the Group (other than
the Issuer));
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(b)
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cause to be prepared and certified by its Auditors in respect of each financial accounting period
accounts of the Issuer in such form as will comply with all relevant legal and accounting requirements and all requirements for
the time being of the London Stock Exchange;
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(c)
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at all times keep and procure its Subsidiaries (if any) to keep proper books of account and allow
and procure such Subsidiaries to allow the Trustee and any person appointed by the Trustee to whom the Issuer, the Guarantors or
the relevant Subsidiary (as the case may be) shall have no reasonable objection free access to such books of account at all reasonable
times during normal business hours except that the requirement for Subsidiaries to keep proper books of account shall not, for
the avoidance of doubt, in any circumstances require such Subsidiary to prepare financial statements (for any accounting period
or otherwise);
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(d)
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send to the Trustee (in addition to any copies to which it may be entitled as a holder of any securities
of the Issuer or any Guarantor) two copies in English of every balance sheet, profit and loss account, report, circular and notice
of general meeting and every other document issued or sent to its shareholders together with any of the foregoing, and every document
issued or sent to holders of securities other than its shareholders (including the Bondholders) as soon as practicable after the
issue or publication thereof;
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(e)
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forthwith give notice in writing to the Trustee of the coming into existence of any security interest
which would require any security to be given to the Bonds pursuant to Condition 5.1 (Negative Pledges) or of the occurrence
of any Event of Default or any Potential Event of Default;
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(f)
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give to the Trustee (a) within seven days after demand by the Trustee therefor and (b) (without
the necessity for any such demand) promptly after the publication of its audited accounts in respect of each financial period commencing
with the financial period ending 31 December, 2015 and in any event not later than 180 days after the end of each such financial
period a certificate in or substantially in the form set out in Schedule 5 signed by two Directors of the Issuer and two Directors
of each Guarantor or, in the case of BCL, either two Directors of BCL or a Director and the secretary of BCL to the effect that
as at a date not more than seven days before delivering such certificate (the certification date) there did not exist and
had not existed or happened since the certification date of the previous certificate (or in the case of the first such certificate
the date hereof) any Event of Default or any Potential Event of Default (or if such exists or existed or had happened specifying
the same) and that during the period from and including the certification date of the last such certificate (or in the case of
the first such certificate the date hereof) to and including the certification date of such certificate each of the Issuer and
each Guarantor has complied with all its obligations contained in these presents or (if such is not the case) specifying the respects
in which it has not complied;
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(g)
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so long as any of the Bonds remain outstanding BCL shall supply to the Trustee:
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(i)
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as soon as they may become available, but in any event within six months of its most recent financial
year-end, a copy of its audited Consolidated Financial Statements for such financial year, together with the report thereon of
BCL’s Auditors;
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(ii)
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as soon as they may become available, but in any event within three months of the end of the first
half of each financial year, a copy of its unaudited Consolidated Financial Statements for such period; and
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(iii)
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concurrently with the delivery of items (i) and (ii) above, a Directors’ Certificate confirming
compliance with the covenant contained in Condition 5.2 (Financial Covenant) with respect to the most recent Reference Date;
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(h)
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so far as permitted by applicable law, at all times execute and do all such further documents,
acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to these presents except
that the provision of any financial statements or evidence and information relating to financial statements shall, for the avoidance
of doubt, only extend to the provision of financial statements for an accounting period prepared in relation to the Group (and
in no circumstances shall extend to any specific entity within the Group (other than the Issuer));
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(i)
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at all times maintain Paying Agents, a Registrar and Transfer Agents in accordance with the Conditions;
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(j)
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procure the Principal Paying Agent to notify the Trustee forthwith in the event that the Principal
Paying Agent does not, on or before the due date for any payment in respect of the Bonds or any of them, receive unconditionally
pursuant to the Agency Agreement payment of the full amount
in the requisite currency of the moneys payable on such due date on all such Bonds;
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(k)
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in the event of the unconditional payment to the Principal Paying Agent or the Trustee of any sum
due in respect of the Bonds or any of them being made after the due date for payment thereof forthwith give or procure to be given
notice to the Bondholders in accordance with Condition 14 (Notices) that such payment has been made;
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(l)
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use reasonable endeavours to maintain the listing of the Bonds on the London Stock Exchange or,
if it is unable to do so having used reasonable or if the Trustee considers that the maintenance of such listing is unduly onerous
and the Trustee is of the opinion that to do so would not be materially prejudicial to the interests of the Bondholders, use reasonable
endeavours to obtain and maintain a quotation or listing of the Bonds on such other stock exchange or exchanges or securities market
or markets as the Issuer may (with the prior written approval of the Trustee) decide and shall also upon obtaining a quotation
or listing of the Bonds on such other stock exchange or exchanges or securities market or markets enter into a trust deed supplemental
to this Trust Deed to effect such consequential amendments to these presents as the Trustee may require or as shall be requisite
to comply with the requirements of any such stock exchange or securities market;
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(m)
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give notice to the Bondholders in accordance with Condition 14 (Notices) of any appointment,
resignation or removal of any Paying Agent, Registrar or Transfer Agent (other than the appointment of the initial Paying Agents,
Registrar and Transfer Agents) after having obtained the prior written approval of the Trustee thereto or any change of any Paying
Agent's, Registrar's or Transfer Agent's specified office and (except as provided by the Agency Agreement or the Conditions) at
least 30 days prior to such event taking effect; PROVIDED ALWAYS THAT so long as any of the Bonds remains outstanding in the case
of the termination of the appointment of the Registrar or a Transfer Agent or so long as any of the Bonds remains liable to prescription
in the case of the termination of the appointment of the Principal Paying Agent no such termination shall take effect until a new
Registrar, Transfer Agent or Principal Paying Agent (as the case may be) has been appointed on terms previously approved in writing
by the Trustee;
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(n)
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send to the Trustee, not less than seven Business Days prior to which any such notice is to be
given, the draft form of every notice to be given to the Bondholders in accordance with Condition 14 (Notices) and obtain
the prior written approval of the Trustee (such approval not to be unreasonably withheld or delayed) to, and promptly give to the
Trustee two copies of, the final form of every notice to be given to the Bondholders in accordance with Condition 14 (Notices)
(such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial Services and Markets
Act 2000 of the United Kingdom (the FSMA) of a communication within the meaning of Section 21 of the FSMA);
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(o)
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comply with and perform all its obligations under the Agency Agreement and use its best endeavours
to procure that the Paying Agents, the Registrar and the Transfer Agents comply with and perform all their respective obligations
thereunder and (in the case of the Paying Agents and the Registrar) any notice given by the Trustee pursuant to subclause 2.3(a)
and not make any amendment or modification to such Agreement without the prior written approval of the Trustee and use all reasonable
endeavours to make such amendments to such Agreement as the Trustee may require;
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(p)
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in order to enable the Trustee to ascertain the principal amount of Bonds for the time being outstanding
for any of the purposes referred to in the proviso to the definition of outstanding in clause 1, deliver to the Trustee
forthwith upon being so requested in writing by the Trustee a certificate in writing signed by two Directors of the Issuer or two
Directors of the relevant Guarantor or, in the case of BCL, either two Directors of BCL or a Director and the secretary of BCL
(as appropriate) setting out the total number and aggregate principal amount of Bonds which:
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(i)
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up to and including the date of such certificate have been purchased by the Issuer or any member
of the Group and cancelled; and
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(ii)
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are at the date of such certificate held by, for the benefit of, or on behalf of, the Issuer, any
Guarantor, any Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding company;
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(q)
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procure its Subsidiaries to comply with all (if any) applicable provisions of Condition 8 (Redemption
and Purchase);
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(r)
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procure that each of the Paying Agents makes available for inspection by Bondholders at its specified
office copies of these presents, the Agency Agreement and the then latest audited balance sheets and profit and loss accounts (consolidated
if applicable) of the Group;
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(s)
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give to the Trustee (i) on the date hereof, (ii) within three Business Days after a demand by the
Trustee therefor and (iii) (without the necessity for such demand) within six months of BCL’s most recent financial year-end
commencing with the financial period ending 31 December 2015 and within three months of the end of the first half of each financial
year commencing with the financial period ending 30 June 2016, a certificate in or substantially in the form set out in Schedule
6 signed by either two Directors of BCL or a Director and the secretary of BCL addressed to the Trustee listing those Subsidiaries
of BCL which as at the date hereof, as at the date of the relevant certificate or as at any specific date requested by the Trustee,
were Material Subsidiaries for the purposes of Condition 11 (Events of Default);
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(t)
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promptly give written notice signed by two directors of BCL or by a director and the secretary
of BCL to the Trustee if any Subsidiary of BCL, (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate
(without duplication) amounts to more than £2,000,000 (or its equivalent in any other currency) and BCL covenants that it
shall procure that such Subsidiary shall as soon as reasonably practicable, but in any event no later than 60 days after the date
on which it incurs such Financial Indebtedness, provide a Guarantee in respect of these presents in accordance with Clause 7 above;
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(u)
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promptly give written notice signed by two directors of BCL or by a director and the secretary
of BCL to the Trustee if a Subsidiary Guarantor is to be automatically released from the Guarantee in accordance with Condition
4.4 (Guarantee – Release of Subsidiary Guarantors);
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(v)
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prior to making any modification or amendment or supplement to these presents, procure the delivery
of (a) legal opinion(s) as to English and any other relevant law, addressed to the Trustee, dated the date of such modification
or amendment or supplement, as the case may be,
and in a form acceptable to the Trustee from legal advisers acceptable to the Trustee;
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(w)
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give notice to the Trustee of the proposed redemption of the Bonds at least 5 business days in
London prior to the giving of any notice of redemption in respect of such Bonds pursuant to Condition 14 (Notices); and
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(x)
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provide the Trustee with sufficient information so as to enable it to determine whether or not
it is obliged, in respect of any payments to be made by it pursuant to these presents, to make any withholding or deduction pursuant
to an agreement described in Section 1471(b) of the US Internal Revenue Code of 1986 (the Code) or otherwise imposed pursuant
to Sections 1471 through 1474 of the Code and any regulations or agreements thereunder or official interpretations thereof (FATCA
Withholding Tax).
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15.
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Remuneration and Indemnification of Trustee
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15.1
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The Issuer failing whom, the Guarantors shall pay to the Trustee remuneration for its services
as trustee as from the date of this Trust Deed, such remuneration to be at such rate and to be paid on such dates as may from time
to time be agreed between the Issuer and the Trustee. In the absence of any agreement to the contrary, such remuneration shall
be payable in advance on 26 April in each year, the first such payment to be made on the date hereof. Such remuneration shall accrue
from day to day and be payable (in priority to payments to the Bondholders) up to and including the date when, all the Bonds having
become due for redemption, the redemption moneys and interest thereon to the date of redemption have been paid to the Principal
Paying Agent or, as the case may be, the Trustee PROVIDED THAT if upon due presentation of any Bond (if required) or any cheque
payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will commence again to accrue.
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15.2
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In the event of the occurrence of an Event of Default or a Potential Event of Default the Issuer
and the Guarantors hereby agree that the Trustee shall be entitled to be paid additional remuneration, which may be calculated
at its normal hourly rates in force from time to time (provided that such hourly rates are comparable to the prevailing rates in
the market at such time). In any other case, if the Trustee considers it expedient or necessary or is requested by the Issuer or
the Guarantors to undertake duties which the Trustee and the Issuer or, as the case may be, the relevant Guarantor agree to be
of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents the Issuer, failing
whom the Guarantors, shall pay to the Trustee such additional remuneration as shall be agreed between them (and which may be calculated
by reference to the Trustee's normal hourly rates in force from time to time provided that such hourly rates are comparable to
the prevailing rates in the market at such time).
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15.3
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The Issuer, failing whom the Guarantors shall in addition pay to the Trustee an amount equal to
the amount of any value added tax or similar tax chargeable thereon in respect of its remuneration under these presents.
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15.4
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In the event of the Trustee and the Issuer failing or, as the case may be, the relevant Guarantor
failing to agree:
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(a)
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(in a case to which subclause 15.1 above applies) upon the amount of the remuneration; or
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(b)
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(in a case to which subclause 15.2 above applies) upon whether such duties shall be of an
exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents, or upon such
additional remuneration,
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such matters
shall be determined by a person (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer
or, failing such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society
of England and Wales (the expenses involved in such nomination and the fees of such person being payable by the Issuer) and the
determination of any such person shall be final and binding upon the Trustee and the Issuer.
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15.5
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Without prejudice to the right of indemnity by law given to trustees, the Issuer and each Guarantor
shall severally indemnify the Trustee and every Appointee and keep it or him indemnified against all Liabilities to which it or
he may be or become subject or which may be incurred by it or him in the preparation and execution or purported execution of any
of its or his trusts, powers, authorities and discretions under these presents or its or his functions under any such appointment
or in respect of any other matter or thing done or omitted in any way relating to these presents or any such appointment (including
all Liabilities incurred in disputing or defending any of the foregoing).
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15.6
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The Issuer, failing whom the Guarantors, shall also pay or discharge all Liabilities incurred by
the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under,
and in any other manner relating to, these presents, including but not limited to travelling expenses and any stamp, issue, registration,
documentary and other taxes or duties paid or payable by the Trustee in connection with any action taken or contemplated by or
on behalf of the Trustee for enforcing these presents.
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15.7
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Where any amount which would otherwise be payable by the Issuer or the Guarantors under subclause
15.5 or subclause 15.6 has instead been paid by any person or persons other than the Issuer or the Guarantors (each, an Indemnifying
Party), the Issuer or the Guarantors, as the case may be, shall pay to the Trustee an equal amount for the purpose of enabling
the Trustee to reimburse the Indemnifying Parties.
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15.8
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All amounts payable pursuant to subclause 15.5 and 15.6 above shall be payable by the Issuer on
the date specified in a demand by the Trustee and in the case of payments actually made by the Trustee prior to such demand shall
carry interest at a rate equal to the Trustee’s cost of borrowing from the date such demand is made, and in all other cases
shall (if not paid within 30 days after the date of such demand or, if such demand specifies that payment is to be made on an earlier
date, on such earlier date) carry interest at such rate from such thirtieth day of such other date specified in such demand. All
remuneration payable to the Trustee shall carry interest at such rate from the due date therefor. A certificate from the Trustee
as to the Trustee’s cost of borrowing on any particular date or during any particular period shall be conclusive and binding
on the Issuer and the Guarantors.
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15.9
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The Issuer hereby further undertakes to the Trustee that all monies payable by the Issuer, failing
which the Guarantors, to the Trustee under this clause shall be made without set-off, counterclaim, deduction or withholding unless
compelled by law in which event the Issuer, failing which the Guarantors, will pay such additional amounts as will result in the
receipt by the Trustee of the amounts which would otherwise have been payable by the Issuer, failing which the Guarantors to the
Trustee under this clause in the absence of any such set-off, counterclaim, deduction or withholding.
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15.10
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Unless otherwise specifically stated in any discharge of these presents the provisions of this
clause 15 shall continue in full force and effect notwithstanding such discharge.
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16.
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Supplement to Trustee Acts
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Section 1 of
the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents. Where
there are any inconsistencies between the Trustee Acts and the provisions of these presents, the provisions of these presents shall,
to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of these
presents shall constitute a restriction or exclusion for the purposes of that Act. The Trustee shall have all the powers conferred
upon trustees by the Trustee Acts and by way of supplement thereto it is expressly declared as follows:
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(a)
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The Trustee may in relation to these presents act on the advice or opinion of or any information
(whether addressed to the Trustee or not) obtained from any lawyer, valuer, accountant, surveyor, banker, broker, auctioneer or
other expert whether obtained by the Issuer, any Guarantor, the Trustee or otherwise and shall not be responsible for any Liability
occasioned by so acting.
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(b)
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Any such advice, opinion or information may be sent or obtained by letter, telex, telegram, facsimile
transmission, electronic mail or cable and the Trustee shall not be liable for acting on any advice, opinion or information purporting
to be conveyed by any such letter, telegram, facsimile transmission, electronic mail or cable although the same shall contain some
error or shall not be authentic.
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(c)
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The Trustee may call for and shall be at liberty to accept as sufficient evidence of any fact or
matter or the expediency of any transaction or thing a certificate signed by any two Directors of the Issuer and/or by any two
Directors of any Guarantor or, in the case of BCL, either two Directors of BCL or a Director and the secretary of BCL and the Trustee
shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by
it or any other person acting on such certificate.
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(d)
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The Trustee shall be at liberty to hold these presents and any other documents relating thereto
or to deposit them in any part of the world with any banker or banking company or company whose business includes undertaking the
safe custody of documents or lawyer or firm of lawyers considered by the Trustee to be of good repute and the Trustee shall not
be responsible for or required to insure against any Liability incurred in connection with any such holding or deposit and may
pay all sums required to be paid on account of or in respect of any such deposit.
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(e)
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The Trustee shall not be responsible for the receipt or application of the proceeds of the issue
of any of the Bonds by the Issuer, the exchange of the Global Certificate for Definitive Certificates or the delivery of the Global
Certificate or Definitive Certificates to the person(s) entitled to it or them.
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(f)
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The Trustee shall not be bound to give notice to any person of the execution of any documents comprised
or referred to in these presents or to take any steps to ascertain whether any Event of Default or Potential Event of Default has
happened and, until it shall have actual knowledge or express notice pursuant to these presents to the contrary, the Trustee shall
be entitled to assume that no Event of Default or Potential Event of Default has happened and that the Issuer and each Guarantor
is observing and performing all its obligations under these presents.
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(g)
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Save as expressly otherwise provided in these presents, the Trustee shall have absolute and uncontrolled
discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions under these presents (the exercise
or non-exercise of which as between the Trustee and the Bondholders shall be conclusive and binding on the Bondholders) and shall
not be responsible for any Liability which may result from their exercise or non-exercise and in particular the Trustee shall not
be bound to act at the request or direction of the Bondholders or otherwise under any provision of these presents or to take at
such request or direction or otherwise any other action under any provision of these presents, without prejudice to the generality
of subclause 9.1, unless it shall first be indemnified and/or secured and/or pre-funded to its satisfaction against all Liabilities
to which it may render itself liable or which it may incur by so doing and the Trustee shall incur no liability for refraining
to act in such circumstances.
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(h)
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The Trustee shall not be liable to any person by reason of having acted upon any Extraordinary
Resolution in writing or any Extraordinary Resolution purporting to have been passed at any meeting of Bondholders in respect whereof
minutes have been made and signed or any Extraordinary Resolution passed by way of electronic consents received through the relevant
Clearing System(s) in accordance with these presents or any direction or request of Bondholders even though subsequent to its acting
it may be found that there was some defect in the constitution of the meeting or the passing of the resolution or (in the case
of an Extraordinary Resolution in writing or a direction or a request) it was not signed by the requisite number of Bondholders
or (in the case of an Extraordinary Resolution passed by electronic consents received through the relevant Clearing System(s))
it was not approved by the requisite number of Bondholders or that for any reason the resolution, direction or request was not
valid or binding upon such Bondholders.
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(i)
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The Trustee shall not be liable to any person by reason of having accepted as valid or not having
rejected any Bond purporting to be such and subsequently found to be forged or not authentic.
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(j)
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Any consent or approval given by the Trustee for the purposes of these presents may be given on
such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the contrary in these
presents may be given retrospectively. The Trustee may give any consent or approval, exercise any power, authority or discretion
or take any similar action (whether or not such consent, approval, power, authority, discretion or action is specifically referred
to in these presents) if it is satisfied that the interests of the Bondholders will not be materially prejudiced thereby. For the
avoidance of doubt, the Trustee shall not have any duty to the Bondholders in relation to such matters other than that which is
contained in the preceding sentence.
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(k)
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The Trustee shall not (unless and to the extent ordered so to do by a court of competent jurisdiction)
be required to disclose to any Bondholder any information (including, without limitation, information of a confidential, financial
or price sensitive nature) made available to the Trustee by the Issuer or the Guarantors or any other person in connection with
these presents and no Bondholder shall be entitled to take any action to obtain from the Trustee any such information.
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(l)
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Where it is necessary or desirable for any purpose in connection with these presents to convert
any sum from one currency to another it shall (unless otherwise provided by these presents or required by law) be converted at
such rate or rates, in accordance with such method and as at such
date for the determination of such rate of exchange, as may be agreed by the Trustee in consultation with the Issuer or the Guarantor
as relevant and any rate, method and date so agreed shall be binding on the Issuer, the Guarantors, and the Bondholders.
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(m)
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The Trustee may certify that any of the conditions, events and acts set out in subparagraphs (b)
to (d) inclusive (other than the winding up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries), (e)
to (g) inclusive and (k) and (l) of Condition 11.1 (Events of Default) (each of which conditions, events and acts shall,
unless in any case the Trustee in its absolute discretion shall otherwise determine, for all the purposes of these presents be
deemed to include the circumstances resulting therein and the consequences resulting therefrom) is in its opinion materially prejudicial
to the interests of the Bondholders and any such certificate shall be conclusive and binding upon the Issuer, the Guarantors, and
the Bondholders.
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(n)
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The Trustee as between itself and the Bondholders may determine all questions and doubts arising
in relation to any of the provisions of these presents. Every such determination, whether or not relating in whole or in part to
the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Bondholders.
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(o)
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In connection with the exercise by it of any of its trusts, powers, authorities and discretions
under these presents (including, without limitation, any modification, waiver, authorisation, determination or substitution), the
Trustee shall have regard to the general interests of the Bondholders as a class and shall not have regard to any interests arising
from circumstances particular to individual Bondholders (whatever their number) and, in particular but without limitation, shall
not have regard to the consequences of any such exercise for individual Bondholders (whatever their number) resulting from their
being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular
territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Bondholder be entitled
to claim, from the Issuer, the Guarantors, the Trustee or any other person any indemnification or payment in respect of any tax
consequence of any such exercise upon individual Bondholders except to the extent already provided for in Condition 9 (Taxation)
and/or any undertaking given in addition thereto or in substitution therefor under these presents.
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(p)
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Any trustee of these presents being a lawyer, accountant, broker or other person engaged in any
profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted
and acts done by him or his firm in connection with the trusts of these presents and also his proper charges in addition to disbursements
for all other work and business done and all time spent by him or his firm in connection with matters arising in connection with
these presents.
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(q)
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The Trustee may whenever it thinks fit delegate by power of attorney or otherwise to any person
or persons or fluctuating body of persons (whether being a joint trustee of these presents or not) all or any of its trusts, powers,
authorities and discretions under these presents. Such delegation may be made upon such terms (including power to sub-delegate)
and subject to such conditions and regulations as the Trustee may in the interests of the Bondholders think fit. The Trustee shall
not be under any obligation to supervise the proceedings or acts of any such delegate or sub-delegate or be in any way responsible
for any Liability incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate. The Trustee
shall within a reasonable time after any such delegation
or any renewal, extension or termination thereof give notice thereof to the Issuer.
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(r)
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The Trustee may in the conduct of the trusts of these presents instead of acting personally employ
and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur in transacting or conducting,
any business and to do, or concur in doing, all acts required to be done in connection with these presents (including the receipt
and payment of money). The Trustee shall not be in any way responsible for any Liability incurred by reason of any misconduct or
default on the part of any such agent or be bound to supervise the proceedings or acts of any such agent.
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(s)
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The Trustee may appoint and pay any person to act as a custodian or nominee on any terms in relation
to such assets of the trusts constituted by these presents as the Trustee may determine, including for the purpose of depositing
with a custodian these presents or any document relating to the trusts constituted by these presents and the Trustee shall not
be responsible for any Liability incurred by reason of the misconduct, omission or default on the part of any person appointed
by it hereunder or be bound to supervise the proceedings or acts of such person; the Trustee is not obliged to appoint a custodian
if the Trustee invests in securities payable to bearer.
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(t)
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The Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy,
genuineness, validity, performance, enforceability or admissibility in evidence of these presents or any other document relating
or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence, consent or other authority
for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility
in evidence of these presents or any other document relating or expressed to be supplemental thereto.
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(u)
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The Trustee may call for and shall be entitled to rely on any record, certificate or other document
to be issued by Euroclear or Clearstream, Luxembourg as to the principal amount of Bonds represented by the Global Certificate
standing to the account of any person. Any such record, certificate or other document shall, in the absence of manifest error,
be conclusive and binding for all purposes. Any such record, certificate or other document may comprise any form of statement or
print out of electronic records provided by the relevant clearing system (including Euroclear’s EUCLID or Clearstream, Luxembourg's
Creation Online system) in accordance with its usual procedures and in which the holder of a particular principal amount of Bonds
is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having
accepted as valid or not having rejected any such record, certificate or other document to such effect purporting to be issued
by Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic.
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(v)
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The Trustee shall not be responsible to any person for failing to request, require or receive any
legal opinion relating to the Bonds or for checking or commenting upon the content of any such legal opinion and shall not be responsible
for any Liability incurred thereby.
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(w)
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Subject to the requirements, if any, of the London Stock Exchange, any corporation into which the
Trustee shall be merged or with which it shall be consolidated or any company resulting from any such merger or consolidation shall
be a party hereto and shall be the Trustee under these
presents without executing or filing any paper or document or any further act on the part of the parties thereto.
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(x)
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The Trustee shall not be bound to take any action in connection with these presents or any obligations
arising pursuant thereto, including, without prejudice to the generality of the foregoing, forming any opinion or employing any
financial adviser, where it is not satisfied that it will be indemnified against all Liabilities which may be incurred in connection
with such action and may demand prior to taking any such action that there be paid to it in advance such sums as it considers (without
prejudice to any further demand) shall be sufficient so to indemnify it.
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(y)
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No provision of these presents shall require the Trustee to do anything which may (i) be illegal
or contrary to applicable law or regulation; or (ii) cause it to expend or risk its own funds or otherwise incur any Liability
in the performance of any of its duties or in the exercise of any of its rights, powers or discretions (including obtaining any
advice which it might otherwise have thought appropriate or desirable to obtain), if it shall believe that repayment of such funds
or adequate indemnity against such risk or Liability is not assured to it.
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(z)
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Unless notified to the contrary, the Trustee shall be entitled to assume without enquiry (other
than requesting a certificate pursuant to subclause 14(p)) that no Bonds are held by, for the benefit of, or on behalf of, the
Issuer, any Guarantor, any Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding
company.
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(aa)
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The Trustee shall have no responsibility whatsoever to the Issuer, the Guarantors, any Bondholder
or any other person for the maintenance of or failure to maintain any rating of any of the Bonds by any rating agency.
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(bb)
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Any certificate, advice, opinion or report of the Auditors or any other expert or professional
adviser called for by or provided to the Trustee (whether or not addressed to the Trustee) in accordance with or for the purposes
of these presents may be relied upon by the Trustee as sufficient evidence of the facts stated therein notwithstanding that such
certificate, advice, opinion or report and/or any engagement letter or other document entered into by the Trustee in connection
therewith contains a monetary or other limit on the liability of the Auditors or such other expert or professional adviser in respect
thereof and notwithstanding that the scope and/or basis of such certificate, advice, opinion or report may be limited by any engagement
or similar letter or by the terms of the certificate, advice, opinion or report itself.
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(cc)
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The Trustee shall not be responsible for, or for investigating any matter which is the subject
of, any recital, statement, representation, warranty or covenant of any person contained in these presents, or any other agreement
or document relating to the transactions contemplated in these presents or under such other agreement or document.
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(dd)
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The Trustee shall not be liable or responsible for any Liabilities or inconvenience which may result
from anything done or omitted to be done by it in accordance with the provisions of these presents.
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(ee)
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The Trustee shall not incur any liability to the Issuer, Bondholders or any other person in connection
with any approval given by it pursuant to Clause 14(n) to any notice to be given to Bondholders
by the Issuer; the Trustee shall not be deemed to have represented, warranted, verified or confirmed that the contents of any such
notice are true, accurate or complete in any respects or that it may be lawfully issued or received in any jurisdiction.
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(ff)
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When determining whether an indemnity or any security or pre-funding is satisfactory to it, the
Trustee shall be entitled to evaluate its risk in any given circumstance by considering the worst-case scenario and, for this purpose,
it may take into account, without limitation, the potential costs of defending or commencing proceedings in England or elsewhere
and the risk, however remote, of any award of damages against it in England or elsewhere.
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(gg)
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The Trustee shall be entitled to require that any indemnity or security given to it by the Bondholders
or any of them be given on a joint and several basis and be supported by evidence satisfactory to it as to the financial standing
and creditworthiness of each counterparty and/or as to the value of the security and an opinion as to the capacity, power and authority
of each counterparty and/or the validity and effectiveness of the security.
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(hh)
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The Trustee shall not be responsible for monitoring whether any notices to Bondholders are given
in compliance with the requirements of the London Stock Exchange or with any other legal or regulatory requirements.
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(ii)
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The Trustee shall be entitled to deduct FATCA Withholding Tax, and shall have no obligation to
gross-up any payment hereunder or to pay any additional amount as a result of such FATCA Withholding Tax.
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(jj)
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Notwithstanding anything in these presents to the contrary, the Trustee shall not do, or be authorised
or required to do, anything which might constitute a regulated activity for the purpose of the FSMA, unless it is authorised under
the FSMA to do so. The Trustee shall have the discretion at any time (i) to delegate any of the functions which fall to be performed
by an authorised person under the FSMA to any agent or person which has the necessary authorisations and licences and (ii) to apply
for authorisation under the FSMA and perform any or all such functions itself if, in its absolute discretion, it considers it necessary,
desirable or appropriate to do so.
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17.1
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Nothing in these presents shall exempt the Trustee from or indemnify it against any liability which
by virtue of any rule of law would otherwise attach to it in respect of any gross negligence, wilful default or fraud of which
it may be guilty in relation to its duties under these presents where the Trustee has failed to show the degree of care and diligence
required of it as trustee having regard to the provisions of these presents conferring on it any trusts, powers, authorities or
discretions.
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17.2
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Notwithstanding any provision of these presents to the contrary, the Trustee shall not in any event
be liable for:
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(a)
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loss of profit, loss of business, loss of goodwill, loss of opportunity, whether direct or indirect;
and
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(b)
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special, indirect, punitive or consequential loss or damage of any kind whatsoever, whether or
not foreseeable, whether or not the Trustee can reasonably be regarded as having assumed responsibility at the time this Trust
Deed is entered into, even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss
or damage is made in respect of fraud on the part of the Trustee.
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18.
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Trustee Contracting with the Issuer and the Guarantors
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Neither the
Trustee nor any director or officer or holding company, Subsidiary or associated company of a corporation acting as a trustee under
these presents shall by reason of its or his fiduciary position be in any way precluded from:
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(a)
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entering into or being interested in any contract or financial or other transaction or arrangement
with the Issuer or any Guarantor or any person or body corporate associated with the Issuer or any Guarantor (including without
limitation any contract, transaction or arrangement of a banking or insurance nature or any contract, transaction or arrangement
in relation to the making of loans or the provision of financial facilities or financial advice to, or the purchase, placing or
underwriting of or the subscribing or procuring subscriptions for or otherwise acquiring, holding or dealing with, or acting as
paying agent in respect of, the Bonds or any other bonds, notes stocks, shares, debenture stock, debentures or other securities
of, the Issuer or any Guarantor or any person or body corporate associated as aforesaid); or
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(b)
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accepting or holding the trusteeship of any other trust deed constituting or securing any other
securities issued by or relating to the Issuer or any Guarantor or any such person or body corporate so associated or any other
office of profit under the Issuer or any Guarantor or any such person or body corporate so associated,
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and shall be
entitled to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such
contract, transaction or arrangement as is referred to in (a) above or, as the case may be, any such trusteeship or office of profit
as is referred to in (b) above without regard to the interests of the Bondholders and notwithstanding that the same may be contrary
or prejudicial to the interests of the Bondholders and shall not be responsible for any Liability occasioned to the Bondholders
thereby and shall be entitled to retain and shall not be in any way liable to account for any profit made or share of brokerage
or commission or remuneration or other amount or benefit received thereby or in connection therewith.
Where any holding
company, subsidiary or associated company of the Trustee or any director or officer of the Trustee acting other than in his capacity
as such a director or officer has any information, the Trustee shall not thereby be deemed also to have knowledge of such information
and, unless it shall have actual knowledge of such information, shall not be responsible for any loss suffered by Bondholders resulting
from the Trustee's failing to take such information into account in acting or refraining from acting under or in relation to these
presents.
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19.
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Waiver, Authorisation and Determination
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19.1
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The Trustee may without the consent or sanction of the Bondholders and without prejudice to its
rights in respect of any subsequent breach, Event of Default or Potential Event of Default from time to time and at any time but
only if and in so far as in its opinion the interests of the Bondholders shall not be materially prejudiced thereby waive or authorise
any breach or proposed breach by the Issuer or any Guarantor of any of the covenants or provisions contained in these presents
or the Agency Agreement or determine that any Event of Default or Potential Event of Default
shall not be treated as such for the purposes of these presents PROVIDED ALWAYS THAT the Trustee shall not exercise any powers
conferred on it by this clause in contravention of any express direction given by Extraordinary Resolution or by a request under
Condition 12 (Enforcement) but so that no such direction or request shall affect any waiver, authorisation or determination
previously given or made. Any such waiver, authorisation or determination may be given or made on such terms and subject to such
conditions (if any) as the Trustee may determine, shall be binding on the Bondholders and, if, but only if, the Trustee shall so
require, shall be notified by the Issuer to the Bondholders in accordance with Condition 14 (Notices) as soon as practicable
thereafter.
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MODIFICATION
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19.2
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The Trustee may without the consent or sanction of the Bondholders at any time and from time to
time concur with the Issuer and the Guarantors in making any modification (i) to these presents or the Agency Agreement (including,
without limitation, any Basic Terms Modification) which in the opinion of the Trustee it may be proper to make PROVIDED THAT the
Trustee is of the opinion that such modification is not materially prejudicial to the interests of the Bondholders or (ii) to these
presents or the Agency Agreement if in the opinion of the Trustee such modification is of a formal, minor or technical nature or
to correct a manifest error or an error which is, in the opinion of the Trustee, proven. Any such modification may be made on such
terms and subject to such conditions (if any) as the Trustee may determine, shall be binding upon the Bondholders and, unless the
Trustee agrees otherwise, shall be notified by the Issuer to the Bondholders in accordance with Condition 14 (Notices) as
soon as practicable thereafter.
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BREACH
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19.3
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Any breach of or failure to comply with any such terms and conditions as are referred to in subclauses
19.1 and 19.2 shall constitute a default by the Issuer or the relevant Guarantor (as the case may be) in the performance or observance
of a covenant or provision binding on it under or pursuant to these presents.
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20.
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Entitlement to treat Holder as Absolute Owner
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The Issuer,
the Guarantors, the Trustee, the Paying Agents, the Registrar and the Transfer Agents may (to the fullest extent permitted by applicable
laws) deem and treat the holder of any Bond or of a particular principal amount of the Bonds as the absolute owner of such Bond
or principal amount for all purposes (whether or not such Bond or principal amount shall be overdue and notwithstanding any notice
of ownership thereof or of trust or other interest with regard thereto, any notice of loss or theft thereof or any writing thereon),
and the Issuer, the Guarantors, the Trustee, the Paying Agents, the Registrar and the Transfer Agents shall not be affected by
any notice to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective
to satisfy and discharge the liability for the moneys payable in respect of such Bond or principal amount.
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21.1
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(a)
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The Trustee may without the consent of the Bondholders at any time agree with the Issuer and
the Guarantors to the substitution in place of the Issuer (or of the previous substitute under this clause) as the principal
debtor under these presents of BCL or any of its other Subsidiaries (such substituted company being hereinafter called the New
Company) provided that a trust deed is executed or some other form of undertaking is given by the New Company in form and
manner satisfactory to the Trustee, agreeing to be bound by
the provisions of these presents with any consequential amendments which the Trustee may deem appropriate as fully as if the New
Company had been named in these presents as the principal debtor in place of the Issuer (or of the previous substitute under the
clause) and provided further that each Guarantor (other than a Guarantor substituted in place of the Issuer) continues to unconditionally
and irrevocably guarantee all amounts payable under these presents to the satisfaction of the Trustee.
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(b)
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The following further conditions shall apply to (a) above:
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(i)
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the Issuer, each Guarantor and the New Company shall comply with such other requirements as the
Trustee may direct in the interests of the Bondholders;
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(ii)
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without prejudice to the rights of reliance of the Trustee under the immediately following paragraph
(iii), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Bondholders;
and
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(iii)
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if two Directors of the New Company (or other officers acceptable to the Trustee) shall certify
that the New Company is solvent both at the time at which the relevant transaction is proposed to be effected and immediately thereafter
(which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to have regard to the financial
condition, profits or prospects of the New Company or to compare the same with those of the Issuer or the previous substitute under
this clause as applicable.
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21.2
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Any such trust deed or undertaking shall, if so expressed, operate to release the Issuer or the
previous substitute as aforesaid from all of its obligations as principal debtor under these presents. Not later than 14 days after
the execution of such documents and compliance with such requirements, the New Company shall give notice thereof in a form previously
approved by the Trustee to the Bondholders in the manner provided in Condition 14 (Notices). Upon the execution of such
documents and compliance with such requirements, the New Company shall be deemed to be named in these presents as the principal
debtor in place of the Issuer (or in place of the previous substitute under this clause) under these presents and these presents
shall be deemed to be modified in such manner as shall be necessary to give effect to the above provisions and, without limitation,
references in these presents to the Issuer shall, unless the context otherwise requires, be deemed to be or include references
to the New Company.
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Each of the
Issuer and each of the Guarantors shall severally indemnify the Trustee, every Appointee and the Bondholders and keep them indemnified
against:
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(a)
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any Liability incurred by any of them arising from the non-payment by the Issuer or the Guarantors
of any amount due to the Trustee or the Bondholders under these presents by reason of any variation in the rates of exchange between
those used for the purposes of calculating the amount due under a judgment or order in respect thereof and those prevailing at
the date of actual payment by the Issuer or the Guarantors; and
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(b)
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any deficiency arising or resulting from any variation in rates of exchange between (i) the date
as of which the local currency equivalent of the amounts due or contingently due under these presents (other
than this clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer or any Guarantor and
(ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency
shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any
distribution of assets in connection with any such bankruptcy, insolvency or liquidation.
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The above
indemnities shall constitute obligations of the Issuer and the Guarantors separate and independent from their obligations under
the other provisions of these presents and shall apply irrespective of any indulgence granted by the Trustee or the Bondholders
from time to time and shall continue in full force and effect notwithstanding the judgment or filing of any proof or proofs in
any bankruptcy, insolvency or liquidation of the Issuer or the Guarantors for a liquidated sum or sums in respect of amounts due
under these presents (other than this clause). Any such deficiency as aforesaid shall be deemed to constitute a loss suffered
by the Bondholders and no proof or evidence of any actual loss shall be required by the Issuer or the Guarantors or their liquidator
or liquidators.
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23.1
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The power to appoint a new trustee of these presents shall, subject as hereinafter provided, be
vested in the Issuer but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution.
One or more persons may hold office as trustee or trustees of these presents but such trustee or trustees shall be or include a
Trust Corporation. Whenever there shall be more than two trustees of these presents the majority of such trustees shall be competent
to execute and exercise all the duties, powers, trusts, authorities and discretions vested in the Trustee by these presents provided
that a Trust Corporation shall be included in such majority. Any appointment of a new trustee of these presents shall as soon as
practicable thereafter be notified by the Issuer to the Principal Paying Agent, the Registrar, the Transfer Agents and the Bondholders.
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SEPARATE
AND CO-TRUSTEES
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23.2
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Notwithstanding the provisions of subclause 23.1 above, the Trustee may, upon giving prior notice
to the Issuer and the Guarantors (but without the consent of the Issuer, the Guarantors or the Bondholders), appoint any person
established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate trustee or as a co-trustee
jointly with the Trustee:
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(a)
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if the Trustee considers such appointment to be in the interests of the Bondholders;
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(b)
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for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction
in which any particular act or acts is or are to be performed; or
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(c)
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for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction
of either a judgment already obtained or any of the provisions of these presents against the Issuer and/or any Guarantor.
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The
Issuer and each of the Guarantors irrevocably appoints the Trustee to be its attorney in its name and on its behalf to
execute any such instrument of appointment. Such a person shall (subject always to the provisions of these presents) have
such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by these presents) and such
duties and obligations as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power in
like manner to remove any such person. Such reasonable remuneration as the Trustee may pay to any such person, together with
any attributable Liabilities incurred by it in performing its function as such separate trustee or co-trustee, shall for the
purposes of these presents be treated as Liabilities incurred by the Trustee.
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24.
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Trustee's Retirement and Removal
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A trustee of
these presents may retire at any time on giving not less than 90 days' prior written notice to the Issuer and the Guarantors without
giving any reason and without being responsible for any Liabilities incurred by reason of such retirement. The Bondholders may
by Extraordinary Resolution remove any trustee or trustees for the time being of these presents. The Issuer and each Guarantor
undertake that in the event of the only trustee of these presents which is a Trust Corporation (for the avoidance of doubt, disregarding
for this purpose any separate or co-trustee appointed under subclause 23.2) giving notice under this clause or being removed by
Extraordinary Resolution they will use their best endeavours to procure that a new trustee of these presents being a Trust Corporation
is appointed as soon as reasonably practicable thereafter. The retirement or removal of any such trustee shall not become effective
until a successor trustee being a Trust Corporation is appointed. If, in such circumstances, no appointment of such a new trustee
has become effective within 60 days of the date of such notice or Extraordinary Resolution, the Trustee shall be entitled to appoint
a Trust Corporation as trustee of these presents, but no such appointment shall take effect unless previously approved by an Extraordinary
Resolution.
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25.
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Trustee's Powers to be Additional
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The powers
conferred upon the Trustee by these presents shall be in addition to any powers which may from time to time be vested in the Trustee
by the general law or as a holder of any of the Bonds.
Any notice
or demand to the Issuer, BCL or the Trustee to be given, made or served for any purposes under these presents shall be given, made
or served by sending the same by pre-paid post (first class if inland, first class airmail if overseas) or facsimile transmission
or by delivering it by hand as follows:
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to the Issuer:
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Burford Capital PLC
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24 Cornhill
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London EC3V 3ND
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(Attention: Hayley Leake)
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Facsimile No. 020 70609977
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to BCL:
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Burford Capital Limited
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Regency Court
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Glategny Esplanade
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St Peter Port
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GY1 1WW
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(Attention: Mark Woodall)
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Facsimile No. (0)1481716868
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to the Trustee:
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U.S. Bank Trustees Limited
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125 Old Broad Street
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Fifth Floor
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London
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EC2N 1AR
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(Attention: Structured Finance Relationship Management)
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Facsimile No. +44 (0)20 7354 2577
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or to such
other address or facsimile number as shall have been notified (in accordance with this clause) to the other parties hereto and
any notice or demand sent by post as aforesaid shall be deemed to have been given, made or served two days in the case of inland
post or seven days in the case of overseas post after despatch and any notice or demand sent by facsimile transmission as aforesaid
shall be deemed to have been given, made or served at the time of despatch provided that in the case of a notice or demand given
by facsimile transmission a confirmation of transmission is received by the sending party and such notice or demand shall forthwith
be confirmed by post. The failure of the addressee to receive such confirmation shall not invalidate the relevant notice or demand
given by facsimile transmission.
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27.
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Confidentiality Undertaking
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27.1
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The Trustee undertakes that it, and each of its directors, officers
and affiliates, will:
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(a)
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keep the Confidential Information confidential and not disclose it to any person except as permitted
under sub-clause 27.2 below or with the written consent of the Issuer; and
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(b)
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use the Confidential Information solely to perform its role of Trustee pursuant to the provisions
of these presents upon and subject to the terms and conditions of these presents.
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27.2
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The Trustee may disclose Confidential Information only in the
following circumstances and only if and to the extent that the Trustee reasonably determines that: (i) it is both relevant and
necessary to do so in the relevant circumstances and (ii) in the case of (d) and (f) below (and in the case of (e) below, to the
extent it relates to disclosure to the Bondholders), it is necessary for Bondholders to be aware of such Confidential Information
when considering any matter, making any relevant decision or when determining to give any relevant directions to the Trustee:
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(a)
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to its professional advisers or auditors, or to any separate or co-trustee or Appointee, provided
that the recipient is subject to professional obligations to maintain the confidentiality of the Confidential Information or is
otherwise bound by requirements of confidentiality (in mutatis mutandis the same form as this Clause 27) in relation to
the Confidential Information;
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(b)
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to comply with any court order or applicable law or regulation;
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(c)
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to defend itself (in legal proceedings or otherwise) against any allegations of negligence, default
or misconduct (howsoever described) where failure by the Trustee to disclose the Confidential Information would otherwise materially
prejudice the Trustee’s defence;
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(d)
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for the purpose of investigating the occurrence of any Event of Default or Potential Event of Default
(where it knows, or has reasonable grounds to suspect, that such an event has occurred);
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(e)
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for the purpose of enforcing any of its rights or the rights of the Bondholders under these presents
and/or the Bonds against the Issuer and/or any Guarantor (including, without limitation, in any court proceedings); or
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(f)
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to enable it to seek directions from the Bondholders, in circumstances where it determines that
such directions are necessary or desirable.
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27.3
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To the extent permitted by applicable law, the Trustee agrees
to inform the Issuer of each disclosure of Confidential Information pursuant to paragraphs (b) to (f) of sub-clause 27.2 above
as soon as reasonably practicable after making its decision to disclose or upon becoming aware that Confidential Information has
been disclosed in breach of Clause 27.1.
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27.4
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The obligations in this Clause 27 are continuing and shall remain
in full force and effect notwithstanding redemption of the Bonds or termination of these presents.
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These presents
and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance
with, English law.
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29.
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Submission to Jurisdiction
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29.1
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Each of the Guarantors irrevocably agrees for the benefit of the Trustee and the Bondholders that
the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with these
presents and accordingly submit to the exclusive jurisdiction of the English courts. Each of the Guarantors waives any objection
to the courts of England on the grounds that they are an inconvenient or inappropriate forum. To the extent permitted by law, the
Trustee and the Bondholders may take any suit, action or proceeding arising out of or in connection with these presents (together
referred to as Proceedings) against the Guarantors in any other court of competent jurisdiction and concurrent Proceedings
in any number of jurisdictions.
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29.2
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BCL irrevocably and unconditionally appoints the Issuer at its registered office for the time being
as its agent for service of process in England in respect of any Proceedings and undertakes that in the event of it ceasing so
to act it will appoint such other person as the Trustee may approve as its agent for that purpose. BCL:
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(a)
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agrees to procure that, so long as any of the Bonds remains liable to prescription, there shall
be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept service as
aforesaid;
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(b)
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agrees that failure by any such person to give notice of such service of process to BCL shall not
impair the validity of such service or of any judgment based thereon;
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(c)
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consents to the service of process in respect of any Proceedings by the airmailing of copies, postage
prepaid, to BCL in accordance with clause 26; and
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(d)
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agrees that nothing in these presents shall affect the right to serve process in any other manner
permitted by law.
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This Trust
Deed and any trust deed supplemental hereto may be executed and delivered in any number of counterparts, all of which, taken together,
shall constitute one and the same deed and any party to this Trust Deed or any trust deed supplemental hereto may enter into the
same by executing and delivering a counterpart.
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31.
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Contracts (Rights of Third Parties) Act 1999
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A person who
is not a party to these presents has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these
presents, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
IN WITNESS whereof
this Trust Deed has been executed as a deed by the Issuer, BCL and the Trustee and delivered on the date first stated on page 1.
Schedule
1
Form of
Global Certificate
[THIS GLOBAL CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS AND
THE ISSUER HAS NOT BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(THE 1940 ACT). NEITHER THIS GLOBAL CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND UNDER CIRCUMSTANCES WHICH DO NOT REQUIRE THE ISSUER TO REGISTER UNDER THE 1940 ACT.]
ISIN: XS1391063424
BURFORD CAPITAL PLC
(Incorporated with
limited liability under the laws of England and Wales with registered number 09077893)
GLOBAL CERTIFICATE
representing
£100,000,000
6.125 PER CENT. GUARANTEED
BONDS DUE 2024
unconditionally and irrevocably
guaranteed
as to payment of principal
and interest by
BURFORD CAPITAL LIMITED
(Incorporated with
limited liability under the laws of Guernsey with registered number 50877)
and any Subsidiary of
Burford Capital Limited which becomes a Guarantor from time to time
Burford Capital PLC (the
Issuer) hereby certifies that [__________] is, at the date hereof, entered in the Register as the holder of the aggregate
principal amount of £100,000,000 of a duly authorised issue of Bonds (the Bonds) described above of the Issuer. References
herein to the Conditions (or to any particular numbered Condition) shall be to the Conditions (or that particular one of them)
set out in Schedule 2 to the Trust Deed referred to below. Words and expressions defined in the Conditions shall bear the same
meanings when used in this Global Certificate. This Global Certificate is issued subject to, and with the benefit of, the Conditions
and a Trust Deed dated 26 April, 2016 and made between the Issuer and U.S. Bank Trustees Limited (the Trustee) as trustee
for the Bondholders.
The Issuer, subject
to and in accordance with the Conditions and the Trust Deed, promises to pay to the registered holder hereof on 26 October,
2024 and/or on such earlier date(s) as all or any of the Bonds represented by this Global Certificate may become due and
repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such
Bonds on each such date and to pay interest (if any) on the principal amount of the Bonds outstanding from time to time
represented by this Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with
any other sums payable under the Conditions and the Trust Deed. At maturity, and prior to the payment of any amount due, the
registered holder hereof shall surrender this Global Certificate at the specified office of the Principal Paying Agent at 125
Old Broad Street, London EC2N 1AR or such other office as may be specified by the Issuer and approved by the Trustee. On any
redemption or purchase and cancellation of any of the Bonds represented by this Global Certificate, details of such
redemption or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in the Schedule
hereto and the relevant space in the Schedule hereto recording any such redemption or purchase and cancellation (as the case
may be) shall be signed by or on behalf of the Principal Paying Agent. Upon any such redemption or purchase and cancellation
the principal amount outstanding of this Global Certificate and the Bonds held by the registered holder hereof shall be
reduced by the principal amount of such Bonds so redeemed or purchased and cancelled. The principal amount outstanding of
this Global Certificate and of the Bonds held by the registered holder hereof following any such redemption or purchase and
cancellation as aforesaid or any exchange as referred to below shall be the outstanding principal amount most recently
entered in the fourth column in the Schedule hereto.
Bonds represented by
this Global Certificate are exchangeable and transferable only in accordance with, and subject to, the provisions hereof and the
rules and operating procedures of Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, société
anonyme (Clearstream, Luxembourg).
Upon the exchange of
the whole or a part of this Global Certificate for Definitive Certificates (only where Euroclear or Clearstream, Luxembourg notifies
the Issuer and the Guarantors that it is unwilling or unable to continue as a clearing system in connection with a Global Certificate,
and a successor clearing system approved by the Trustee is not appointed by the Issuer and the Guarantors within 90 days after
receiving such notice from Euroclear, Clearstream, Luxembourg), details of such exchange shall be entered by or on behalf of the
Issuer in the third column of the Schedule hereto and the relevant space in the Schedule hereto recording such exchange shall be
signed by or on behalf of the Principal Paying Agent, whereupon the outstanding principal amount of this Global Certificate and
the Bonds held by the registered holder hereof shall be increased or reduced (as the case may be) by the principal amount so exchanged.
Subject as provided in
the following paragraph, until the exchange of the whole of this Global Certificate as aforesaid, the registered holder hereof
shall in all respects be entitled to the same benefits as if he were the registered holder of Definitive Certificates in the form
set out in Part 1 of Schedule 2 to the Trust Deed.
Subject as provided in
the Trust Deed, each person who is for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg as entitled
to a particular principal amount of the Bonds represented by this Global Certificate (in which regard any certificate or other
document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Bonds standing to the account of any
person shall be conclusive and binding for all purposes save in the case of manifest error) shall be deemed to be the holder of
such principal amount of such Bonds for all purposes other than with respect to payments of principal and interest on the Bonds
for which purpose the registered holder of this Global Certificate shall be deemed to be the holder of such principal amount of
the Bonds in accordance with and subject to the terms of this Global Certificate and the Trust Deed. Whilst the Bonds are represented
by this Global Certificate payments will be made to the registered holder appearing on the Register at the close of the business
day (being for this purpose a day on which Euroclear and Clearstream, Luxembourg are open for business) preceding such due date.
For so long as all
of the Bonds are represented by this Global Certificate and this Global Certificate is held on behalf of Euroclear and/or
Clearstream, Luxembourg, notices to Bondholders may be given by delivery of the relevant notice to Euroclear and/or
Clearstream, Luxembourg (as the case may be) for communication to the relative accountholders rather than by publication as
required by Condition 14 (Notices) provided that, so long as the Bonds are admitted to the official list maintained by
the Financial Conduct Authority in its capacity as the UK Listing Authority (the UKLA) and admitted to trading on the
London Stock Exchange plc's market for listed securities, all requirements of the UKLA have been complied with. Any such
notice shall be deemed to have been given to the Bondholders on the second day after the day on which such notice is
delivered to Euroclear and/or Clearstream, Luxembourg (as the case may be) as aforesaid.
Whilst any Bonds held
by a Bondholder are represented by this Global Certificate, notices to be given by such Bondholder may be given by such Bondholder
to the Principal Paying Agent through Euroclear and/or Clearstream, Luxembourg, as the case may be, in such a manner as the Principal
Paying Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.
Claims against the Issuer
and the Guarantors in respect of principal and interest on the Bonds represented by this Global Certificate will be prescribed
after 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date (as defined in Condition
9 (Taxation)).
References herein to
Euroclear and/or Clearstream, Luxembourg shall be deemed to include references to any other clearing system approved by the Trustee.
No rights are conferred
on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Global Certificate but this does
not affect any right or remedy of any person which exists or is available apart from that Act.
This Global Certificate
and any non-contractual obligations arising out of or in connection with it is governed by, and shall be construed in accordance
with, English law.
This Global Certificate
shall not be valid unless authenticated by Elavon Financial Services Limited as Principal Paying Agent.
IN WITNESS whereof the
Issuer has caused this Global Certificate to be signed on its behalf.
BURFORD CAPITAL PLC
Issued in London, England
on 26 April, 2016.
Certificate of authentication
This Global Certificate
is duly authenticated
without recourse, warranty
or liability.
Duly authorised
for and on behalf of
Elavon Financial Services
Limited
as Principal Paying Agent
SCHEDULE
Outstanding Principal
Amount
The following (i) exchanges of this Global
Certificate for Definitive Certificates (only in the limited circumstances set forth in this Global Certificate), (ii) payments
of any redemption amount in respect of this Global Certificate and/or (iii) cancellations of interests in this Global Certificate
have been made, resulting in the principal amount outstanding hereof being the amount specified in the latest entry in the fourth
column:
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Date
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Amount of increase/ decrease in outstanding
principal amount of this Global Certificate
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Reasons for increase/ decrease in outstanding
principal amount of this Global Certificate (initial issue, cancellation, redemption or payment)
|
Outstanding principal amount of this Global
Certificate following such increase/ decrease
|
Notation made by or on behalf of the Principal Paying Agent
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Schedule
2
Form of
Definitive Certificate and Conditions of the Bonds
Part
1
Form of
Definitive Certificate
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[£100]
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[ISIN: XS1391063424]
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[SERIES]
[SERIAL NO.]
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BURFORD CAPITAL
PLC
(Incorporated with
limited liability under the laws of England and Wales with registered number 09077893)
£100,000,000 6.125 PER CENT.
GUARANTEED BONDS DUE 2024
unconditionally and irrevocably
guaranteed
as to payment of principal
and interest by
BURFORD CAPITAL LIMITED
(Incorporated with
limited liability under the laws of Guernsey with registered number 50877)
and any Subsidiary of
Burford Capital Limited which becomes a Guarantor from time to time
The issue of the Bonds
was authorised by a resolution of the Board of Directors of Burford Capital PLC (the Issuer) passed on 4 April, 2016 and
the giving of the guarantee in respect of the Bonds was authorised by a resolution of the Board of Directors of Burford Capital
Limited (BCL) passed on 3 February, 2016 and 4 April, 2016.
This Bond forms one of
a series of Bonds constituted by a Trust Deed (the Trust Deed) dated 26 April, 2016 made between the Issuer, the Guarantor
and U.S. Bank Trustees Limited as trustee for the holders of the Bonds and issued as Registered Bonds in the denomination of £100
each, in an aggregate principal amount of £100,000,000.
THIS IS TO CERTIFY that
is/are the registered
holder(s) of one of the above-mentioned Registered Bonds, such Bond being in the denomination of £100 (one hundred Pounds
Sterling) and is/are entitled on the Interest Payment Date (as defined in Condition 6 (Interest) endorsed hereon) falling
on 26 October, 2024 (or on such earlier date as the principal sum hereinafter mentioned may become repayable in accordance with
the Conditions endorsed hereon) to the repayment of such principal sum of:
£100 (one hundred
Pounds Sterling)
together with such other
amounts (if any) as may be payable, all subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
Interest at rates determined
in accordance with the said Conditions is payable on the said principal sum semi-annually in arrear on 26 April and 26 October
in each year, subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
IN WITNESS whereof
this Registered Bond has been executed on behalf of the Issuer.
BURFORD CAPITAL PLC
By:
Director
By:
Director
Dated as of 26 April,
2016.
Issued in London, England.
Certificate of authentication
This Bond is duly authenticated
without recourse, warranty
or liability.
Duly authorised
for and on behalf of
Elavon Financial Services
Limited
as Registrar
FORM OF
TRANSFER OF REGISTERED BOND
FOR VALUE RECEIVED the
undersigned hereby sell(s), assign(s) and transfer(s) to
(Please print or type
name and address (including postal code) of transferee)
£100
principal amount of this Bond and all rights hereunder, hereby irrevocably constituting and appointing
as attorney to transfer such principal amount of this Bond in the register maintained by BURFORD CAPITAL PLC with full power
of substitution.
Signature(s)
Date:
[20 ]
N.B.:
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1.
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This form of transfer must be accompanied by such documents, evidence and information as may be
required pursuant to the Conditions and must be executed under the hand of the transferor or, if the transferor is a corporation,
either under its common seal or under the hand of two of its officers duly authorised in writing and, in such latter case, the
document so authorising such officers must be delivered with this form of transfer.
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2.
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The signature(s) on this form of transfer must correspond with the name(s) as it/they appear(s)
on the face of this Bond in every particular, without alteration or enlargement or any change whatever.
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PART
2 CONDITIONS OF THE BONDS The sterling denominated 6.125 per cent. Guaranteed Bonds due
2024 (the "Bonds", which expression shall in these Conditions, unless the context otherwise
requires, include any further bonds issued pursuant to Condition 18 and forming a single
series with the Bonds of Burford Capital PLC (the "Issuer")) are constituted by a Trust
Deed dated the Issue Date (the "Trust Deed") made between the Issuer, Burford Capital
Limited ("BCL") as guarantor and U.S. Bank Trustees Limited (the "Trustee", which expression
shall include its successor(s)) as trustee for the holders of the Bonds (the "Bondholders").
References in these Conditions to the "Guarantors" shall be references to BCL and each
Subsidiary of BCL which becomes a Guarantor pursuant to Condition 4.3 but shall not include
any Subsidiary of BCL which has ceased to be a Guarantor pursuant to Condition 4.4. The
statements in these Conditions include summaries of, and are subject to, the detailed
provisions of and definitions in the Trust Deed. Copies of the Trust Deed and the Agency
Agreement dated the Issue Date (the "Agency Agreement") made between the Issuer, BCL,
the Registrar, the initial Transfer Agent, the initial Paying Agent and the Trustee are
available for inspection during normal business hours by the Bondholders at the registered
office for the time being of the Trustee, being at the date of issue of the Bonds at
125 Old Broad Street, London EC2N 1AR and at the specified office of each of the Paying
Agents. The Bondholders are entitled to the benefit of, are bound by, and are deemed
to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable
to them. 1. Form, Denomination and Title 1.1 Form and Denomination The Bonds are issued
in registered form in amounts of £100 (referred to as the "principal amount" of
a Bond). A certificate (each a "Certificate") will be issued to each Bondholder in respect
of its registered holding of Bonds. Each Certificate will be numbered serially with an
identifying number which will be recorded on the relevant Certificate and in the register
of Bondholders which the Issuer will procure to be kept by the Registrar. 1.2 Title Title
to the Bonds passes only by registration in the register of Bondholders. The holder of
any Bond will (except as otherwise required by law) be treated as its absolute owner
for all purposes (whether or not it is overdue and regardless of any notice of ownership,
trust or any interest or any writing on, or the theft or loss of, the Certificate issued
in respect of it) and no person will be liable for so treating the holder. In these Conditions
"Bondholder" and (in relation to a Bond) "holder" means the person in whose name a Bond
is registered m the register of Bondholders. 2. Transfers of Bonds and Issue of Certificates
2.1 Transfers A Bond may be transferred by depositing the Certificate issued m respect
of that Bond, with the form of transfer on the back duly completed and signed, at the
specified office of any Transfer Agent.
2.2
Delivery of new Certificates Each new Certificate to be issued upon transfer of Bonds
will, within five business days of receipt by the relevant Transfer Agent of the duly
completed form of transfer endorsed on the relevant Certificate, be mailed by uninsured
mail at the risk of the holder entitled to the Bond to the address specified in the form
of transfer. For the purposes of this Condition, "business day" shall mean a day on which
banks are open for business in the city in which the specified office of the Transfer
Agent with whom a Certificate is deposited in connection with a transfer is located.
Where some but not all of the Bonds in respect of which a Certificate is issued are to
be transferred a new Certificate in respect of the Bonds not so transferred will, within
five business days of receipt by the relevant Transfer Agent of the original Certificate,
be mailed by uninsured mail at the risk of the holder of the Bonds not so transferred
to the address of such holder appearing on the register of Bondholders or as specified
in the form of transfer. 2.3 Formalities free of charge Registration of transfer of Bonds
will be effected without charge by or on behalf of the Issuer or any Transfer Agent but
upon payment (or the giving of such indemnity as the Issuer or the relevant Transfer
Agent may reasonably require) in respect of any tax or other governmental charges which
may be imposed in relation to such transfer. 2.4 Closed Periods No Bondholder may require
the transfer of a Bond to be registered during the period of 15 days ending on the due
date for any payment of principal, premium or interest on that Bond. 2.5 Regulations
All transfers of Bonds and entries on the register of Bondholders will be made subject
to the detailed regulations concerning transfer of Bonds scheduled to the Trust Deed.
The regulations may be changed by the Issuer with the prior written approval of the Transfer
Agents and the Trustee. A copy of the current regulations will be mailed (free of charge)
by the Registrar to any Bondholder who requests one. 3. Status of the Bonds The Bonds
are direct, unconditional and (subject to the provisions of Condition 5.1) unsecured
obligations of the Issuer and (subject as provided above) rank and will rank pari passu,
without any preference among themselves, with all other outstanding unsecured and unsubordinated
obligations of the Issuer, present and future, but, in the event of insolvency, only
to the extent permitted by applicable laws relating to creditors' rights. 4. Guarantee
4.1 Guarantee The payment of the principal and interest in respect of the Bonds and all
other moneys payable by the Issuer under or pursuant to the Trust Deed has been jointly
and severally unconditionally and irrevocably guaranteed by BCL (such guarantee together
with any additional guarantees provided pursuant to Condition 4.3, the "Guarantee") in
the Trust Deed.
4.2
Status of the Guarantee The obligations of each Guarantor under the Guarantee constitute
direct, unconditional and (subject to the provisions of Condition 5.1) unsecured obligations
of such Guarantor and (subject as provided above) rank and will rank pari passu with
all other outstanding unsecured and unsubordinated obligations of such Guarantor, present
and future, but, in the event of insolvency, only to the extent permitted by applicable
laws relating to creditors' rights. 4.3 Addition of Subsidiary Guarantors Without prejudice
to Condition 5, if any Subsidiary of BCL (other than an Excluded Subsidiary) has Financial
Indebtedness which in aggregate (without duplication) amounts to more than £2,000,000
(or its equivalent in any other currency), BCL covenants that it shall procure that such
Subsidiary shall as soon as reasonably practicable, but in any event no later than 60
days after the date on which it incurs such Financial Indebtedness, provide a Guarantee
in respect of the Trust Deed and the Bonds by procuring the delivery to the Trustee of
a deed of accession substantially in the form scheduled to the Trust Deed or otherwise
as the Trustee may agree, duly executed, and relevant legal opinions having been delivered
to the Trustee in accordance with the Trust Deed. Notice of any addition of a Subsidiary
Guarantor (as defined below) pursuant to this Condition 4.3 will promptly be given by
the Issuer to the Bondholders in accordance with Condition 14. Upon execution of the
deed of accession referred to above and relevant legal opinions having been delivered
to the Trustee (and subject to Condition 4.4) the relevant acceding Subsidiary shall
be referred to as a "Subsidiary Guarantor" 4.4 Release of Subsidiary Guarantors A Subsidiary
Guarantor which has Financial Indebtedness which in aggregate (without duplication) amounts
to £2,000,000 (or its equivalent in any other currency) or less shall be immediately,
automatically and (subject to Condition 4.3) irrevocably released and relieved of all
its future obligations under the Guarantee and all of its future obligations as a Subsidiary
Guarantor under the Trust Deed upon BCL giving written notice to the Trustee signed by
two directors of BCL or by a director and the secretary of BCL. Such notice must also
contain the following certifications: (i) that no Event of Default or Potential Event
of Default (as defined in the Trust Deed) is continuing; and (ii) that such Subsidiary
Guarantor has Financial Indebtedness which in aggregate (without duplication) amounts
to £2,000,000 (or its equivalent in any other currency) or less. None of the Issuer,
BCL or any Subsidiary Guarantor will be required to execute or provide any other document
in relation to any release pursuant to this Condition 4.4 but, if the Issuer requests
in writing, the Trustee shall (at the expense of the Issuer) enter into any documentation
in relation to the release of any Subsidiary Guarantor which the Issuer (acting reasonably)
considers necessary or desirable and in a form satisfactory to the Trustee to evidence
the release of that Subsidiary Guarantor, provided that, the Trustee shall not be obliged
to enter into any documentation which, in the sole opinion of the Trustee, would have
the effect of: (i) exposing the Trustee to any liability against which it has not been
indemnified and/or secured and/or pre-funded to its satisfaction; or (ii) increasing
or imposing new and/or additional obligations or duties, or reducing the protections,
of the Trustee in the Trust Deed, the Agency Agreement and the Bonds.
Notice
of any release of a Subsidiary Guarantor pursuant to this Condition 4.4 will promptly
be given by the Issuer to the Bondholders in accordance with Condition 14 If any Subsidiary
of BCL released from the Guarantee as described above subsequently has Fmancial Indebtedness
which in aggregate (without duplication) amounts to more than £2,000,000 (or its
equivalent in any other currency) at any time after such release, such Subsidiary of
BCL shall (unless it is an Excluded Subsidiary) be required to provide a Guarantee as
described in Condition 4.3. 4.5 No Requirement to monitor The Trustee shall not be obliged
to monitor compliance by BCL with Conditions 4.3 or 4.4 and shall have no liability to
any person for not domg so. The Trustee shall be entitled to rely without further enquiry
or evidence, without liability to any person, on any notice provided by BCL in relation
to this Condition 4, and until it receives such notice shall be entitled to assume that
no other Subsidiary of BCL (other than an Excluded Subsidiary) has Financial Indebtedness
which m aggregate (without duplication) amounts to more than £2,000,000 (or its
equivalent in any other currency). 5. Covenants 5.1 Negative Pledges So long as any of
the Bonds remain outstanding (as defined in the Trust Deed): (a) the Issuer will not,
create, assume or permit to subsist any mortgage, charge, lien, pledge or other security
interest (each a "Security Interest") upon, or with respect to, the whole or any part
of its present or future business, undertaking, assets or revenues (including any uncalled
capital) to secure any Financial Indebtedness of any person other than an Excluded Subsidiary1
unless the Issuer, in the case of the creation of a Security Interest, before or at the
same time and, in any other case, promptly, takes any and all action necessary to ensure
that: (l) all amounts payable by it under the Bonds and the Trust Deed are secured by
the Security Interest equally and rateably with the Financial Indebtedness to the satisfaction
of the Trustee; or (ii) such other Security Interest or guarantee or other arrangement
(whether or not it includes the giving of a Security Interest) is provided either (A)
as the Trustee in its absolute discretion deems not materially less beneficial to the
interests of the Bondholders or (B) as is approved by an Extraordinary Resolution (as
defined in the Trust Deed) of the Bondholders; (b) no Guarantor will, and each Guarantor
will procure, so far as it can by the proper exercise of voting and other rights or powers
of control exercisable by it in relation to its Subsidiaries that none of its Subsidiaries
(other than Excluded Subsidiaries) will, create, assume or permit to subsist any Security
Interest upon, or with respect to, the whole or any part of the present or future business,
undertaking, assets or revenues (including any uncalled capital) of such Guarantor and/or
any of its respective Subsidiaries (other than Excluded Subsidiaries) to secure any Financial
Indebtedness of any person other than an Excluded Subsidiary1 unless the relevant Guarantor,
m the case of the creation of a Security Interest, before or at the same time and, m
any other case, promptly, takes any and all action necessary to ensure that: 1 In relation
to Financial Indebtedness of Excluded Subsidiaries please see Condition 5.1(c) below.
(i)
all amounts payable by it under the Guarantee are secured by the Security Interest equally
and rateably with the Financial Indebtedness to the satisfaction of the Trustee; or (ii)
such other Security Interest or guarantee or other arrangement (whether or not it includes
the giving of a Security Interest) is provided either (A) as the Trustee in its absolute
discretion deems not materially less beneficial to the interests of the Bondholders or
(B) as is approved by an Extraordinary Resolution of the Bondholders; and (c) neither
the Issuer nor any Guarantor will, and each Guarantor will procure, so far as it can
by the proper exercise of voting and other rights or powers of control exercisable by
it in relation to its Subsidiaries that none of its Subsidiaries (other than Excluded
Subsidiaries) will: (1) create, assume or permit to subsist any Security Interest upon,
or with respect to, the whole or any part of the present or future business, undertaking,
assets or revenues (including any uncalled capital) of the Issuer, any Guarantor and/or
any of their respective Subsidiaries (other than Excluded Subsidiaries) to secure any
Financial Indebtedness of any Excluded Subsidiary; or (ii) create, assume or permit to
subsist any guarantee or indemnity of any Financial Indebtedness of any Excluded Subsidiary.
5.2 Financial Covenant So long as any Bond remains outstanding (as defined m the Trust
Deed), BCL shall ensure that, as at each Reference Date the Leverage Ratio is no more
than 1:2. 5.3 Compliance Certificate BCL shall, concurrently with the delivery of each
of the annual and semi-annual Consolidated Financial Statements referred to in Condition
5.4, provide to the Trustee a Directors' Certificate confirming compliance with the covenant
contained in Condition 5.2 with respect to the most recent Reference Date. 5.4 Financial
Information BCL has agreed in the Trust Deed, so long as any of the Bonds remain outstanding,
to supply to the Trustee: (a) as soon as they may become available, but in any event
within six months of its most recent financial year-end, a copy of its audited Consolidated
Financial Statements for such financial year, together with the report thereon of BCL's
independent auditors, and (b) as soon as they may become available, but in any event
within three months of the end of the first half of each financial year, a copy of its
unaudited Consolidated Financial Statements for such period. 5.5 No Requirement to Monitor
The Trustee shall not be obliged to review any Consolidated Financial Statements provided
to it pursuant to Condition 5.4, nor to monitor the Leverage Ratio on any Reference Date
for the purposes of Condition 5.2.
6.
Interest 6.1 Interest Rate and Interest Payment Dates The Bonds bear interest from (and
including) 26 April 2016 at the rate of 6.125 per cent, per annum, payable semi-annually
in arrear on 26 April and 26 October (each an "Interest Payment Date") m each year until
(and including) the Maturity Date. The first payment (for the period from (and including)
26 April 2016 to (but excluding) 26 October 2016 and amounting to £3.06 per £100
principal amount of Bonds) shall be made on 26 October 2016. 6.2 Interest Accrual Each
Bond will cease to bear interest from (and including) its due date for redemption unless
upon due presentation payment of the principal in respect of the Bond is improperly withheld
or refused or unless default is otherwise made in respect of payment, in which event
interest shall continue to accrue as provided in the Trust Deed. 6.3 Calculation of Broken
Interest When interest is required to be calculated in respect of a Bond for a period
of less than a full half-year, it shall be calculated by applying the rate of interest
on the Bonds to the denomination of the Bonds and multiplying the sum by the Day Count
Fraction, and rounding the resultant figure to the nearest pence wherein the "Day Count
Fraction" is calculated on the basis of (a) the actual number of days in the period from
(and including) the date from which interest begins to accrue (the "Accrual Date") to
(but excluding) the date on which it falls due divided by (b) the actual number of days
from (and including) the Accrual Date to (but excluding) the next following Interest
Payment Date multiplied by two. 6.4 Interest Rate Step-up If following the Issue Date
a Step-Up Event occurs, the rate of interest payable on the Bonds under Condition 6.1
shall increase by 1.00 per cent, per annum from (and including) the Interest Payment
Date following the occurrence of such Step-Up Event and the Bonds shall thereafter bear
interest at an increased rate of interest of 7.125 per cent, per annum. Notice of any
increase in the rate of interest pursuant to this Condition 6.4 will promptly be given
by the Issuer to the Bondholders in accordance with Condition 14. 7. Payments 7.1 Payments
in respect of Bonds Payments of principal and interest in respect of each Bond will be
made by transfer to the registered account of the Bondholder or by a cheque in Sterling
drawn on a bank that processes payment in Sterling mailed to the registered address of
the Bondholder if it does not have a registered account. Payments of principal and payments
of interest due otherwise than on an Interest Payment Date will only be made against
surrender of the relevant Certificate at the specified office of any of the Paying Agents.
Interest on Bonds due on an Interest Payment Date will be paid to the holder shown on
the register of Bondholders at the close of business on the date (the "record date")
being the fifteenth day before the relevant Interest Payment Date. For the purposes of
this Condition, a Bondholder's registered account means the Sterling account maintained
by or on behalf of it with a bank that processes payments in Sterling, details of which
appear on the register of Bondholders at the close of business, in the case of principal
and interest due otherwise than on an Interest Payment Date, on the second Payment Business
Day before the due date
for
payment and, in the case of interest due on an Interest Payment Date, on the relevant
record date, and a Bondholder's registered address means its address appearing on the
register of Bondholders at that time. 7.2 Payments subject to Applicable Laws Payments
will be subject in all cases, to any fiscal or other laws and regulations applicable
thereto, but without prejudice to the provisions of Condition 9, in the place of payment.
Any such amounts withheld or deducted will be treated as paid for all purposes under
the Bonds, and no additional amounts will be paid on the Bonds with respect to any such
withholding or deduction. 7.3 No commissions No commissions or expenses shall be charged
to the Bondholders in respect of any payments made in accordance with this Condition.
7.4 Payment on Payment Business Days Where payment is to be made by transfer to a registered
account, payment instructions (for value the due date or, if that is not a Payment Business
Day, for value the first following day which is a Payment Business Day) will be initiated
and, where payment is to be made by cheque, the cheque will be mailed, on the Business
Day precedmg the due date for payment or, in the case of a payment of principal or a
payment of interest due otherwise than on an Interest Payment Date, if later, on the
Business Day on which the relevant Certificate is surrendered at the specified office
of a Paying Agent. Bondholders will not be entitled to any interest or other payment
for any delay after the due date in receiving the amount due if the due date is not a
Payment Business Day, if the Bondholder is late in surrendering its Certificate (if required
to do so) or if a cheque mailed in accordance with this Condition arrives after the due
date for payment. 7.5 Partial Payments If the amount of principal or interest which is
due on the Bonds is not paid in full, the Registrar will annotate the register of Bondholders
with a record of the amount of principal or interest in fact paid. 7.6 Initial Agents
The names of the initial Agents and their initial specified offices are set out at the
end of these Conditions. The Issuer and the Guarantors reserve the right, subject to
the prior written approval of the Trustee, at any time to vary or terminate the appointment
of any Agent and to appomt additional or other Agents provided that: (a) there will at
all times be a Principal Paying Agent, a Transfer Agent and a Registrar; and (b) there
will at all times be at least one Paying Agent (which may be the Principal Paying Agent)
having its specified office in a European city. Notice of any termination or appointment
and of any changes in specified offices will be given to the Bondholders promptly by
the Issuer in accordance with Condition 14.
8.
Redemption and Purchase 8.1 Redemption at Maturity Unless previously redeemed or purchased
and cancelled as provided below, the Issuer will redeem the Bonds at their principal
amount on the Maturity Date. 8.2 Redemption for Taxation Reasons If the Issuer satisfies
the Trustee immediately before the giving of the notice referred to below that: (a) as
a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction,
or any change in the application or official interpretation of the laws or regulations
of a Relevant Jurisdiction, which change or amendment becomes effective after (l) in
the case of the Issuer or BCL, the Issue Date; or (ii) in the case of any Subsidiary
Guarantor, the first day on which such Subsidiary Guarantor becomes a Guarantor pursuant
to Condition 4.3, on the next Interest Payment Date either the Issuer would be required
to pay additional amounts as provided or referred to in Condition 9.1 or any Guarantor
could, if the Guarantee was called, be required to pay such additional amounts ; and
(b) the requirement cannot be avoided by the Issuer or any Guarantor taking reasonable
measures available to them (including by BCL procuring payment by the Issuer, itself
or any other Guarantor), the Issuer may at its option, having given not less than 30
nor more than 60 days' notice to the Bondholders in accordance with Condition 14 (which
notice shall be irrevocable and shall specify the date fixed for redemption), redeem
all the Bonds, but not some only, at any time at their principal amount together with
interest accrued to (but excluding) the date of redemption, provided that no such notice
of redemption shall be given earlier than 90 days prior to the earliest date on which
the Issuer or, as the case may be, the relevant Guarantor would be required to pay such
additional amounts, were a payment in respect of the Bonds then due. Prior to the publication
of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the
Trustee a Directors' Certificate from the Issuer or, as the case may be, the relevant
Guarantor stating that the requirement referred to in (a) above will apply on the next
Interest Payment Date and cannot be avoided by the Issuer or the Guarantors taking reasonable
measures available to them, and the Trustee shall be entitled to accept the certificate
as sufficient evidence of the satisfaction of the conditions precedent set out above,
in which event it shall be conclusive and binding on the Bondholders. 8.3 Redemption
at the Option of the Issuer The Issuer may, having given: (a) not less than 15 nor more
than 30 days' notice to the Bondholders in accordance with Condition 14; and (b) notice
to the Registrar, the Trustee and the Principal Paying Agent not less than 15 days before
the giving of the notice referred to in (a); (which notices shall be irrevocable and
shall specify the date fixed for redemption), redeem all (but not some only) of the Bonds,
at any time prior to the Maturity Date at an amount (together with interest accrued to
(but excluding) the date of redemption) being the higher of: (i) 100 per cent, of the
principal amount of the Bonds; and
(ii)
the principal amount of the Bonds multiplied by the price, as reported to the Issuer
and the Trustee by the Financial Adviser, at which the Gross Redemption Yield on the
Bonds on the Make-Whole Reference Date is equal to the Gross Redemption Yield (determined
by reference to the middle market price) at 11.00 a.m. (London time) on the Make-Whole
Reference Date of the Reference Bond, plus 1.00 per cent, all as determined by the Financial
Adviser. References to the payment of "principal" in respect of the Bonds in these Conditions
shall, to the extent relevant, be deemed to include any premium payable pursuant to this
Condition 8.3. 8.4 Purchases The Issuer, any Guarantor or any other member of the Group
may at any time purchase Bonds in any manner and at any price. Such Bonds may be held,
reissued or resold, or at the option of the Issuer or BCL, surrendered to any Paying
Agent for cancellation. 8.5 Cancellations All Bonds which are redeemed or purchased by
the Issuer, any Guarantor or any member of the Group and surrendered for cancellation
in accordance with Condition 8.4 above will forthwith be cancelled, and accordingly may
not be held, reissued or resold. 8.6 Notices Final Upon the expiry of any notice as is
referred to in Conditions 8.2 or 8.3 above the Issuer shall be bound to redeem the Bonds
to which the notice refers in accordance with the terms of such Condition. 9. Taxation
9.1 Payment without Withholding All payments in respect of the Bonds by or on behalf
of the Issuer or any Guarantor shall be made without withholding or deduction for, or
on account of, any present or future taxes, duties, assessments or governmental charges
of whatever nature ("Taxes") imposed or levied by or on behalf of any of the Relevant
Jurisdictions, unless the withholding or deduction of the Taxes is required by law. In
that event, the Issuer or, as the case may be, the relevant Guarantor will pay such additional
amounts as may be necessary in order that the net amounts received by the Bondholders
after the withholding or deduction shall equal the respective amounts which would have
been receivable in respect of the Bonds in the absence of the withholding or deduction;
except that no additional amounts shall be payable in relation to any payment in respect
of any Bond: (a) presented for payment by or on behalf of, a holder who is liable to
the Taxes in respect of the Bond by reason of his having some connection with any Relevant
Jurisdiction other than the mere holding of the Bond; or (b) where such withholding or
deduction is imposed in respect of FATCA; or (c) where such withholding or deduction
for United States federal income taxes would not have been required but for the failure
of the holder or beneficial owner to provide upon request a valid U.S. IRS Form W-8 or
W-9 (or successor forms) or other documentation as required by official IRS guidance,
or (d) presented for payment more than 30 days after the Relevant Date except to the
extent that a holder would have been entitled to additional amounts on presenting the
same for payment on
the
last day of the period of 30 days assuming, whether or not such is in fact the case,
that day to have been a Payment Business Day. 9.2 Additional Amounts Any reference in
these Conditions to any amounts in respect of the Bonds shall be deemed also to refer
to any additional amounts which may be payable under this Condition or under any undertakings
given in addition to, or m substitution for, this Condition pursuant to the Trust Deed.
10. Prescription Claims in respect of principal and interest will become prescribed unless
made within periods of 10 years (in the case of principal) and five years (in the case
of interest) from the Relevant Date in respect of the Bonds subject to the provisions
of Condition 7. 11. Events of Default 11.1 Events of Default The Trustee at its discretion
may, and if so requested in writing by the holders of at least one-fifth in principal
amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution
of the Bondholders shall (subject in each case to being indemnified and/or secured and/or
pre-funded to its satisfaction) (but, in the case of the happening of any of the events
described in subparagraphs (b) to (d) inclusive (other than the winding up or dissolution
of the Issuer, any Guarantor or any of the Material Subsidiaries), (e) to (g) inclusive
and (k) and (1) below, only if the Trustee shall have certified in writing to the Issuer
and the Guarantors that such event is, in its opinion, materially prejudicial to the
interests of the Bondholders) give notice to the Issuer and the Guarantors that the Bonds
are, and they shall accordingly forthwith become, immediately due and repayable at their
principal amount, together with accrued interest as provided in the Trust Deed, in any
of the following events ("Events of Default ) (a) if default is made in the payment of
any principal or interest due in respect of the Bonds or any of them and the default
continues for a period of 7 days in the case of principal or 14 days in the case of interest,
or (b) if the Issuer or any Guarantor fails to perform or observe any of its other obligations
under these Conditions or the Trust Deed and (except in any case where the Trustee considers
the failure to be incapable of remedy, when no continuation or notice as is hereinafter
mentioned will be required) the failure continues for the period of 30 days (or such
longer period as the Trustee may permit) following the service by the Trustee on the
Issuer or such Guarantor (as the case may be) of notice requiring the same to be remedied;
or (c) if (i) any Financial Indebtedness of the Issuer, any Guarantor or any of Material
Subsidiaries becomes due and repayable prematurely or becomes capable of being declared
due and repayable prematurely in each case by reason of an event of default (however
described); or (ii) the Issuer, any Guarantor or any of the Material Subsidiaries fails
to make any payment in respect of any Financial Indebtedness on the due date for payment
as extended by any originally applicable grace period; provided that the amount of Financial
Indebtedness in respect of which one or more of the events mentioned in this paragraph
11.1 (c) have occurred and are continuing, individually or in aggregate exceeds £2,000,000
(or its equivalent in any other currency); or
(d)
(i) if any order is made by any competent court or resolution is passed for the winding
up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries; or
(ii) if the Issuer, any Guarantor or the Group ceases or threatens to cease to carry
on all or substantially all of its business or operations, save (in either case) (x)
for the purposes of and followed by a reconstruction, amalgamation, reorganisation, restructuring,
merger or consolidation on terms approved in writing by the Trustee or by an Extraordinary
Resolution of the Bondholders, or (y) in the case of a Material Subsidiary, for the purposes
of and followed by a Permitted Reorganisation; or (e) the Issuer, any Guarantor or any
of the Material Subsidiaries is (or is deemed (other than where a demand is made for
less than £1,000,000 under section 123(l)(a) of the Insolvency Act 1986) by law
or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or
threatens to stop or suspend payment of all or a material part of its debts; (f) if:
(1) proceedings are initiated against the Issuer, any Guarantor or any of the Material
Subsidiaries under any applicable liquidation, insolvency, composition, reorganisation
or other similar laws or an application is made (or documents filed with a court) for
the appointment of an administrative or other receiver, manager, administrator or other
similar official, or an administrative or other receiver, manager, administrator or other
similar official is appointed, in relation to the Issuer, any Guarantor or any of the
Material Subsidiaries or, as the case may be, in relation to the whole or any material
part of the undertaking or assets of any of them or an encumbrancer takes possession
of the whole or any material part of the undertaking or assets of any of them, or a distress,
execution, attachment, sequestration or other process is levied, enforced upon, sued
out or put in force against the whole or any material part of the undertaking or assets
of any of them, and (h) in any such case (other than the appointment of an administrator
or an administrative receiver appointed following presentation of a petition for an administration
order) unless initiated by the relevant company, is not discharged or stayed within 45
days, save (x) for the purposes of and followed by a reconstruction, amalgamation, reorganisation,
restructuring, merger or consolidation on terms approved in writing by the Trustee or
by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material Subsidiary,
for the purposes of and followed by a Permitted Reorganisation; or (g) if the Issuer,
any Guarantor or any of the Material Subsidiaries (or their respective directors or shareholders)
initiates or consents to judicial proceedings relating to itself under any applicable
liquidation, insolvency, composition, reorganisation or other similar laws (including
the obtaining of a moratorium) or makes a conveyance or assignment for the benefit of,
or enters into any composition or other arrangement with, its creditors generally (or
any class of its creditors) or any meeting is convened to consider a proposal for an
arrangement or composition with its creditors generally (or any class of its creditors)
save (in any case) (x) for the purposes of and followed by a reconstruction, amalgamation,
reorganisation, restructuring, merger or consolidation on terms approved in writing by
the Trustee or by an Extraordinary Resolution of the Bondholders, or (y) in the case
of a Material Subsidiary, for the purposes of and followed by a Permitted Reorganisation;
or (h) any action, condition or thing (including the obtaining or effecting of any necessary
consent, approval, authorisation, exemption, filing, licence, order, recording or registration)
at any time
required
to be taken, fulfilled or done in order (i) to enable the Issuer or any Guarantor lawfully
to enter into, exercise their respective rights and perform and comply with their respective
obligations under the Bonds and the Trust Deed; (ii) to ensure that those obligations
are legally binding and enforceable; and (iii) to make the Bonds and the Trust Deed,
as the case may be, admissible in evidence in the courts of England is not taken, fulfilled
or done; or (i) if the Guarantee ceases to be, or is claimed by the Issuer or any Guarantor
not to be, in full force and effect; or (j) it is or will become unlawful for the Issuer
or any Guarantor to perform or comply with any one or more of its obligations under the
Conditions; or (k) if the Issuer or any Subsidiary Guarantor ceases to be a Subsidiary
of BCL; or (1) if any event occurs which, under the laws of any Relevant Jurisdiction,
has or may have, in the Trustee's opinion, an analogous effect to any of the events referred
to in subparagraphs (d) to (g) above. 11.2 Reports A report by two directors of BCL or
by a director and the secretary of BCL whether or not addressed to the Trustee that in
their opinion a Subsidiary of BCL is or is not or was or was not at any particular time
or throughout any specified period a Material Subsidiary may be relied upon by the Trustee
without further enquiry or evidence and, if relied upon by the Trustee, shall, in the
absence of manifest error, be conclusive and binding on all parties. 12. Enforcement
12.1 Enforcement by the Trustee The Trustee may at any time, at its discretion and without
notice, take such proceedings and/or other steps or action (including lodging an appeal
in any proceedings) against or in relation to the Issuer and/or any one or more of the
Guarantors as it may think fit to enforce the provisions of the Trust Deed and the Bonds
or otherwise, but it shall not be bound to take any such proceedings or other steps or
action unless (a) it has been so directed by an Extraordinary Resolution of the Bondholders
or so requested in writing by the holders of at least one-fifth in principal amount of
the Bonds then outstanding and (b) it has been indemnified and/or secured and/or pre-funded
to its satisfaction. 12.2 Limitation on Trustee actions The Trustee may refrain from
taking any action in any jurisdiction if the taking of such action in that jurisdiction
would, in its opinion based upon legal advice in the relevant jurisdiction, be contrary
to any law of that jurisdiction. Furthermore, the Trustee may also refrain from taking
such action if it would otherwise render it liable to any person in that jurisdiction
or if, in its opinion based upon such legal advice, it would not have the power to do
the relevant thing in that jurisdiction by virtue of any applicable law in that jurisdiction
or if it is determined by any court or other competent authority in that jurisdiction
that it does not have such power. 12.3 Enforcement by the Bondholders No Bondholder shall
be entitled to (l) take any steps or action against the Issuer or any Guarantor to enforce
the performance of any of the provisions of the Trust Deed or the Bonds or (ii) take
any other proceedings (including lodging an appeal in any proceedings) m respect of or
concerning the Issuer or
any
Guarantor, in each case unless the Trustee, having become bound so to take any such action,
steps or proceedings, fails so to do within a reasonable period and the failure shall
be continuing. 13. Replacement of Certificates Should any Certificate be lost, stolen,
mutilated, defaced or destroyed it may be replaced at the specified office of the Registrar
upon payment by the claimant of the expenses incurred in connection with the replacement
and on such terms as to evidence and indemnify as the Issuer and the Guarantors may reasonably
require. Mutilated or defaced Certificates must be surrendered before replacements will
be issued. 14. Notices All notices to the Bondholders will be valid if mailed to them
at their respective addresses in the register of Bondholders maintained by the Registrar.
The Issuer shall also ensure that notices are duly published in a manner which complies
with the rules and regulations of any stock exchange or the relevant authority on which
the Bonds are for the time being listed. Any such notice will be deemed to have been
given on the date of the first publication or, where required to be published in more
than one newspaper, on the second day after being so mailed or on the date of publication
or, if so published more than once or on different dates, on the date of first publication.
15. Substitution The Trustee may, without the consent of the Bondholders, agree with
the Issuer and the Guarantors to the substitution in place of the Issuer (or of any previous
substitute under this Condition) as the principal debtor under the Bonds and the Trust
Deed, of BCL or any other Subsidiaries of BCL subject to: (a) the Bonds remaining jointly
and severally, unconditionally and irrevocably guaranteed by the Guarantors (other than
a Guarantor substituted in place of the Issuer); (b) the Trustee being satisfied that
the substitution is not materially prejudicial to the interests of the Bondholders; and
(c) certain other conditions set out in the Trust Deed being complied with. 16. Meetings
of Bondholders, Modification, Waiver, Authorisation and Determination 16.1 Meetings of
Bondholders The Trust Deed contains provisions for convening meetings of the Bondholders
to consider any matter affecting their interests, including the modification or abrogation
by Extraordinary Resolution of any of these Conditions or any of the provisions of the
Trust Deed. The quorum at any meeting for passing an Extraordinary Resolution will be
one or more persons present holding or representing more than 50 per cent, in principal
amount of the Bonds for the time being outstanding, or at any adjourned such meeting
one or more persons present whatever the principal amount of the Bonds held or represented
by him or them, except that, at any meeting the business of which includes any matter
defined in the Trust Deed as a Basic Terms Modification, including the modification or
abrogation of certain of the provisions of these Conditions and certain of the provisions
of the Trust Deed, the necessary quorum for passing an Extraordinary Resolution will
be one or more persons present holding or representing not less than two-thirds, or at
any adjourned such meeting not less than one-third, of the principal amount of the Bonds
for the time being outstanding. The Trust Deed provides that (l) a resolution passed
at a meeting duly convened and held m accordance with the Trust Deed by a majority consisting
of not less than three
fourths
of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf
of the holders of not less than three-fourths in principal amount of the Bonds for the
time being outstanding or (111) consent given by way of electronic consents through the
relevant clearing system (s) (in a form satisfactory to the Trustee) by or on behalf
of the holders of not less than three-fourths in principal amount of the Bonds for the
time being outstanding, shall, in each case, be effective as an Extraordinary Resolution
of the Bondholders. An Extraordinary Resolution passed by the Bondholders will be binding
on all Bondholders, whether or not they are present at any meeting and whether or not
they voted on the resolution. 16.2 Modification, Waiver, Authorisation and Determ ination
The Trustee may agree, without the consent of the Bondholders, to any modification of,
or to the waiver or authorisation of any breach or proposed breach of, any of these Conditions
or any of the provisions of the Trust Deed or the Agency Agreement, or determine, without
any such consent as aforesaid, that any Event of Default or Potential Event of Default
(as defined m the Trust Deed) shall not be treated as such (provided that, in any such
case, it is not, in the opinion of the Trustee, materially prejudicial to the interests
of the Bondholders) or may agree, without any such consent as aforesaid, to any modification
which, in its opinion, is of a formal, minor or technical nature or to correct a manifest
error or an error which is, in the opinion of the Trustee, proven. 16.3 Trustee to have
Regard to Interests of Bondholders as a Class In connection with the exercise by it of
any of its trusts, powers, authorities and discretions (including, without limitation,
any modification, waiver, authorisation, determination or substitution), the Trustee
shall have regard to the general interests of the Bondholders as a class but shall not
have regard to any interests arising from circumstances particular to individual Bondholders
(whatever their number) and, in particular but without limitation, shall not have regard
to the consequences of any such exercise for individual Bondholders (whatever their number)
resulting from their being for any purpose domiciled or resident in, or otherwise connected
with, or subject to the jurisdiction of, any particular territory or any political sub-division
thereof and the Trustee shall not be entitled to require, nor shall any Bondholder be
entitled to claim, from the Issuer, any Guarantor, the Trustee or any other person any
indemnification or payment in respect of any tax consequence of any such exercise upon
individual Bondholders except to the extent already provided for in Condition 9 and/or
any undertaking given m addition to, or in substitution for, Condition 9 pursuant to
the Trust Deed 16.4 Notification to the Bondholders Any modification, abrogation, waiver,
authorisation, determination or substitution shall be binding on the Bondholders and,
unless the Trustee agrees otherwise, any modification or substitution shall be notified
by the Issuer to the Bondholders as soon as practicable thereafter in accordance with
Condition 14. 17. Indemnification and Protection of the Trustee and its Contracting with
the Issuer and the Guarantors 17.1 Indemnification and protection of the Trustee The
Trust Deed contains provisions for the indemnification of the Trustee and for its relief
from responsibility and liability towards the Issuer, the Guarantors and the Bondholders,
including (l) provisions relieving it from taking action unless indemnified and/or secured
and/or pre-funded to its satisfaction and (ii) provisions limiting or excluding its liability
in certain circumstances. The Trust Deed provides that, when determining whether an indemnity
or any security or pre-funding is
satisfactory
to it, the Trustee shall be entitled (i) to evaluate its risk in any given circumstance
by considering the worst-case scenario and (ii) to require that any indemnity or security
given to it by the Bondholders or any of them be given on a joint and several basis and
be supported by evidence satisfactory to it as to the financial standing and creditworthiness
of each counterparty and/or as to the value of the security and an opinion as to the
capacity, power and authority of each counterparty and/or the validity and effectiveness
of the security. 17.2 Trustee Contracting with the Issuer and the Guarantors The Trust
Deed also contains provisions pursuant to which the Trustee is entitled, inter alia,
(a) to enter into business transactions with the Issuer and/or any Guarantor and/or any
other member of the Group and to act as trustee for the holders of any other securities
issued or guaranteed by, or relating to, the Issuer and/or any Guarantor and/or any other
member of the Group, (b) to exercise and enforce its rights, comply with its obligations
and perform its duties under or in relation to any such transactions or, as the case
may be, any such trusteeship without regard to the interests of, or consequences for,
the Bondholders, and (c) to retain and not be liable to account for any profit made or
any other amount or benefit received thereby or in connection therewith. 18. Further
Issues The Issuer is at liberty from time to time without the consent of the Bondholders
to create and issue further notes or bonds (whether in bearer or registered form) either
(a) ranking pari passu in all respects (or in all respects save for the first payment
of interest thereon) and so that the same shall be consolidated and form a single series
with the outstanding notes or bonds of any series (including the Bonds) constituted by
the Trust Deed or any supplemental deed or (b) upon such terms as to ranking, interest,
conversion, redemption and otherwise as the Issuer may determine at the time of the issue.
Any further notes or bonds which are to form a single series with the outstanding notes
or bonds of any series (including the Bonds) constituted by the Trust Deed or any supplemental
deed shall, and any other further notes or bonds may (with the consent of the Trustee),
be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions
for convening a single meeting of the Bondholders and the holders of notes or bonds of
other series in certain circumstances where the Trustee so decides. 19. Governing Law
and Submission to Jurisdiction 19.1 Governing Law The Trust Deed (including the Guarantee),
the Bonds and any non-contractual obligations arising out of or in connection with them
are governed by, and will be construed in accordance with, English law. 19.2 Jurisdiction
of English Courts Each of the Guarantors has in the Trust Deed, irrevocably agreed (or
will be required to agree) for the benefit of the Trustee and the Bondholders that the
courts of England are to have exclusive jurisdiction to settle any disputes which may
arise out of or in connection with the Trust Deed or the Bonds (including a dispute relating
to any non-contractual obligations arising out of or in connection with the Trust Deed
or the Bonds) and accordingly has submitted (or will be required to submit) to the exclusive
jurisdiction of the English courts. Each of the Guarantors has, in the Trust Deed, waived
(or will be required to waive) any objection to the courts of England on the grounds
that they are an inconvenient or inappropriate forum. To the extent permitted by law,
the Trustee and the Bondholders may take any suit, action or proceeding
arising
out of or in connection with the Trust Deed or the Bonds respectively (including any
suit, action or proceedings relating to any non-contractual obligations arising out of
or in connection with the Trust Deed or the Bonds) (together referred to as "Proceedings")
against the Issuer or any Guarantor in any other court of competent jurisdiction and
concurrent Proceedings in any number of jurisdictions. 19.3 Appointment of Process Agent
Each of the Guarantors incorporated m a jurisdiction other than England and Wales has
in the Trust Deed irrevocably and unconditionally appointed (or will be required to appoint)
the Issuer at the latter's registered office for the time being as its agent for service
or process in England in respect of any Proceedings and has undertaken that in the event
of such agent ceasing so to act it will appoint such other person as the Trustee may
approve as its agent for that purpose. 20. Rights of Third Parties No rights are conferred
on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term
of this Bond, but this does not affect any right or remedy of any person which exists
or is available apart from that Act. 21. Definitions In these Conditions: "Business Day"
means, in relation to any place, a day on which commercial banks and foreign exchange
markets settle payments and are open for general business (including dealing in foreign
exchange and foreign currency deposits) in that place. "Cash and Cash Equivalents" as
at any Reference Date shall be equal to the amount recorded as "Cash and cash equivalents"
in the relevant Consolidated Financial Statements; minus (ii) any such "Cash and cash
equivalents" to which any Excluded Subsidiary is beneficially entitled; and (in) any
such "Cash and cash equivalents" upon which there is any Security Interest. "Cash Management
Investments" as at any Reference Date shall be equal to the amount recorded as "Cash
management investments at fair value through profit or loss" in the relevant Consolidated
Financial Statements; minus (ii) any such "Cash management investments at fair value
through profit or loss" to which any Excluded Subsidiary is beneficially entitled; and
(in) any such "Cash management investments at fair value through profit or loss" upon
which there is a Security Interest. "Consolidated Financial Statements" means BCL's audited
annual consolidated financial statements or its unaudited semi-annual consolidated financial
statements, as the case may be, including the relevant accounting policies and notes
to the accounts in each case prepared in accordance with IFRS from time to time. "Directors'
Certificate" means a certificate addressed to the Trustee, signed on behalf of the Issuer
or the relevant Guarantor (as the case may be) (but without personal liability) by two
directors of the Issuer or the relevant Guarantor (as applicable) or any one director
and the secretary of the Issuer or the relevant Guarantor (as applicable). "Excluded
Financial Indebtedness" means Financial Indebtedness of any Excluded Subsidiary which
is not also Financial Indebtedness of a member of the Group which is not an Excluded
Subsidiary. A report by two directors of BCL or by a director and the secretary of BCL
whether or not addressed to the Trustee that in their opinion Financial Indebtedness
is or is not or was or was not at any particular time or throughout any specified period
Excluded Financial Indebtedness may be relied upon by the
Trustee
without further enquiry or evidence and, if relied upon by the Trustee, shall, in the
absence of manifest error, be conclusive and binding on all parties. "Excluded Subsidiary"
means Burford Lending LLC and its Subsidiaries, provided that BCL may by irrevocable
notice to the Trustee permanently deem any entity which could otherwise be an Excluded
Subsidiary not to be an Excluded Subsidiary and such entity shall no longer be an Excluded
Subsidiary for the purposes of these Conditions. A report by two directors of BCL or
by a director and the secretary of BCL whether or not addressed to the Trustee that in
their opinion a Subsidiary of BCL is or is not or was or was not at any particular time
or throughout any specified period an Excluded Subsidiary may be relied upon by the Trustee
without further enquiry or evidence and, if relied upon by the Trustee, shall, in the
absence of manifest error, be conclusive and binding on all parties. "FATCA" means Sections
1471 through 1474 of the U.S. Internal Revenue Code of 1986 (the "Code") (including an
agreement described in Section 1471(b) thereof) together with any regulations thereunder
or any official interpretations thereof, any intergovernmental agreement between the
US and another jurisdiction facilitating the implementation thereof or any law implementing
such an intergovernmental agreement. "Financial Adviser" means a financial adviser selected
by the Issuer after consultation with the Trustee. "Financial Conduct Authority" means
the United Kingdom Financial Conduct Authority. "Financial Indebtedness" means any indebtedness
(other than indebtedness owed by any member of the Group which is not an Excluded Subsidiary
to another member of the Group which is also not an Excluded Subsidiary) whether or not
contingent, for or in respect of: (a) moneys borrowed; (b) any amount raised by acceptance
under any acceptance credit facility or dematenahsed equivalent; (c) any amount raised
pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan
stock or any similar instrument; (d) the amount of any liability in respect of any lease
or hire purchase contract which would, in accordance with IFRS, be treated as a finance
or capital lease; (e) receivables sold or discounted (other than any receivables to the
extent they are sold on a non-recourse basis); (f) any amount raised under any other
transaction (including any forward sale or purchase agreement) having the commercial
effect of a borrowing; (g) any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate, index or price (and, when
calculating the value of any derivative transaction, only the marked-to-market value
shall be taken into account); (h) any counter-indemnity obligation in respect of a guarantee,
indemnity, bond or any other instrument issued by a bank or financial institution; and
(l) the amount of any liability in respect of any guarantee or indemnity for any of the
items referred to in paragraphs (a) to (h) above.
"Gross
Redemption Yield" means, with respect to a security, the gross redemption yield on such
security, expressed as a percentage and calculated by the Financial Adviser on the basis
set out by the UK Debt Management Office in the paper "Formulae for Calculating Gilt
Prices from Yields", page 4, Section One: Price/Yield Formulae "Conventional Gilts; Double
dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date" (published
8 June, 1998, as amended or updated from time to time) on a semi-annual compounding basis
(converted to an annualised yield and rounded up (if necessary) to four decimal places)
or on such other basis as the Trustee may approve. "Group" means BCL and its Subsidiaries
taken as a whole. "Group Net Debt" means (i) the aggregate of all Financial Indebtedness
of the Group (other than Excluded Financial Indebtedness) at the relevant time less (ii)
the sum of (x) Cash and Cash Equivalents; and (y) Cash Management Investments (other
than any Cash and Cash Equivalents and Cash Management Investments to which any Excluded
Subsidiary is beneficially entitled). "Group Total Assets" as at any Reference Date shall
be equal to: (i) the sum of (a) the amount recorded as "Total assets" in the relevant
Consolidated Financial Statements and (b) Uncalled Preference Share Amounts; minus (ii)
the sum (without duplication) of (x) any 'Total assets" referred to in (a) above to which
any Excluded Subsidiary is beneficially entitled and (y) any goodwill and intangible
assets which are included in the "Total assets" referred to in (a) above. "IFRS" means
the generally accepted accounting practice and principles applicable to the business
BCL conducts, currently International Financial Reporting Standards. "Issue Date" means
26 April 2016. "Leverage Ratio" means the ratio of: (a) Group Net Debt; to (b) Group
Total Assets. "Make-Whole Reference Date" means the date which is three London Business
Days prior to the date fixed for redemption pursuant to Condition 8.3 by the Issuer.
"Material Subsidiary" means at any time a Subsidiary (other than an Excluded Subsidiary)
of BCL: (a) whose gross assets (consolidated in the case of a Subsidiary which itself
has Subsidiaries) represent (or, m the case of a Subsidiary acquired after the end of
the financial period to which the then latest audited consolidated accounts of BCL and
its Subsidiaries relate, are equal to) not less than 5.00 per cent, of the consolidated
gross assets of the Group, all as calculated respectively by reference to the then latest
Directors' Certificate relating to such Subsidiary delivered to the Trustee in accordance
with the relevant provisions of the Trust Deed and the then latest audited consolidated
accounts of BCL and its Subsidiaries, provided that: (A) in the event that the relevant
Subsidiary itself has Subsidiaries which are Excluded Subsidiaries, the gross assets
of such Excluded Subsidiaries are excluded from the calculation of the consolidated gross
assets of such Subsidiary; (B) the gross assets of all Excluded Subsidiaries are excluded
from the calculation of the consolidated gross assets of the Group; and
(C)
in the case of a Subsidiary of BCL acquired after the end of the financial period to
which the then latest audited consolidated accounts of BCL and its Subsidiaries relate,
the reference to the then latest audited consolidated accounts of BCL and its Subsidiaries
for the purposes of the calculation above shall, until consolidated accounts for the
financial period in which the acquisition is made have been prepared and audited as aforesaid,
be deemed to be a reference to such first-mentioned accounts as if such Subsidiary had
been shown in such accounts by reference to the then latest Directors' Certificate relating
to such Subsidiary delivered to the Trustee in accordance with the relevant provisions
of the Trust Deed, adjusted as deemed appropriate by BCL; or (b) to which is transferred
the whole or substantially the whole of the undertaking and assets of a Subsidiary of
BCL which immediately prior to such transfer is a Material Subsidiary, provided that
the transferor Subsidiary shall upon such transfer forthwith cease to be a Material Subsidiary
and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to this
subparagraph (b) on the date on which the consolidated accounts of BCL and its Subsidiaries
for the financial period current at the date of such transfer have been prepared and
audited as aforesaid but so that such transferor Subsidiary or such transferee Subsidiary
may be a Material Subsidiary on or at any time after the date on which such consolidated
accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph
(a) above or, prior to or after such date, by virtue of any other applicable provision
of this definition; or (c) to which is transferred an undertaking or assets which, taken
together with the undertaking or assets of the transferee Subsidiary, represent (or,
in the case of the transferee Subsidiary being acquired after the end of the financial
period to which the then latest audited consolidated accounts of BCL and its Subsidiaries
relate, are equal to) not less than 5 per cent of the consolidated gross assets of the
Group, all as calculated as referred to in subparagraph (a) above, provided that the
transferor Subsidiary (if a Material Subsidiary) shall upon such transfer forthwith cease
to be a Material Subsidiary unless immediately following such transfer its undertaking
and assets represent (or, in the case aforesaid, are equal to) not less than 5 per cent,
of the consolidated gross assets of the Group, all as calculated as referred to in subparagraph
(a) above, and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant
to this subparagraph (c) on the date on which the consolidated accounts of BCL and its
Subsidiaries for the financial period current at the date of such transfer have been
prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary
may be a Material Subsidiary on or at any time after the date on which such consolidated
accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph
(a) above or, prior to or after such date, by virtue of any other applicable provision
of this definition, all as more particularly defined in the Trust Deed. In accordance
with the provisions of the Trust Deed, BCL has agreed to give to the Trustee a Director's
Certificate which provides a list of Material Subsidiaries (a) on the Issue Date; (b)
within three business days after demand by the Trustee therefor and (c) (without the
necessity for such demand) within six months of its most recent financial year-end commencing
with the financial period ending 31 December 2015 and within three months of the end
of the first half of each financial year commencing with the financial period ending
30 June 2016. "Maturity Date" means 26 October 2024.
"Payment
Business Day" means a day (other than a Saturday or Sunday) on which commercial banks
are open for business in London and, in the case of presentation of a Certificate, in
the place in which the Certificate is presented. "Permitted Reorganisation" means, in
the case of a Material Subsidiary, any reconstruction, amalgamation, reorganisation,
restructuring, merger or consolidation the result of which will be that all or substantially
all of the assets and undertaking of such Material Subsidiary will be transferred to
or otherwise vested in the Issuer, any Guarantor or another Subsidiary of BCL (other
than an Excluded Subsidiary). "Rating Agency" means Moody's Investors Services Limited,
Fitch Ratings Ltd. or Standard & Poor's Credit Market Services Europe Limited (or
any of their respective affiliates). "Reference Date" means such annual or semi-annual
date or dates as at which BCL prepares its audited annual Consolidated Financial Statements
or unaudited semi-annual Consolidated Financial Statements, as the case may be and as
at the Issue Date those are 31 December and 30 June in each year, respectively. "Reference
Bond" means the 2.75 per cent. Treasury Stock due 2024, or if such stock is no longer
in issue such other UK government stock with a maturity date as near as possible to the
Maturity Date as the Financial Adviser may determine to be appropriate by way of substitution
for the 2.75 per cent. Treasury Stock due 2024. "Relevant Date" means the date on which
the payment first becomes due but, if the full amount of the money payable has not been
received by the Principal Paymg Agent or the Trustee on or before the due date, it means
the date on which, the full amount of the money having been so received, notice to that
effect has been duly given to the Bondholders by the Issuer in accordance with Condition
14. "Relevant Jurisdiction" means: (l) m the case of the Issuer, the UK or any political
subdivision or any authority thereof or therein having power to tax; (ii) in the case
of BCL, Guernsey or any political subdivision or any authority thereof or therein having
power to tax; and (iii) in the case of any Subsidiary Guarantor, any jurisdiction under
the laws of which that Subsidiary Guarantor for the time being is organised or in which
it is treated as resident for tax purposes or any political subdivision or any authority
thereof or therein having power to tax or (in each case) any other jurisdiction or any
political subdivision or any authority thereof or therein having power to tax to which
the Issuer or the relevant Guarantor, as the case maybe, becomes subject m respect of
payments made by it of principal and interest on the Bonds. "Step-Up Event" means that
(i) any member of the Group (other than an Excluded Subsidiary); or (ii) any Financial
Indebtedness of any member of the Group (other than Excluded Financial Indebtedness),
is assigned a credit rating solicited by a member of the Group by any Rating Agency and,
m either case, the credit rating initially assigned by such Rating Agency is below: (a)
Ba3 in the case of Moody's Investors Services Limited (or any of its affiliates); (b)
BB- in the case of Fitch Ratings Ltd. (or any of its affiliates); or (c) BB- in the case
of Standard & Poor's Credit Market Services Europe Limited (or any of its affiliates)
(or,
in each case, their respective equivalent ratings for the time being). "Subsidiary" means
a subsidiary within the meaning of Section 1159 of the Companies Act 2006 as amended.
"UK" means the United Kingdom. "Uncalled Preference Share Amounts" means, for so long
as it is a Subsidiary of BCL, any amounts which BC Capital Limited is entitled upon notice
to receive pursuant to the Capital Call Right on its "A" Preference Shares (as each such
term is defined in the Articles of Association of BC Capital Limited). "US" means the
United States of America.
PRINCIPAL PAYING AGENT
Elavon Financial Services
Limited (acting through its UK Branch)
125 Old Broad Street
Fifth Floor
London EC2N 1AR
REGISTRAR
Elavon Financial Services
Limited
Block E
Cherrywood Business Park
Loughlinstown
Dublin, Ireland
TRANSFER AGENTS
Elavon Financial Services Limited (acting
through its UK Branch)
125 Old Broad Street
Fifth Floor
London EC2N 1AR
and/or such other or
further Principal Paying Agent and other Paying Agents, Registrar and Transfer Agents and/or specified offices as may from time
to time be appointed by the Issuer and the Guarantors with the approval of the Trustee and notice of which has been given to the
Bondholders.
Schedule
3
Register
and Transfer of Bonds
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1.
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The Issuer shall at all times ensure that the Registrar maintains in London, or at such other place
in the United Kingdom as the Trustee may agree, a register showing the amount of the Bonds from time to time outstanding and the
dates of issue and all subsequent transfers and changes of ownership thereof and the names and addresses of the holders of the
Bonds. The Trustee and the holders of the Bonds or any of them and any person authorised by it or any of them may at all reasonable
times during office hours inspect the register and take copies of or extracts from it. The register may be closed by the Issuer
for such periods at such times (not exceeding in total 30 days in any one year) as it may think fit.
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2.
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Each Bond shall have an identifying serial number which shall be entered on the register.
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3.
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The Bonds are transferable by execution of the form of transfer endorsed thereon under the hand
of the transferor or, where the transferor is a corporation, under its common seal or under the hand of two of its officers duly
authorised in writing.
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4.
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The Bonds to be transferred must be delivered for registration to the specified office of the Registrar
or any Transfer Agent with the form of transfer endorsed thereon duly completed and executed and must be accompanied by such documents,
evidence and information as may be required pursuant to the Conditions and such other evidence as the Issuer may reasonably require
to prove the title of the transferor or his right to transfer the Bonds and, if the form of transfer is executed by some other
person on his behalf or in the case of the execution of a form of transfer on behalf of a corporation by its officers, the authority
of that person or those persons to do so.
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5.
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The executors or administrators of a deceased holder of Bonds (not being one of several joint holders)
and in the case of the death of one or more of several joint holders the survivor or survivors of such joint holders shall be the
only person or persons recognised by the Issuer as having any title to such Bonds.
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6.
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Any person becoming entitled to Bonds in consequence of the death or bankruptcy of the holder of
such Bonds may upon producing such evidence that he holds the position in respect of which he proposes to act under this paragraph
or of his title as the Issuer shall require be registered himself as the holder of such Bonds or, subject to the preceding paragraphs
as to transfer, may transfer such Bonds. The Issuer shall be at liberty to retain any amount payable upon the Bonds to which any
person is so entitled until such person shall be registered as aforesaid or shall duly transfer the Bonds.
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7.
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Unless otherwise requested by him, the holder of Bonds shall be entitled to receive only one Certificate
in respect of his entire holding.
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8.
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The joint holders of Bonds shall be entitled to one Certificate only in respect of their joint
holding which shall, except where they otherwise direct, be delivered to the joint holder whose name appears first in the register
of the holders of Bonds in respect of such joint holding.
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9.
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Where a holder of Bonds has transferred part only of his holding there shall be delivered to him
without charge a Certificate in respect of the balance of such holding.
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10.
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The Issuer shall make no charge to the Bondholders for the registration of any holding of Bonds
or any transfer thereof or for the issue thereof or for the delivery thereof at the specified office of the Registrar or of any
Transfer Agent or by post to the address specified by the Bondholder. If any Bondholder entitled to receive a Certificate wishes
to have the same delivered to him otherwise than at the specified office of the Registrar or of any Transfer Agent, such delivery
shall be made, upon his written request to the Registrar or such Transfer Agent, at his risk and (except where sent by post to
the address specified by the Bondholder) at his expense.
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11.
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The holder of a Bond may (to the fullest extent permitted by applicable laws) be treated at all
times, by all persons and for all purposes as the absolute owner of such Bond notwithstanding any notice any person may have of
the right, title, interest or claim of any other person thereto. The Issuer, each Guarantor and the Trustee shall not be bound
to see to the execution of any trust to which any Bond may be subject and no notice of any trust shall be entered on the register.
The holder of a Bond will be recognised by the Issuer and each Guarantor as entitled to his Bond free from any equity, set-off
or counterclaim on the part of the Issuer or each Guarantor against the original or any intermediate holder of such Bond.
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Schedule
4
Provisions
for Meetings of Bondholders
DEFINITIONS
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1.
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As used in this Schedule the following expressions shall have the following meanings unless the
context otherwise requires:
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Block Voting
Instruction means an English language document issued by a Paying Agent in which:
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(a)
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it is certified that on the date thereof Bonds represented by the Global Certificate or Definitive
Certificates which are held in an account with any Clearing System (in each case not being Bonds in respect of which a Voting Certificate
has been issued and is outstanding in respect of the meeting specified in such Block Voting Instruction) are blocked in an account
with a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1)
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the conclusion of the meeting specified in such Block Voting Instruction; and
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(2)
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the Bonds ceasing with the agreement of the Paying Agent to be so blocked and the giving of notice
by the Paying Agent to the Issuer in accordance with paragraph 3(E) of the necessary amendment to the Block Voting Instruction;
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(b)
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it is certified that each holder of such Bonds has instructed such Paying Agent that the vote(s)
attributable to the Bonds so blocked should be cast in a particular way in relation to the resolution(s) to be put to such meeting
and that all such instructions are, during the period commencing 48 Hours prior to the time for which such meeting is convened
and ending at the conclusion or adjournment thereof, neither revocable nor capable of amendment;
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(c)
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the aggregate principal amount of the Bonds so blocked is listed distinguishing with regard to
each such resolution between those in respect of which instructions have been given that the votes attributable thereto should
be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto
should be cast against the resolution; and
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(d)
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one or more persons named in such Block Voting Instruction (each hereinafter called a proxy)
is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Bonds so listed in accordance with
the instructions referred to in (c) above as set out in such Block Voting Instruction;
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Clearing
System means Euroclear and/or Clearstream, Luxembourg and includes in respect of any Bond any clearing system on behalf of
which such Bond is held or which is the holder or (directly or through a nominee) registered owner of a Bond, in either case whether
alone or jointly with any other Clearing System(s). For the avoidance of doubt, the provisions of subclause 1.2(g) shall apply
to this definition;
Eligible
Person means any one of the following persons who shall be entitled to attend and vote at a meeting:
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(a)
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a holder of a Bond in definitive form which is not held in an account with any Clearing System;
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(b)
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a bearer of any Voting Certificate;
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(c)
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a proxy specified in any Block Voting Instruction; and
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(d)
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a proxy appointed by a holder of a Bond in definitive form which is not held in an account with
any Clearing System;
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Extraordinary
Resolution means:
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(a)
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a resolution passed at a meeting duly convened and held in accordance with these presents by a
majority consisting of not less than three-fourths of the Eligible Persons voting thereon upon a show of hands or, if a poll is
duly demanded, by a majority consisting of not less than three-fourths of the votes cast on such poll;
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(b)
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a resolution in writing signed by or on behalf of the holders of not less than three fourths in
principal amount of the Bonds for the time being outstanding which resolution may be contained in one document or in several documents
in like form each signed by or on behalf of one or more of the holders; or
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(c)
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consent given by way of electronic consents through the relevant Clearing System(s) (in a form
satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in principal amount of the Bonds for
the time being outstanding;
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Voting Certificate
means an English language certificate issued by a Paying Agent in which it is stated:
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(a)
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that on the date thereof Bonds represented by the Global Certificate or Definitive Certificates
which are held in an account with any Clearing System (in each case not being Bonds in respect of which a Block Voting Instruction
has been issued and is outstanding in respect of the meeting specified in such Voting Certificate) are blocked in an account with
a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1)
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the conclusion of the meeting specified in such Voting Certificate; and
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(2)
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the surrender of the Voting Certificate to the Paying Agent who issued the same; and
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(b)
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that the bearer thereof is entitled to attend and vote at such meeting in respect of the Bonds
represented by such Voting Certificate;
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24 Hours
means a period of 24 hours including all or part of a day upon which banks are open for business in both the place where the relevant
meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose
the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more
periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of
the places as aforesaid; and
48
Hours means a period of 48 hours including all or part of two days upon which banks are open for business both in the
place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices
(disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period
or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of two days upon which
banks are open for business in all of the places as aforesaid.
For the purposes
of calculating a period of Clear Days in relation to a meeting, no account shall be taken of the day on which the notice
of such meeting is given (or, in the case of an adjourned meeting, the day on which the meeting to be adjourned is held) or the
day on which such meeting is held.
All references
in this Schedule to a "meeting" shall, where the context so permits, include any relevant adjourned meeting.
EVIDENCE OF ENTITLEMENT
TO ATTEND AND VOTE
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2.
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A holder of a Bond represented by the Global Certificate or a Definitive Certificate which is held
in an account with any Clearing System may require the issue by a Paying Agent of Voting Certificates and Block Voting Instructions
in accordance with the terms of paragraph 3.
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For the purposes
of paragraph 3, the Principal Paying Agent and each Paying Agent shall be entitled to rely, without further enquiry, on any information
or instructions received from a Clearing System and shall have no liability to any holder or other person for any loss, damage,
cost, claim or other liability occasioned by its acting in reliance thereon, nor for any failure by a Clearing System to deliver
information or instructions to the Principal Paying Agent or any Paying Agent.
The holder
of any Voting Certificate or the proxies named in any Block Voting Instruction shall for all purposes in connection with the relevant
meeting be deemed to be the holder of the Bonds to which such Voting Certificate or Block Voting Instruction relates.
PROCEDURE FOR ISSUE
OF VOTING CERTIFICATES, BLOCK VOTING INSTRUCTIONS AND PROXIES
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3.
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(A)
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Definitive Certificates not held in a Clearing System
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If Bonds have
been issued in definitive form and are not held in an account with any Clearing System, the Trustee may from time to time prescribe
further regulations (in accordance with paragraph 23) to enable the holders of such Bonds to attend and/or vote at a meeting in
respect of such Bonds.
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(B)
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Global Certificate and Definitive Certificates held in a Clearing System - Voting Certificate
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A holder of
a Bond (not being a Bond in respect of which instructions have been given to the Principal Paying Agent in accordance with
paragraph 3(C)) represented by the Global Certificate or which is in definitive form and is held in an account with any
Clearing System may procure the delivery of a Voting Certificate in respect of such Bond by giving notice to the Clearing
System through which such holder's interest in the Bond is held specifying by name a person (an Identified Person)
(which need not be the holder himself) to collect the Voting Certificate and attend and vote at the meeting. The relevant
Voting Certificate will be made available at or shortly prior to the commencement of the meeting by the Principal Paying
Agent against presentation by such Identified Person of the form of identification previously notified by such holder to the
Clearing System. The Clearing System may prescribe forms of identification (including, without limitation, a passport or
driving licence) which it deems appropriate for these purposes. Subject to receipt by the Principal Paying Agent from the
Clearing System, no later than 24 Hours prior to the time for which such meeting is convened, of notification of the
principal amount of the Bonds to be represented by any such Voting Certificate and the form of identification against
presentation of which such Voting Certificate should be released, the Principal Paying Agent shall, without any obligation to
make further enquiry, make available Voting Certificates against presentation of the form of identification corresponding to
that notified.
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(C)
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Global Certificate and Definitive Certificates held in a Clearing System - Block Voting Instruction
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A holder of a
Bond (not being a Bond in respect of which a Voting Certificate has been issued) represented by the Global Certificate or which
is in definitive form and is held in an account with any Clearing System may require the Principal Paying Agent to issue a Block
Voting Instruction in respect of such Bond by first instructing the Clearing System through which such holder's interest in the
Bond is held to procure that the votes attributable to such Bond should be cast at the meeting in a particular way in relation
to the resolution or resolutions to be put to the meeting. Any such instruction shall be given in accordance with the rules of
the Clearing System then in effect. Subject to receipt by the Principal Paying Agent of instructions from the Clearing System,
no later than 24 Hours prior to the time for which such meeting is convened, of notification of the principal amount of the Bonds
in respect of which instructions have been given and the manner in which the votes attributable to such Bonds should be cast, the
Principal Paying Agent shall, without any obligation to make further enquiry, appoint a proxy to attend the meeting and cast votes
in accordance with such instructions.
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(D)
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Each Block Voting Instruction, together (if so requested by the Trustee) with proof satisfactory
to the Trustee of its due execution on behalf of the relevant Paying Agent shall be deposited by the relevant Paying Agent or (as
the case may be) by the Registrar or the relevant Transfer Agent at such place as the Trustee shall approve not less than 24 Hours
before the time appointed for holding the meeting at which the proxy or proxies named in the Block Voting Instruction proposes
to vote, and in default the Block Voting Instruction shall not be treated as valid unless the Chairman of the meeting decides otherwise
before such meeting proceeds to business. A copy of each Block Voting Instruction shall be deposited with the Trustee before the
commencement of the meeting but the Trustee shall not thereby be obliged to investigate or be concerned with the validity of or
the authority of the proxy or proxies named in any such Block Voting Instruction.
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(E)
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Any vote given in accordance with the terms of a Block Voting Instruction shall be valid notwithstanding
the previous revocation or amendment of the Block Voting Instruction or of any of the instructions of the relevant holder or the
relevant Clearing System (as the case may be) pursuant to which it was executed provided that no intimation in writing of such
revocation or amendment has been received from the relevant Paying Agent by the Issuer at its registered office (or such other
place as may have been required or approved by the Trustee for the purpose) by the time being 24 Hours (in the case of a Block
Voting Instruction) or 48 Hours (in the case of a proxy) before the time appointed for holding the meeting at which the Block Voting
Instruction is to be used.
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CONVENING OF MEETINGS,
QUORUM AND ADJOURNED MEETINGS
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4.
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The Issuer, the Guarantors or the Trustee may at any time, and the Issuer shall upon a requisition
in writing in the English language signed by the holders of not less than ten per cent. in principal amount of the Bonds for the
time being outstanding, convene a meeting and if the Issuer makes default for a period of seven days in convening such a meeting
the same may be convened by the Trustee or the requisitionists. Whenever the Issuer or any Guarantor is about to convene any such
meeting the Issuer or the relevant Guarantor, as the case may be, shall forthwith give notice in writing to the Trustee of the
day, time and place thereof and of the nature of the business to be transacted thereat. Every such meeting shall be held at such
time and place as the Trustee may appoint or approve in writing.
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5.
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At least 21 Clear Days' notice specifying the place, day and hour of meeting shall be given to
the holders prior to any meeting in the manner provided by Condition 14 (Notices). Such notice, which shall be in the English
language, shall state generally the nature of the business to be transacted at the meeting thereby convened and, where an Extraordinary
Resolution will be proposed at the meeting, shall either specify in such notice the terms of such resolution or state fully the
effect on the holders of such resolution, if passed. Such notice shall include statements as to the manner in which holders may
arrange for Voting Certificates or Block Voting Instructions to be issued and, if applicable, appoint proxies. A copy of the notice
shall be sent by post to the Trustee (unless the meeting is convened by the Trustee), to the Issuer (unless the meeting is convened
by the Issuer) and to each of the Guarantors (unless the meeting is convened by that Guarantor).
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6.
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A person (who may but need not be a holder) nominated in writing by the Trustee shall be entitled
to take the chair at the relevant meeting, but if no such nomination is made or if at any meeting the person nominated shall not
be present within 15 minutes after the time appointed for holding the meeting the holders present shall choose one of their number
to be Chairman, failing which the Issuer may appoint a Chairman. The Chairman of an adjourned meeting need not be the same person
as was Chairman of the meeting from which the adjournment took place.
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7.
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At any such meeting one or more Eligible Persons present and holding or representing in the aggregate
more than 50 per cent. in principal amount of the Bonds for the time being outstanding shall (subject as provided below) form a
quorum for the transaction of business (including the passing of an Extraordinary Resolution) PROVIDED THAT at any meeting the
business of which includes any Basic Terms Modification (which shall, subject only to subclause 19.2 and clause 21, only be capable
of being effected after having been approved by Extraordinary Resolution) the quorum shall be one or more Eligible Persons present
and holding or representing in the aggregate not less than two-thirds of the principal amount of the Bonds for the time being outstanding.
No business (other than the choosing of a Chairman) shall be transacted at any meeting unless the requisite quorum is present at
the commencement of the relevant business.
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8.
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If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide)
after the time appointed for any such meeting a quorum is not present for the transaction of any particular business, then, subject
and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting shall if convened
upon the requisition of holders be dissolved. In any other case it shall stand adjourned for such period, being not less than 13
Clear Days nor more than 42 Clear Days, and to such place as may be appointed by the Chairman either at or subsequent to such meeting
and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide)
after the time appointed for any adjourned meeting a quorum is not present for the transaction of
any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is
present, the Chairman may either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period,
being not less than 13 Clear Days (but without any maximum number of Clear Days), and to such place as may be appointed by the
Chairman either at or subsequent to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall
apply to all further adjourned such meetings.
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9.
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At any adjourned meeting one or more Eligible Persons present (whatever the principal amount of
the Bonds so held or represented by them) shall (subject as provided below) form a quorum and shall have power to pass any resolution
and to decide upon all matters which could properly have been dealt with at the meeting from which the adjournment took place had
the requisite quorum been present PROVIDED THAT at any adjourned meeting the quorum for the transaction of business comprising
any Basic Terms Modification shall be one or more Eligible Persons present and holding or representing in the aggregate not less
than one-third of the principal amount of the Bonds for the time being outstanding.
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10.
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Notice of any adjourned meeting shall be given in the same manner as notice of an original meeting
but as if 10 were substituted for 21 in paragraph 5 and such notice shall state the required quorum.
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CONDUCT OF BUSINESS
AT MEETINGS
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11.
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Every question submitted to a meeting shall be decided in the first instance by a show of hands.
A poll may be demanded (before or on the declaration of the result of the show of hands) by the Chairman, the Issuer, any Guarantor,
the Trustee or any Eligible Person (whatever the amount of the Bonds so held or represented by him).
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12.
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At any meeting, unless a poll is duly demanded, a declaration by the Chairman that a resolution
has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence
of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
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13.
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Subject to paragraph 15, if at any such meeting a poll is so demanded it shall be taken in such
manner and, subject as hereinafter provided, either at once or after an adjournment as the Chairman directs and the result of such
poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll.
The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the motion
on which the poll has been demanded.
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14.
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The Chairman may, with the consent of (and shall if directed by) any such meeting, adjourn the
same from time to time and from place to place; but no business shall be transacted at any adjourned meeting except business which
might lawfully have been transacted at the meeting from which the adjournment took place.
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15.
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Any poll demanded at any such meeting on the election of a Chairman or on any question of adjournment
shall be taken at the meeting without adjournment.
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16.
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Any director or officer of the Trustee, its lawyers and financial advisors, any director or officer
of the Issuer or, as the case may be, the Guarantors, their lawyers and financial advisors, any director or officer of any of the
Paying Agents and any other person authorised so to do by the Trustee may attend and speak at any meeting. Save as aforesaid, no
person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting unless he is an Eligible Person.
No person shall be entitled to vote at any meeting in respect of Bonds which are deemed to
be not outstanding by virtue of the proviso to the definition of "outstanding" in clause 1.
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(a)
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on a show of hands every Eligible Person present shall have one vote; and
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(b)
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on a poll every Eligible Person present shall have one vote in respect of each £1 or such
other amount as the Trustee may in its absolute discretion stipulate in principal amount of the Bonds held or represented by such
Eligible Person.
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Without prejudice
to the obligations of the proxies named in any Block Voting Instruction, any Eligible Person entitled to more than one vote need
not use all his votes or cast all the votes to which he is entitled in the same way.
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18.
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The proxies named in any Block Voting Instruction need not be holders. Nothing herein shall prevent
any of the proxies named in any Block Voting Instruction from being a director, officer or representative of or otherwise connected
with the Issuer or any Guarantor.
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19.
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The Bondholders shall in addition to the powers hereinbefore given have the following powers exercisable
(without prejudice to any powers conferred on other persons by these presents) only by Extraordinary Resolution (subject, in the
case of an Extraordinary Resolution to be proposed at a meeting, to the provisions relating to quorum contained in paragraphs 7
and 9) namely:
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(a)
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Power to sanction any compromise or arrangement proposed to be made between the Issuer, the Guarantors,
the Trustee, any Appointee and the holders or any of them.
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(b)
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Power to sanction any abrogation, modification, compromise or arrangement in respect of the rights
of the Trustee, any Appointee, the holders, the Issuer or the Guarantors against any other or others of them or against any of
their property whether such rights arise under these presents or otherwise.
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(c)
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Power to assent to any modification of the provisions of these presents which is proposed by the
Issuer, the Guarantors, the Trustee or any holder.
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(d)
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Power to give any authority or sanction which under the provisions of these presents is required
to be given by Extraordinary Resolution.
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(e)
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Power to appoint any persons (whether holders or not) as a committee or committees to represent
the interests of the holders and to confer upon such committee or committees any powers or discretions which the holders could
themselves exercise by Extraordinary Resolution.
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(f)
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Power to approve of a person to be appointed a trustee and power to remove any trustee or trustees
for the time being of these presents.
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(g)
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Power to discharge or exonerate the Trustee and/or any Appointee from all liability in respect
of any act or omission for which the Trustee and/or such Appointee may have become responsible under these presents.
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(h)
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Power to authorise the Trustee and/or any Appointee to concur in and execute and do all such deeds,
instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution.
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(i)
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Power to sanction any scheme or proposal for the exchange or sale of the Bonds for or the conversion
of the Bonds into or the cancellation of the Bonds in consideration of shares, stock, notes, bonds, debentures, debenture stock
and/or other obligations and/or securities of the Issuer or any other company formed or to be formed, or for or into or in consideration
of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other
obligations and/or securities as aforesaid and partly for or into or in consideration of cash and for the appointment of some person
with power on behalf of the holders to execute an instrument of transfer of the Bonds held by them in favour of the persons with
or to whom the Bonds are to be exchanged or sold respectively.
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(j)
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Power to approve the substitution of any entity for the Issuer (or any previous substitute) as
principal debtor under these presents.
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20.
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Any Extraordinary Resolution (i) passed at a meeting of the holders duly convened and held in accordance
with these presents, (ii) passed as an Extraordinary Resolution in writing in accordance with these presents or (iii) passed by
way of electronic consents given by holders through the relevant Clearing System(s) in accordance with these presents shall be
binding upon all the holders whether or not present or whether or not represented at any meeting and whether or not voting on such
Extraordinary Resolution and each of them shall be bound to give effect thereto accordingly and the passing of any such Extraordinary
Resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of the result of the voting
on any Extraordinary Resolution duly considered by the holders shall be published in accordance with Condition 14 (Notices)
by the Issuer within 14 days of such result being known, PROVIDED THAT the non-publication of such notice shall not invalidate
such result.
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21.
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Minutes of all resolutions and proceedings at every meeting shall be made and entered in books
to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid, if purporting to be signed by
the Chairman of the meeting at which such resolutions were passed or proceedings transacted, shall be conclusive evidence of the
matters therein contained and, until the contrary is proved, every such meeting in respect of the proceedings of which minutes
have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted thereat
to have been duly passed or transacted.
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22.
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(A)If and whenever the Issuer has issued and has outstanding Bonds of more than one series
the foregoing provisions of this Schedule shall have effect subject to the following modifications:
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(i)
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a resolution which in the opinion of the Trustee affects the Bonds of only one series shall be
deemed to have been duly passed if passed at a separate meeting (or by a separate resolution in writing or by a separate resolution
passed by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds of that series;
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(ii)
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a resolution which in the opinion of the Trustee affects the Bonds of more than one series but
does not give rise (in the opinion of the Trustee) to an actual or potential conflict of interest between the holders of Bonds
of any of the series so affected shall be deemed to have been duly passed if passed at a single meeting (or by a single resolution
in writing or by a single resolution passed by way of consents received through the relevant Clearing System(s)) of the holders
of the Bonds of all the series so affected;
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(iii)
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a resolution which in the opinion of the Trustee affects the Bonds of more than one series and
gives or may give rise (in the opinion of the Trustee) to a conflict of interest between the holders of the Bonds of one series
or group of series so affected and the holders of the Bonds of another series or group of series so affected shall be deemed to
have been duly passed only if passed at separate meetings (or by separate resolutions in writing or by separate resolutions passed
by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds of each series or group of series
so affected; and
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(iv)
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to all such meetings all the preceding provisions of this Schedule shall mutatis mutandis apply
as though references therein to Bonds and holders were references to the Bonds of the series or group of series in question or
to the holders of such Bonds, as the case may be.
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(B)
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Subject as provided below, if the Issuer has issued and has outstanding Bonds which are not denominated
in Pounds Sterling, or in the case of any meeting of Bonds of more than one currency, the principal amount of such Bonds shall
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(i)
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for the purposes of paragraph 4, be the equivalent in Pounds Sterling at the spot rate of a bank
nominated by the Trustee for the conversion of the relevant currency or currencies into Pounds Sterling on the seventh dealing
day prior to the day on which the requisition in writing is received by the Issuer; and
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(ii)
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for the purposes of paragraphs 7, 9 and 17 (whether in respect of the meeting or any adjourned
such meeting or any poll resulting therefrom), be the equivalent at such spot rate on the seventh dealing day prior to the day
of such meeting.
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In such circumstances,
on any poll each person present shall have one vote for each £1 (or such other Pounds Sterling amount as the Trustee may
in its absolute discretion stipulate) in principal amount of the Bonds (converted as above) which he holds or represents. For the
avoidance of doubt, in the case of a meeting of Bonds which are denominated in a single currency which is not pounds sterling,
the Trustee (in its sole discretion) may agree with the Issuer that the relevant currency for the purposes of the meeting (including,
without limitation, the quorum and voting calculations) shall be the currency of the relevant Bonds, in which case the provisions
of this Schedule shall be construed accordingly.
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23.
|
Subject to all other provisions of these presents the Trustee may (after consultation with the
Issuer and the Guarantors where the Trustee considers such consultation to be practicable but without the consent of the Issuer,
the Guarantors or the holders) prescribe such further or alternative regulations regarding the requisitioning and/or the holding
of meetings and attendance and voting thereat as the Trustee may in its sole discretion reasonably think fit (including, without
limitation, the substitution for periods of 24 Hours and 48 Hours referred to in this Schedule of shorter periods). Such regulations
may, without prejudice to the generality of the foregoing, reflect the practices and facilities of any relevant Clearing System.
Notice of any such further or alternative regulations may, at the sole discretion of the Trustee, be given to holders in accordance
with Condition 14 (Notices) at the time of service of any notice convening a meeting or at such other time as the Trustee
may decide.
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Schedule
5
Form of
Directors' Certificate
[ON THE HEADED PAPER OF
THE ISSUER/GUARANTOR]
Dear Sirs
£100,000,000
6.125 per cent. Guaranteed Bonds due 2024
This certificate is delivered
to you in accordance with Clause 14(f) of the Trust Deed dated 26 April 2016 (the Trust Deed) and made between Burford Capital
PLC (the Issuer), Burford Capital Limited (BCL) and U.S. Bank Trustees Limited (the Trustee). All words and
expressions defined in the Trust Deed shall (save as otherwise provided herein or unless the context otherwise requires) have the
same meanings herein.
We hereby certify that:
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(a)
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as at [ ]1,
no Event of Default or Potential Event of Default existed [other than [ ]]2
and no Event of Default or Potential Event of Default had existed or happened at any time since [ ]3
[the certification date (as defined in the Trust Deed) of the last certificate delivered under Clause [14(f)]]4
[other than [ ]]5;
and
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(b)
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from and including [ ]3 [the certification date of the last certificate
delivered under Clause [14(f)]]4 to and including [ ]1, [each of] the Issuer and the Guarantors have complied
in all respects with its obligations under these presents (as defined in the Trust Deed) [other than [ ]]6.
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For and on behalf of
[BURFORD CAPITAL PLC
/ BURFORD CAPITAL LIMITED]
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Director
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Director[/Secretary]
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1
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Specify a date not more than 7 days before the date of delivery of the certificate.
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2
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If any Event of Default or Potential Event of Default did exist, give details; otherwise delete.
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3
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Insert date of Trust Deed in respect of the first certificate delivered under Clause 14(f), otherwise delete.
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4
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Include unless the certificate is the first certificate delivered under Clause 14(f) , in which case delete.
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5
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If any Event of Default or Potential Event of Default did exist or had happened, give details; otherwise delete.
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6
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If the Issuer and/or Guarantors have failed to comply with any obligation(s), give details; otherwise delete.
|
Schedule
6
Form of
Material Subsidiaries Certificate
[ON THE HEADED PAPER OF
BCL]
Dear Sirs
£100,000,000
6.125 per cent. Guaranteed Bonds due 2024
Please note that the
contents of this certificate constitutes Confidential Information (as defined in the Trust Deed) and is subject to the confidentiality
provisions set out in clause 27 of the Trust Deed.
This certificate is delivered
to you in accordance with Clause 14(s) of the Trust Deed dated 26 April 2016 (the Trust Deed) and made between Burford Capital
PLC (the Issuer), Burford Capital Limited (BCL) and U.S. Bank Trustees Limited (the Trustee). All words and
expressions defined in the Trust Deed shall (save as otherwise provided herein or unless the context otherwise requires) have the
same meanings herein.
We hereby certify that
as at [insert date] the following Subsidiaries were Material Subsidiaries:
[insert
list of Material Subsidiaries]
For and on behalf of
BURFORD CAPITAL LIMITED
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Director
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Director/Secretary
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Schedule
7
Form of
Supplemental Deed
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DEED
|
|
[l] 20[l]
|
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BURFORD CAPITAL PLC
and
BURFORD CAPITAL LIMITED
and
[enter name of Subsidiary Guarantor]
(as the Subsidiary Guarantor)
and
U.S. BANK TRUSTEES LIMITED
relating to
£100,000,000
6.125 per cent. Guaranteed
Bonds due 2024
unconditionally and irrevocably guaranteed
by
Burford Capital Limited
|
THIS SUPPLEMENTAL DEED
is made on [l] 20[l]
BETWEEN:
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(1)
|
BURFORD CAPITAL PLC, a company incorporated under the laws of England and Wales with company
number 09077893, whose registered office is at 24 Cornhill, London EC3V 3ND (the Issuer);
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(2)
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BURFORD CAPITAL LIMITED, a company incorporated under the laws of Guernsey with company
number 50877, whose registered office is at Regency Court, Glategny Esplanade, St Peter Port GY1 1WW, Guernsey (BCL);
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(3)
|
[l] a company incorporated under the laws of [l]
whose registered office is at [l] (the Subsidiary Guarantor);
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(4)
|
U.S. BANK TRUSTEES LIMITED, a limited liability company registered in England and Wales
with company number 02379632 having its registered office at 125 Old Broad Street, Fifth Floor, London EC2N 1AR (the Trustee,
which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being
the trustee or trustees of these presents) as trustee for the Bondholders (each as defined below);
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(5)
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ELAVON FINANCIAL SERVICES LIMITED (the Registrar); and
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(6)
|
ELAVON FINANCIAL SERVICES LIMITED, ACTING THROUGH ITS U.K. BRANCH (the Paying Agent and
the Transfer Agent).
|
WHEREAS:
|
(A)
|
This Supplemental Deed is supplemental to the Trust Deed dated 26 April, 2016 (the Principal
Trust Deed) made between the Issuer, BCL and the Trustee constituting the £100,000,000 6.125 per cent. Guaranteed Bonds
due 2024 (the Bonds) and the Agency Agreement dated 26 April, 2016 (the Principal Agency Agreement) made between
the Issuer, BCL, the Trustee and the various Agents set out therein.
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(B)
|
Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors) of the Bonds provides
that, BCL may from time to time appoint or procure to be appointed, a Subsidiary (as defined in the Principal Trust Deed) of BCL
which is not a Guarantor (as defined in the Principal Trust Deed) as a Subsidiary Guarantor in order to comply with its obligations
under Condition 4.1 (Guarantee) of the Bonds.
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(C)
|
Clause 7.11 of the Principal Trust Deed provides that in connection with the proposed admission
of any Subsidiary of BCL as a Guarantor pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors)
of the Bonds, no such admission shall be effective until the Trustee shall have received (inter alia) a duly executed deed
supplemental to the Principal Trust Deed (or in such other form as may be necessary or appropriate to comply with any applicable
law, rule or regulation, including the law of any jurisdiction where that Subsidiary is organised or carries on business) containing
a joint and several guarantee (in terms substantially similar to the Guarantee) and otherwise in form and manner satisfactory to
the Trustee pursuant to which such Subsidiary agrees to be bound by the provisions of the Principal Trust Deed as fully as if such
Subsidiary had been named in the Principal Trust Deed as a Guarantor.
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(D)
|
The Subsidiary Guarantor is a Subsidiary of the Guarantor and is not an Excluded Subsidiary.
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(E)
|
By [a resolution of the shareholders of the Subsidiary Guarantor
passed on [l] and] a resolution of the Board of Directors of the Subsidiary Guarantor
passed on [l], and pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary
Guarantors) of the Bonds and Clause 7.11 of the Principal Trust Deed, the Subsidiary Guarantor (being of the opinion that it
will be to its benefit and interest and in the furtherance of its objects to do so) has agreed to guarantee the said Bonds and
to enter into certain covenants as set out or referred to in this Supplemental Deed and BCL has procured that the Subsidiary Guarantor
will be a party to this Supplemental Deed for such purposes.
|
NOW THIS SUPPLEMENTAL DEED WITNESSES
AND IT IS HEREBY AGREED AND DECLARED as follows:
|
1.
|
Interpretation and construction
|
|
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|
1.1
|
Save as herein otherwise provided and unless there is something
in the subject or context inconsistent therewith all words and expressions defined in the Principal Trust Deed shall have the same
meanings in this Supplemental Deed.
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1.2
|
The Principal Trust Deed and the Agency Agreement shall henceforth
be read and construed as one document with this Supplemental Deed.
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1.
|
Guarantee
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1.1
|
The Subsidiary Guarantor hereby irrevocably and unconditionally,
and notwithstanding the release of any other guarantor or any other person under the terms of any composition or arrangement with
any creditors of the Issuer, BCL or any other Subsidiary of BCL, guarantees on a joint and several basis with each of the current
Guarantors set out in the Schedule hereto to the Trustee:
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(a)
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the due and punctual payment in accordance with the provisions of these presents of the principal
of and interest on the Bonds and of any other amounts payable by the Issuer under these presents; and
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(b)
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the due and punctual performance and observance by the Issuer of each of the other provisions of
these presents on the Issuer's part to be performed or observed.
|
[Insert any legally
applicable limitations on guarantee for jurisdiction of Subsidiary Guarantor, as appropriate]
|
1.2
|
If the Issuer fails for any reason whatsoever punctually to pay
any such principal, interest or other amount, the Subsidiary Guarantor shall cause each and every such payment to be made as if
the Subsidiary Guarantor instead of the Issuer were expressed to be the primary obligor under these presents and not merely as
surety (but without affecting the nature of the Issuer's obligations) to the intent that the holder of the relevant Bond or the
Trustee (as the case may be) shall receive the same amounts in respect of principal interest or such other amount as would have
been receivable had such payments been made by the Issuer.
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1.3
|
If any payment received by the Trustee or any Bondholder under
the provisions of these presents shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer
or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging
or diminishing the liability of the Subsidiary Guarantor and this guarantee shall continue to apply as if such payment had at all
times remained owing by the Issuer and each other Guarantor shall severally indemnify the Trustee and the Bondholders (as the case
may be) in respect thereof PROVIDED THAT the obligations of the Issuer
and/or the Subsidiary Guarantor under this subclause shall, as regards each payment made to the Trustee or any Bondholder which
is avoided or set aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled through the Issuer.
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|
1.4
|
The Subsidiary Guarantor hereby agrees that its obligations under
this clause shall be unconditional and that the Subsidiary Guarantor shall be fully liable irrespective of the validity, regularity,
legality or enforceability against the Issuer of, or of any defence or counter-claim whatsoever available to the Issuer in relation
to, its obligations under these presents, whether or not any action has been taken to enforce the same or any judgment obtained
against the Issuer, whether or not any of the other provisions of these presents have been modified, whether or not any time, indulgence,
waiver, authorisation or consent has been granted to the Issuer by or on behalf of the Bondholders or the Trustee, whether or not
any determination has been made by the Trustee pursuant to subclause 19.1 of the Principal Trust Deed, whether or not there have
been any dealings or transactions between the Issuer, any of the Bondholders or the Trustee, whether or not the Issuer has been
dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control or ownership, whether or
not the Issuer has been prevented from making payment by foreign exchange provisions applicable at its place of registration or
incorporation and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge
of or defence to a guarantor. Accordingly the validity of this guarantee shall not be affected by reason of any invalidity, irregularity,
illegality or unenforceability of all or any of the obligations of the Issuer under these presents and this guarantee shall not
be discharged nor shall the liability of the Subsidiary Guarantor under these presents be affected by any act, thing or omission
or means whatever whereby its liability would not have been discharged if it had been the principal debtor.
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1.5
|
Without prejudice to the provisions of subclause 9.1 of the Principal
Trust Deed the Trustee may determine from time to time whether or not it will enforce this guarantee which it may do without making
any demand of or taking any proceedings against the Issuer and may from time to time make any arrangement or compromise with the
Subsidiary Guarantor in relation to this guarantee which the Trustee may consider expedient in the interests of the Bondholders.
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1.6
|
The Subsidiary Guarantor waives diligence, presentment, demand
of payment, filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Issuer, any right
to require a proceeding first against the Issuer, protest or notice with respect to these presents or the indebtedness evidenced
thereby and all demands whatsoever and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate
balance of all sums payable and obligations owed by the Issuer under these presents, shall not be discharged except by complete
performance of the obligations in these presents and is additional to, and not instead of, any security or other guarantee or indemnity
at any time existing in favour of any person, whether from the Subsidiary Guarantor or otherwise.
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1.7
|
If any moneys shall become payable by the Subsidiary Guarantor
under this guarantee the Subsidiary Guarantor shall not, so long as the same remain unpaid, without the prior written consent of
the Trustee:
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|
|
(a)
|
in respect of any amounts paid or payable by it under this guarantee, exercise any rights of subrogation
or contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such
payment or any such obligation to make payment; or
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|
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(b)
|
in respect of any other moneys for the time being due to the Guarantors by the Issuer, claim payment
thereof or exercise any other right or remedy;
|
(including
in either case claiming the benefit of any security or right of set-off or contribution or, on the liquidation of the Issuer, proving
in competition with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer,
any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be
received by the Subsidiary Guarantor before payment in full of all amounts payable under these presents shall have been made to
the Bondholders and the Trustee, such payment or distribution shall be received by the Subsidiary Guarantor on trust to pay the
same over immediately to the Trustee for application in or towards the payment of all sums due and unpaid under these presents
in accordance with clause 10 of the Principal Trust Deed.
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1.8
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Until all amounts which may be or become payable by the Issuer
under these presents have been irrevocably paid in full, the Trustee may:
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(a)
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refrain from applying or enforcing any other moneys, security or rights held or received by the
Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those
amounts or otherwise), and the Subsidiary Guarantor shall not be entitled to the benefit of the same; and
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(b)
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hold in a suspense account any moneys received from the Subsidiary Guarantor or on account of the
Subsidiary Guarantor's liability under this guarantee, without liability to pay interest on those moneys.
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1.9
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If any sum which, although expressed to be payable by the Issuer
under these presents or the Bonds, is for any reason (whether or not now existing and whether or not now known or becoming known
to the Issuer, the Subsidiary Guarantor, the Trustee or any Bondholder) not recoverable from the Subsidiary Guarantor on the basis
of a guarantee then (a) it will nevertheless be recoverable from it as if it were the sole principal debtor and will be paid by
it to the Trustee on demand and (b) as a separate and additional liability under these presents the Subsidiary Guarantor agrees,
as a primary obligation and on a joint and several basis, to indemnify each of the Trustee and each Bondholder in respect of such
sum by way of a full indemnity in the manner and currency as is provided for in the Bonds or these presents (as the case may be)
and to indemnify each Bondholder against all losses, claims, costs, charges and expenses to which it may be subject or which it
may incur in recovering such sum.
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1.10
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The obligations of the Subsidiary Guarantor under these presents
constitute direct, unconditional and (subject to the provisions of Condition 5.1 (Negative Pledges)) unsecured obligations
of the Subsidiary Guarantor and (subject as aforesaid) rank and will rank pari passu with all other outstanding unsecured
and unsubordinated obligations of the Subsidiary Guarantor, present and future, but, in the event of insolvency, only to the extent
permitted by applicable laws relating to creditors' rights.
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2.
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Applicability of Provision of Trust Deeds AND AGENCY AGREEMENT
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2.1
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On and from the date hereof, the Subsidiary Guarantor will become
a Guarantor for the purposes of the Trust Deed and the Agency Agreement (as amended and restated pursuant to this Supplemental
Deed) pursuant to Clause 7 of the Principal Trust Deed and Clause 21.10 of the Principal Agency Agreement respectively.
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2.2
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All the provisions of the Principal Trust Deed relating to each
other Guarantor shall apply to the Subsidiary Guarantor and to the guarantee given by the Subsidiary Guarantor under Clause 2 hereof
in all respects as if the Subsidiary Guarantor had been a party to the Principal Trust Deed and references therein to the Guarantors
had included the Subsidiary Guarantor and the Subsidiary Guarantor hereby covenants with the Trustee that it will henceforth duly
observe and perform and be bound by all such of the covenants, conditions and provisions contained in the Principal Trust Deed
as are expressed to be binding on the Guarantors.
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2.3
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All the provisions of the Principal Agency Agreement relating
to each other Guarantor shall apply to the Subsidiary Guarantor as if the Subsidiary Guarantor had been a party to the Principal
Agency Agreement and references therein to the Guarantors had included the Subsidiary Guarantor and the Subsidiary Guarantor hereby
covenants with the Trustee, the Registrar, the Paying Agent and the Transfer Agent that it will henceforth duly observe and perform
and be bound by all such of the covenants, conditions and provisions contained in the Principal Agency Agreement as are expressed
to be binding on the Guarantors.
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3.
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Further Assurance
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The
Issuer and the Subsidiary Guarantor shall, at their own cost, take such action and execute such documentation as the Trustee shall
reasonably request in respect of the matters contemplated by this Supplemental Deed.
Any notice or
demand to the Subsidiary Guarantor to be given, made or served for any purposes under these presents shall be given, made or served
by sending the same by pre-paid post (first class if inland, first class airmail if overseas) or facsimile transmission or by delivering
it by hand as follows:
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to the Additional
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[Name of Subsidiary Guarantor]
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Guarantor:
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[Address]
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(Attention: l)
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Facsimilie No. l
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These presents and any non-contractual
obligations arising out of or in connection with these presents are governed by, and shall be construed in accordance with, English
law.
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6.
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Contracts (Rights of Third Parties) Act 1999
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A person who is not a party
to these presents has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these presents, but
this does not affect any right or remedy of a third party which exists or is available apart from that Act.
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7.
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[Submission to Jurisdiction
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7.1
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The Subsidiary Guarantor irrevocably agrees for the benefit of
the Trustee and the Bondholders that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise
out of or in connection with these presents and that accordingly any suit, action or proceedings arising out of or in connection
with these presents (together referred to as Proceedings) may be brought in the courts
of England. The Subsidiary Guarantor irrevocably and unconditionally waives and agrees not to raise any objection which it may
have now or subsequently to the laying of the venue of any Proceedings in the courts of England and any claims that
any Proceedings have been brought in an inconvenient or inappropriate forum and unconditionally agrees that a judgement in any
Proceedings brought in the courts of England shall be conclusive and binding upon it and may be enforced in the courts of any other
jurisdiction. To the extent permitted by law, the Trustee and the Bondholders may take any Proceedings against the Subsidiary Guarantor
in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions.
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7.2
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The Subsidiary Guarantor irrevocably and unconditionally appoints
[l] at its registered office for the time being and in the event of its ceasing so
to act will appoint such other person as the Trustee may approve and as the Subsidiary Guarantor may nominate in writing to the
Trustee for the purpose to accept service of process on its behalf in England in respect of any Proceedings. The Subsidiary Guarantor:
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(a)
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agrees to procure that, so long as any of the Bonds remains liable to prescription, there shall
be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept service as
aforesaid;
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(b)
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agrees that failure by any such person to give notice of such service of process to the Issuer
or any Subsidiary Guarantor shall not impair the validity of such service or of any judgment based thereon;
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(c)
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consents to the service of process in respect of any Proceedings by the airmailing of copies, postage
prepaid, to the Issuer or the Subsidiary Guarantor in accordance with Clause 26 of the Principal Trust Deed; and
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(d)
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agrees that nothing in these presents shall affect the right to serve process in any other manner
permitted by law.]
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This Supplemental Deed may
be executed and delivered in any number of counterparts, all of which, taken together, shall constitute one and the same deed and
any party to this Supplemental Deed may enter into the same by executing and delivering a counterpart.
IN WITNESS whereof
this Supplemental Deed has been executed as a deed by the Issuer, the Subsidiary Guarantor and the Trustee and delivered on the
date first stated on page 1.
SCHEDULE
THE CURRENT GUARANTORS
Burford Capital Limited
[insert names of
the other current Guarantors (if any)]
SIGNATORIES
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EXECUTED as a deed
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)
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by BURFORD CAPITAL PLC,
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)
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acting by:
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Director:
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Director/Secretary:
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EXECUTED as a deed
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)
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by BURFORD CAPITAL LIMITED,
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)
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acting by:
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Director:
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Director/Secretary:
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EXECUTED as a deed
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)
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by [SUBSIDIARY GUARANTOR],
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)
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acting by • and •
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)
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acting under the authority
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)
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of that company[ in the presence of:
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)
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Witness's signature
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Name
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Address
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Occupation]
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EXECUTED as a deed
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)
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by U.S. BANK TRUSTEES LIMITED,
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)
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acting by:
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)
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Name:
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Name:
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Signatories
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EXECUTED as a deed
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)
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by BURFORD CAPITAL PLC,
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)
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acting by:
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Director:
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/s/ Hayley Leake
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Director/Secretary:
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/s/ Leslie Paster
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EXECUTED as a deed
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)
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by BURFORD CAPITAL LIMITED,
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)
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acting by:
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Director:
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/s/ Charles Parkinson
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Director/Secretary:
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/s/ International Administration Group
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EXECUTED as a deed
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)
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by U.S. BANK TRUSTEES LIMITED,
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)
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acting by:
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)
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Name:
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/s/ Laurence Griffiths
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Name:
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/s/ Chris Hobbs
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Exhibit 4.4
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TRUST DEED
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DATED 19 AUGUST, 2014
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BURFORD CAPITAL PLC
and
BURFORD CAPITAL LIMITED
and
U.S. BANK TRUSTEES LIMITED
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constituting
£90,000,000
6.50 per cent. Guaranteed
Bonds due 19 August 2022
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contents
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Clause
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Page
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1.
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Definitions
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1
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2.
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Covenant to Repay and to Pay Interest on the Bonds
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8
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3.
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Form and Issue of Bonds
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11
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4.
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Fees, Duties and Taxes
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11
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5.
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Covenant of Compliance
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12
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6.
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Cancellation of Bonds and Records
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12
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7.
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Guarantee
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12
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8.
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Enforcement
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16
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9.
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Action, Proceedings and Indemnification
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16
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10.
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Application of Moneys
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16
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11.
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Notice of Payments
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17
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12.
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Investment by Trustee
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17
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13.
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Partial Payments
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18
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14.
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Covenants by the Issuer and the Guarantors
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18
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15.
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Remuneration and Indemnification of Trustee
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22
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16.
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Supplement to Trustee Acts
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24
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17.
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Trustee's Liability
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29
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18.
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Trustee Contracting with the Issuer and the Guarantors
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30
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19.
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Waiver, Authorisation and Determination
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30
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20.
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Entitlement to treat Holder as Absolute Owner
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31
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21.
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Substitution
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31
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22.
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Currency Indemnity
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32
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23.
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New Trustee
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33
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24.
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Trustee's Retirement and Removal
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34
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25.
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Trustee's Powers to be Additional
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34
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26.
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Notices
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34
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27.
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Governing Law
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35
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28.
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Submission to Jurisdiction
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36
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29.
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Counterparts
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37
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30.
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Contracts (Rights of Third Parties) Act 1999
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37
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Schedule
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1.
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Form of Global Certificate
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38
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2.
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Form of Definitive Certificate and Conditions of the Bonds
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42
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1
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Form of Definitive Certificate
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42
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2
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Conditions of the Bonds
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45
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3.
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Register and Transfer of Bonds
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67
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4.
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Provisions for Meetings of Bondholders
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69
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5.
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Form of Directors' Certificate
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78
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6.
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Form of Material Subsidiaries Certificate
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79
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7.
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Form of Supplemental Deed
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80
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Signatories
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89
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THIS TRUST DEED
is made on 19 August, 2014
BETWEEN:
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(1)
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BURFORD CAPITAL PLC, a company incorporated under the laws of England and Wales with company
number 09077893, whose registered office is at 5th Floor Norfolk House, Wellesley Road, Croydon, United Kingdom CR0 1LH (the
Issuer);
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(2)
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BURFORD CAPITAL LIMITED, a company incorporated under the laws of Guernsey with company
number 50877, whose registered office is at Regency Court, Glategny Esplanade, St Peter Port GY1 1WW, Guernsey (BCL); and
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(3)
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U.S. BANK TRUSTEES LIMITED, a limited liability company registered in England and Wales
with company number 02379632 having its registered office at 125 Old Broad Street, Fifth Floor, London EC2N 1AR (the Trustee,
which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being
the trustee or trustees of these presents) as trustee for the Bondholders (each as defined below).
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WHEREAS:
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(A)
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By a resolution of the Board of Directors of the Issuer passed on 16 July, 2014 the Issuer has
resolved to issue £90,000,000 6.50 per cent. Guaranteed Bonds due 19 August 2022 to be constituted by this Trust
Deed.
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(B)
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By a resolution of the Board of Directors of BCL passed on 16 July, 2014 BCL has agreed to guarantee
the said Bonds and to enter into certain covenants as set out in this Trust Deed.
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(C)
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The said Bonds in definitive form will be in registered form without coupons attached.
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(D)
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The Trustee has agreed to act as trustee of these presents for the benefit of the Bondholders upon
and subject to the terms and conditions of these presents.
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NOW THIS TRUST DEED
WITNESSES AND IT IS AGREED AND DECLARED as follows:
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1.1
|
Terms defined in the Conditions and not otherwise defined herein shall have the same meaning in
this Trust Deed. In these presents unless there is anything in the subject or context inconsistent therewith the following expressions
shall have the following meanings:
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Agency Agreement
means the agreement appointing the initial Paying Agents, Registrar and/or Transfer Agents in relation to the Bonds and any other
agreement for the time being in force appointing Successor paying agents, successor registrars and/or transfer agents in relation
to the Bonds, or in connection with their duties, the terms of which have previously been approved in writing by the Trustee, together
with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the
aforesaid agreements in relation to the Bonds;
Appointee
means any attorney, manager, agent, delegate, nominee, custodian or other person appointed by the Trustee under these presents;
Auditors means
the independent auditors for the time being of the Issuer, or (as the case may be) the relevant Guarantor or, in the event of
their being unable or unwilling promptly to carry out any action requested of them pursuant to the provisions of these
presents, such other firm of accountants or such financial advisors as may be nominated or approved by the Trustee for the
purposes of these presents;
Basic Terms
Modification means any proposal to:
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(a)
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reduce or cancel the amount payable or, where applicable, modify, except where such modification
is in the opinion of the Trustee bound to result in an increase, the method of calculating the amount payable or modify the date
of payment or, where applicable, the method of calculating the date of payment in respect of any principal or interest in respect
of the Bonds;
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(b)
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alter the currency in which payments under the Bonds are to be made;
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(c)
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alter the majority required to pass an Extraordinary Resolution;
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(d)
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sanction any such scheme or proposal or substitution as is described in paragraphs 19(i) and 19(j)
of Schedule 4;
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(e)
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alter the proviso to paragraph 7 of Schedule 4 or the proviso to paragraph 9 of Schedule 4; or
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(f)
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alter the definition of a Basic Terms Modification;
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Bondholders
means the several persons who are for the time being holders of the Bonds (being the several persons whose names are entered
in the register of holders of the Bonds as the holders thereof) save that, for so long as such Bonds or any part thereof are represented
by the Global Certificate deposited with a common depositary for Euroclear and Clearstream, Luxembourg or, in respect of Bonds
in definitive form held in an account with Euroclear or Clearstream, Luxembourg, each person who is for the time being shown in
the records of Euroclear or Clearstream, Luxembourg (other than Clearstream, Luxembourg, if Clearstream, Luxembourg shall be an
accountholder of Euroclear, and Euroclear, if Euroclear shall be an accountholder of Clearstream, Luxembourg) as the holder of
a particular principal amount of the Bonds shall be deemed to be the holder of such principal amount of such Bonds (and the registered
holder of the relevant Bond shall be deemed not to be the holder) for all purposes of these presents other than with respect to
the payment of principal or interest on such principal amount of such Bonds, the rights to which shall be vested, as against the
Issuer and the Trustee, solely in such common depositary and for which purpose such common depositary shall be deemed to be the
holder of such principal amount of such Bonds in accordance with and subject to its terms and the provisions of these presents;
and the words holder and holders and related expressions shall (where appropriate) be construed accordingly;
Bonds
means the bonds in registered form comprising the said £90,000,000 6.50 per cent. Guaranteed Bonds due 19 August
2022 of the Issuer hereby constituted or the principal amount thereof for the time being outstanding or, as the context may require,
a specific number thereof and includes any replacements for Bonds issued pursuant to Condition 13 (Replacement of Certificates)
and (except for the purposes of clause 2.4(d)) the Global Certificate;
Certificate
means a Global Certificate or a Definitive Certificate;
Clearstream,
Luxembourg means Clearstream Banking, société anonyme;
Conditions
means the Conditions in the form set out in Schedule 2 as the same may from time to time be modified in accordance with these
presents and any reference in these presents to a particular specified Condition or paragraph of a Condition shall in relation
to the Bonds be construed accordingly;
Confidential
Information means the legal name, legal or business address or any incorporation details or constitutive documents relating
to a Material Subsidiary or any other information that would enable a third party to determine any of the foregoing and that may
be given to the Trustee by the Issuer or any Guarantor pursuant to the provisions of these presents, provided that the Issuer or
the relevant Guarantor, as the case may be, has identified such information (other than the legal names of the Material Subsidiaries
and any such information that the Trustee may itself obtain from publicly available sources from the legal names of such Material
Subsidiaries) as “Confidential Information” at the time it is given to the Trustee.
Definitive
Certificates has the meaning set out in subclause 3.1;
Directors
means the Board of Directors for the time being of the Issuer or, as the case may be, the relevant Guarantor, and Director
means any of them;
Euroclear
means Euroclear Bank S.A./N.V.;
Event of
Default means any of the conditions, events or acts provided in Condition 11.1 (Events of Default) to be events upon
the happening of which the Bonds would, subject only to notice by the Trustee as therein provided, become immediately due and repayable;
Extraordinary
Resolution has the meaning set out in paragraph 1 of Schedule 4;
Global Certificate
means the global certificate in respect of the Bonds to be issued pursuant to subclause 3.1 in the form or substantially in
the form set out in Schedule 1;
Guarantee
has the meaning ascribed to it in Condition 4.1 (Guarantee);
Guarantors
means:
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(i)
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BCL;
and
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(ii)
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any Subsidiary Guarantor,
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and the term
Guarantor means any of them;
Liability
means any loss, damage, cost, fee, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including,
without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar
tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;
Material
Subsidiary means at any time a Subsidiary (other than an Excluded Subsidiary) of BCL:
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(a)
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whose gross assets (consolidated in the case of a Subsidiary which itself has Subsidiaries)
represent (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited
consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less than 5 per cent. of the consolidated
gross assets of the Group, all as calculated
respectively by reference to the then latest Directors’ Certificate relating to such Subsidiary delivered to the Trustee
in accordance with clause 14(s) below and the then latest audited consolidated accounts of BCL and its Subsidiaries, provided that:
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(i)
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in the event that the relevant Subsidiary itself has Subsidiaries which are Excluded Subsidiaries,
the gross assets of such Excluded Subsidiaries are excluded from the calculation of the consolidated gross assets of such Subsidiary;
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(ii)
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the gross assets of all Excluded Subsidiaries are excluded from the calculation of the consolidated
gross assets of the Group; and
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(iii)
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in the case of a Subsidiary of BCL acquired after the end of the financial period to which the
then latest audited consolidated accounts of BCL and its Subsidiaries relate, the reference to the then latest audited consolidated
accounts of BCL and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts for the financial
period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned
accounts as if such Subsidiary had been shown in such accounts by reference to the then latest Directors’ Certificate relating
to such Subsidiary delivered to the Trustee in accordance with clause 14(s) below, adjusted as deemed appropriate by BCL;
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(b)
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to which is transferred the whole or substantially the whole of the undertaking and assets of a
Subsidiary of BCL which immediately prior to such transfer is a Material Subsidiary, provided that the transferor Subsidiary shall
upon such transfer forthwith cease to be a Material Subsidiary and the transferee Subsidiary shall cease to be a Material Subsidiary
pursuant to this subparagraph (b) on the date on which the consolidated accounts of BCL and its Subsidiaries for the financial
period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary
or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such consolidated accounts
have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after such date,
by virtue of any other applicable provision of this definition; or
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(c)
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to which is transferred an undertaking or assets which, taken together with the undertaking or
assets of the transferee Subsidiary, represent (or, in the case of the transferee Subsidiary being acquired after the end of the
financial period to which the then latest audited consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less
than 5 per cent. of the consolidated gross assets of the Group, all as calculated as referred to in subparagraph (a)
above, provided that the transferor Subsidiary (if a Material Subsidiary) shall upon such transfer forthwith cease to be a Material
Subsidiary unless immediately following such transfer its undertaking and assets represent (or, in the case aforesaid are equal
to) not less than 5 per cent. of the consolidated gross assets of the Group, all
as calculated as referred to in subparagraph (a) above, and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant
to this subparagraph (c) on the date on which the consolidated accounts of BCL and its Subsidiaries for the financial period current
at the date of such transfer have been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary
may be a Material Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited
as aforesaid by virtue of the provisions of subparagraph
(a) above or, prior to or after such date, by virtue of any other applicable provision of this definition.
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A report by
two Directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion a
Subsidiary of BCL is or is not or was or was not at any particular time or throughout any specified period a Material Subsidiary
may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall in the absence
of manifest error, be conclusive and binding on all parties.
Official
List has the meaning set out in Section 103 of the Financial Services and Markets Act 2000;
outstanding
means in relation to the Bonds all the Bonds issued other than:
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(a)
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those Bonds which have been redeemed pursuant to these presents;
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(b)
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those Bonds in respect of which the date for redemption in accordance with the Conditions has occurred
and the redemption moneys (including all interest payable thereon) have been duly paid to the Trustee or to the Principal Paying
Agent in the manner provided in the Agency Agreement (and where appropriate notice to that effect has been given to the Bondholders
in accordance with Condition 14 (Notices)) and remain available for payment (against presentation of the relevant Bond,
if required);
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(c)
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those Bonds which have been purchased and cancelled in accordance with Condition 8 (Redemption
and Purchase);
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(d)
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those Bonds which have become void under Condition 10 (Prescription);
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(e)
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those mutilated or defaced Bonds which have been surrendered and cancelled and in respect of which
replacements have been issued pursuant to Condition 13 (Replacement of Certificates);
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(f)
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(for the purpose only of ascertaining the principal amount of the Bonds outstanding and without
prejudice to the status for any other purpose of the relevant Bonds) those Bonds which are alleged to have been lost, stolen or
destroyed and in respect of which replacements have been issued pursuant to Condition 13 (Replacement of Certificates);
and
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(g)
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the Global Certificate to the extent that it shall have been exchanged for Bonds in definitive
form pursuant to its provisions;
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PROVIDED THAT
for each of the following purposes, namely:
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(i)
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the right to attend and vote at any meeting of the Bondholders or any of them, an Extraordinary
Resolution in writing or an Extraordinary Resolution by way of electronic consents given through the relevant Clearing System(s)
as envisaged by paragraph 1 of Schedule 4 and any direction or request by the holders of the Bonds;
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(ii)
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the determination of how many and which Bonds are for the time being outstanding for the purposes
of subclause 9.1, Conditions 11 (Events of Default), 12 (Enforcement) and 16 (Meeting of Bondholders, Modification,
Waiver, Authorisation and Determination) and paragraphs 4, 7 and 9 of Schedule 4;
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(iii)
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any discretion, power or authority (whether contained in these presents or vested by operation
of law) which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Bondholders
or any of them; and
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(iv)
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the determination by the Trustee whether any event, circumstance, matter or thing is, in its opinion,
materially prejudicial to the interests of the Bondholders or any of them,
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those Bonds
(if any) which are for the time being held by or on behalf of or for the benefit of the Issuer, any Guarantor, any other Subsidiary
of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding company, in each case as beneficial
owner, shall (unless and until ceasing to be so held) be deemed not to remain outstanding;
Paying Agents
means the several institutions (including where the context permits the Principal Paying Agent) at their respective specified offices
initially appointed as paying agents in relation to the Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement
and/or, if applicable, any Successor paying agents in relation to such Bonds;
Potential
Event of Default means any condition, event or act which, with the lapse of time and/or the issue, making or giving of any
notice, certification, declaration, demand, determination and/or request and/or the taking of any similar action and/or the fulfilment
of any similar condition, would constitute an Event of Default;
Principal
Paying Agent means the institution at its specified office initially appointed as principal paying agent in relation to such
Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement or, if applicable, any Successor principal paying agent
in relation to such Bonds;
Registrar
means the institution at its specified office initially appointed as the registrar in relation to the Bonds by the Issuer and the
Guarantors pursuant to the Agency Agreement or, if applicable, any Successor registrar in relation to such Bonds;
Relevant
Date has the meaning set out in Condition 9 (Taxation);
repay,
redeem and pay shall each include both the others and cognate expressions shall be construed accordingly;
Subsidiary
means any company which is for the time being a subsidiary (within the meaning of Section 1159 of the Companies Act 2006);
Subsidiary
Guarantor means each Subsidiary of BCL that enters into a deed supplemental to the Trust Deed (or in such other form as may
be necessary or appropriate to comply with any applicable law, rule or regulation, including the law of any jurisdiction outside
England and Wales where that Subsidiary is organised or carries on business) for the purpose of giving a joint and several guarantee
(in the same terms, mutatis mutandis, as the Guarantee) in accordance with Condition 4.3 (Guarantee – Addition
of Subsidiary Guarantors) and Clause 7.11, and, which has not been released or discharged from its obligations as a Subsidiary
Guarantor in accordance with Condition 4.4 (Guarantee – Release of a Subsidiary Guarantor);
Successor means,
in relation to the Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents, any successor to
any one or more of them in relation to the Bonds which shall become such pursuant to the provisions of these presents or the
Agency Agreement and/or such other or further principal paying agent, paying agents, registrar and/or transfer agents (as the
case may be) in relation to such Bonds as may (with the prior approval of, and on terms previously approved by, the Trustee
in writing) from time to time be appointed as such, and/or, if applicable, such other or further specified offices (in the
former case being within the same place as those for which they are substituted) as may from time to time be nominated, in
each case by the Issuer and, if applicable, the Guarantors, and (except in the case of the initial appointments and specified
offices made under and specified in the Conditions and/or the Agency Agreement, as the case may be) notice of whose
appointment or, as the case may be, nomination has been given to the Bondholders pursuant to subclause 14(m) in accordance
with Condition 14 (Notices);
the London
Stock Exchange means the London Stock Exchange plc or any successor thereto;
these presents
means this Trust Deed and the Schedules and any trust deed supplemental hereto and the Schedules (if any) thereto and the Bonds
and the Conditions, all as from time to time modified in accordance with the provisions herein or therein contained;
Transfer
Agents means the institutions at their respective specified offices initially appointed as transfer agents in relation to the
Bonds by the Issuer and the Guarantors pursuant to the Agency Agreement and/or, if applicable, any Successor transfer agents in
relation to such Bonds;
Trust Corporation
means a corporation entitled by rules made under the Public Trustee Act 1906 or entitled pursuant to any other comparable legislation
applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee;
Trustee
Acts means the Trustee Act 1925 and the Trustee Act 2000;
UK Listing
Authority means the Financial Conduct Authority in its capacity as competent authority under the Financial Services and Markets
Act 2000;
words denoting
the singular shall include the plural and vice versa;
words denoting
one gender only shall include the other genders; and
words denoting
persons only shall include firms and corporations and vice versa.
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1.2
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(a)
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All references in these presents to principal and/or interest in respect of the Bonds or
to any moneys payable by the Issuer and/or the Guarantors under these presents shall be deemed to include, in the case of amounts
of principal payable, a reference to any specific redemption price (as defined in the relevant Conditions), any premium which may
be payable under or in respect of the Bonds and, in any case, a reference to any additional amounts which may be payable under
Condition 9 (Taxation).
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(b)
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All references in these presents to pounds sterling, Pounds Sterling or the sign
£ shall be construed as references to the lawful currency for the time being of the United Kingdom.
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(c)
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All references in these presents to any statute or any provision of any statute shall be deemed
also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder
or under any such modification or re-enactment.
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(d)
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All references in these presents to guarantees or to an obligation being guaranteed shall be deemed
to include respectively references to indemnities or to an indemnity being given in respect thereof.
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(e)
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All references in these presents to any action, remedy or method of proceeding for the enforcement
of the rights of creditors shall be deemed to include, in respect of any jurisdiction other than England, references to such action,
remedy or method of proceeding for the enforcement of the rights of creditors available or appropriate in such jurisdiction as
shall most nearly approximate to such action, remedy or method of proceeding described or referred to in these presents.
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(f)
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All references in these presents to taking proceedings against the Issuer and/or any Guarantor
shall be deemed to include references to proving in the winding up of the Issuer and/or such Guarantor (as the case may be).
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(g)
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All references in these presents to Euroclear and/or Clearstream, Luxembourg shall be deemed to
include references to any other clearing system as is approved by the Trustee.
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(h)
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Unless the context otherwise requires words or expressions used in these presents shall bear the
same meanings as in the Companies Act 2006.
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(i)
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In this Trust Deed references to Schedules, clauses, subclauses, paragraphs and subparagraphs shall
be construed as references to the Schedules to this Trust Deed and to the clauses, subclauses, paragraphs and subparagraphs of
this Trust Deed respectively.
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(j)
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In these presents tables of contents and clause headings are included for ease of reference and
shall not affect the construction of these presents.
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(k)
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Any reference in these presents to a written notice, consent or approval being given by the Trustee
shall, for the avoidance of doubt, be deemed to include such notice, consent or approval being given by e-mail.
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(l)
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All references in these presents to Bonds being listed or having a listing shall,
in relation to the London Stock Exchange, be construed to mean that such Bonds have been admitted to the Official List by the UK
Listing Authority and to trading on the London Stock Exchange's market for listed securities and all references in these presents
to listing or listed shall include references to quotation and quoted, respectively.
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(m)
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Any references to the records of Euroclear and Clearstream, Luxembourg shall be to the records
that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflects the amount of such customers' interests
in the Bonds.
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2.
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Covenant to Repay and to Pay Interest on the Bonds
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2.1
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The aggregate principal amount of the Bonds is limited to £90,000,000.
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2.2
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The Issuer covenants with the Trustee that it will, in accordance with these presents, on the due
date for the final maturity of the Bonds provided for in the Conditions, or on such earlier date as the same or any part thereof
may become due and repayable thereunder, pay or procure to be paid unconditionally to or to the order of the Trustee in pounds
sterling in immediately available funds the principal amount of the Bonds repayable on that date and shall in the meantime and until
such date (both before and after any judgment or other order of a court of competent jurisdiction) pay or procure to be paid unconditionally
to or to the order of the Trustee as aforesaid interest (which shall accrue from day to day) on the principal amount of the Bonds
at rates calculated from time to time in accordance with Condition 6 (Interest) and on the dates provided for in the Conditions
PROVIDED THAT:
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(a)
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every payment of principal or interest in respect of the Bonds to or to the account of the Principal
Paying Agent in the manner provided in the Agency Agreement shall operate in satisfaction pro tanto of the relative covenant
by the Issuer in this clause except to the extent that there is default in the subsequent payment thereof in accordance with the
Conditions to the Bondholders;
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(b)
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in any case where payment of principal is not made to the Trustee or the Principal Paying Agent
on or before the due date, interest shall continue to accrue on the principal amount of the Bonds (both before and after any judgment
or other order of a court of competent jurisdiction) at the rate aforesaid up to and including the date which the Trustee determines
to be the date on and after which payment is to be made to the Bondholders in respect thereof as stated in a notice given to the
Bondholders in accordance with Condition 14 (Notices) (such date to be not later than seven days after the day on which
the whole of such principal amount, together with an amount equal to the interest which has accrued and is to accrue pursuant to
this proviso up to and including that date, has been received by the Trustee or the Principal Paying Agent); and
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(c)
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in any case where payment of the whole or any part of the principal amount of any Bond is improperly
withheld or refused (other than in circumstances contemplated by proviso (b) above and provided that the relevant Bond is duly
presented (if required)) interest shall accrue on that principal amount payment of which has been so withheld or refused (both
before and after any judgment or other order of a court of competent jurisdiction) at the rate aforesaid from and including the
date of such withholding or refusal up to and including the date on which (upon further presentation of the relevant Bond, if required)
payment of the full amount (including interest as aforesaid) in pounds sterling payable in respect of such Bond is made or (in
respect of the payment of the principal amount and if earlier) the seventh day after notice is given to the relevant Bondholder
(either individually or in accordance with Condition 14 (Notices)) that the full amount (including interest as aforesaid)
in pounds sterling payable in respect of such Bond is available for payment, provided that, upon further presentation thereof being
duly made, such payment is made.
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The Trustee
will hold the benefit of this covenant on trust for the Bondholders and itself in accordance with these presents.
TRUSTEE'S
REQUIREMENTS REGARDING PAYING AGENTS
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2.3
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At any time after an Event of Default or a Potential Event of Default shall have occurred or if
there is failure to make payment of any amount in respect of any Bond when due or the Trustee shall have received any money which
it proposes to pay under clause 10 to the Bondholders, the Trustee may:
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(a)
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by notice in writing to the Issuer, any Guarantor, the Principal Paying Agent and the other Paying
Agents require the Principal Paying Agent and the other Paying Agents pursuant to the Agency Agreement:
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(i)
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to act thereafter as Principal Paying Agent and Paying Agents respectively of the Trustee in relation
to payments to be made by or on behalf of the Trustee under the provisions of these presents mutatis mutandis on the terms
provided in the Agency Agreement (with such consequential amendments as the Trustee shall deem necessary and save that the Trustee's
liability under any provisions thereof for the indemnification, remuneration and payment of out-of-pocket expenses of the Paying
Agents shall be limited to the amounts for the time being held by the Trustee on the trusts of these presents relating to the Bonds
and available for such purpose) and thereafter to hold all Bonds and all sums, documents and records held by them in respect of
the Bonds on behalf of the Trustee; or
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(ii)
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to deliver up all Bonds and all sums, documents and records held by them in respect of the Bonds
to the Trustee or as the Trustee shall direct in such notice provided that such notice shall be deemed not to apply to any documents
or records which the relative Paying Agent is obliged not to release by any law or regulation; and/or
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(b)
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by notice in writing to the Issuer and the Guarantors require each of them to make all subsequent
payments in respect of the Bonds to or to the order of the Trustee and not to the Principal Paying Agent; with effect from the
issue of any such notice to the Issuer and the Guarantors and until such notice is withdrawn proviso (a) to subclause 2.2 of this
clause relating to the Bonds shall cease to have effect.
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FURTHER
ISSUES
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2.4
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(a)
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The Issuer shall be at liberty from time to time (but subject always to the provisions of
these presents) without the consent of the Bondholders to create and issue further notes or bonds (whether in bearer or registered
form) either (i) ranking pari passu in all respects (or in all respects save for the first payment of interest thereon),
and so that the same shall be consolidated and form a single series, with the Bonds and/or the further notes or bonds of any series
or (ii) upon such terms as to ranking, interest, conversion, redemption and otherwise as the Issuer may at the time of issue thereof
determine.
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(b)
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Any further notes or bonds which are to be created and issued pursuant to the provisions of paragraph
2.4(a) above so as to form a single series with the Bonds and/or the further notes or bonds of any series shall be constituted
by a trust deed supplemental to this Trust Deed and any other further notes or bonds which are to be created and issued pursuant
to the provisions of paragraph 2.4(a) above may (subject to the consent of the Trustee) be constituted by a trust deed supplemental
to this Trust Deed. In any such case the Issuer and the Guarantors shall prior to the issue of any further notes or bonds to be
so constituted execute and deliver to the Trustee a trust deed supplemental to this Trust Deed (in relation to which all applicable
stamp duties or other documentation fees, duties or taxes have been paid and, if applicable, duly stamped or denoted accordingly)
containing a covenant by the Issuer in the form mutatis mutandis of subclause 2.2 in relation to the principal and interest
in respect of such further notes or bonds and such other provisions (whether or not corresponding to any of the provisions contained
in this Trust Deed) as the Trustee shall require including making such consequential modifications to this Trust Deed as the Trustee
shall require in order to give effect to such issue of further notes or bonds.
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(c)
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A memorandum of every such supplemental trust deed shall be endorsed by the Trustee on this Trust
Deed and by the Issuer and the Guarantors on their duplicates of this Trust Deed.
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(d)
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Whenever it is proposed to create and issue any further notes or bonds the Issuer shall give to
the Trustee not less than 14 days' notice in writing of its intention so to do stating an indicative amount of further notes or
bonds proposed to be created and issued.
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3.
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Form and Issue of Bonds
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3.1
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The Bonds shall be represented initially by the Global Certificate which the Issuer shall issue
to a common depositary for Euroclear and Clearstream, Luxembourg on terms that such common depositary shall hold the same for the
account of the persons who would otherwise be entitled to receive the Bonds in definitive form (Definitive Certificates)
and the successors in title to such persons as appearing in the records of Euroclear and Clearstream, Luxembourg for the time being.
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3.2
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The Global Certificate shall be printed or typed in the form or substantially in the form set out
in Schedule 1 and may be a facsimile. The Global Certificate shall be in the aggregate principal amount of £90,000,000 and
shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated
by or on behalf of the Principal Paying Agent. The Global Certificate so executed and authenticated shall be a binding and valid
obligation of the Issuer and title thereto shall pass by registration of transfer in respect thereof in accordance with the provisions
of these presents.
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3.3
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The Issuer shall issue the Definitive Certificates in exchange for the Global Certificate in accordance
with the provisions thereof.
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3.4
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The Bonds in definitive form shall be in registered form and shall be issued in the form or substantially
in the form set out in Schedule 2 in the denomination and transferable in units of £100 each, shall be serially numbered
and shall be endorsed with a Form of Transfer in the form or substantially in the form also set out in Schedule 2 and with the
Conditions. Title to the Bonds in definitive form shall pass upon the registration of transfers in respect thereof in accordance
with the provisions of these presents.
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3.5
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The Definitive Certificates shall be signed manually or in facsimile by two of the Directors of
the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Principal Paying Agent.
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3.6
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The Issuer may use the facsimile signature of any person who at the date such signature is affixed
is a person duly authorised by the Issuer or is a Director of the Issuer as referred to in subclauses 3.2 and 3.5 above notwithstanding
that at the time of issue of the Global Certificate or any of the Definitive Certificates, as the case may be, he may have ceased
for any reason to be so authorised or to be the holder of such office. The Definitive Certificates so signed shall be binding and
valid obligations of the Issuer.
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4.
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Fees, Duties and Taxes
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The
Issuer will pay any stamp, issue, registration, documentary and other fees, duties and taxes, including interest and
penalties, payable in any relevant jurisdiction on or in connection with (a) the execution and delivery of these presents,
(b) the constitution and issue of the Bonds and (c) any action taken by or on behalf of the Trustee or (where permitted under
these presents so to do) any Bondholder to enforce, or to resolve any doubt concerning, or for any other purpose in relation
to, these presents.
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5.
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Covenant of Compliance
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Each of the
Issuer and the Guarantors severally covenants with the Trustee that it will comply with and perform and observe all the provisions
of these presents which are expressed to be binding on it. The Conditions shall be binding on the Issuer, the Guarantors and the
Bondholders. The Trustee shall be entitled to enforce the obligations of the Issuer and the Guarantors under the Bonds as if the
same were set out and contained in the trust deeds constituting the same, which shall be read and construed as one document with
the Bonds. The Trustee will hold the benefit of this covenant upon trust for itself and the Bondholders according to its and their
respective interests.
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6.
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Cancellation of Bonds and Records
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6.1
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The Issuer shall procure that all Bonds (a) redeemed or (b) purchased and surrendered for cancellation
by or on behalf of the Issuer, the Guarantors or any member of the Group or (c) which, being mutilated or defaced, have been surrendered
and replaced pursuant to Condition 13 (Replacement of Certificates) or (d) exchanged as provided in these presents shall
forthwith be cancelled by or on behalf of the Issuer and a certificate stating:
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(a)
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the aggregate principal amount of Bonds which have been redeemed;
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(b)
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the serial numbers of such Bonds in definitive form;
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(c)
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the aggregate amount of interest paid (and the due dates of such payments) on the Bonds;
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(d)
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the aggregate principal amount of Bonds (if any) which have been purchased by or on behalf of the
Issuer, BCL or any member of the Group and cancelled and the serial numbers of such Bonds in definitive form; and
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(e)
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the aggregate principal amounts
of Bonds which have been so exchanged or surrendered and replaced and the serial numbers of such Bonds in definitive form,
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shall be given
to the Trustee by or on behalf of the Issuer as soon as possible and in any event within four months after the date of any such
redemption, purchase, payment, exchange or replacement (as the case may be) takes place. The Trustee may accept such certificate
as conclusive evidence of redemption, purchase, exchange or replacement pro tanto of the Bonds or payment of interest thereon
respectively and of cancellation of the relative Bonds.
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6.2
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The Issuer shall procure (i) that the Principal Paying Agent shall keep a full and complete record
of all Bonds and of their redemption, cancellation, payment or exchange (as the case may be) and of all replacement notes issued
in substitution for lost, stolen, mutilated, defaced or destroyed Bonds and (ii) that such records shall be made available to the
Trustee at all reasonable times.
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7.1
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BCL hereby irrevocably and unconditionally, and notwithstanding the release of any other guarantor
or any other person under the terms of any composition or arrangement with any creditors of the Issuer or any other Subsidiary
of BCL, guarantees to the Trustee:
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(a)
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the due and punctual payment in accordance with the provisions of these presents of the principal
of and interest on the Bonds and of any other amounts payable by the Issuer under these presents; and
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(b)
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the due and punctual performance and observance by the Issuer of each of the other provisions of
these presents on the Issuer's part to be performed or observed.
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7.2
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If the Issuer fails for any reason whatsoever punctually to pay any such principal, interest or
other amount, BCL shall cause each and every such payment to be made as if BCL instead of the Issuer were expressed to be the primary
obligor under these presents and not merely as surety (but without affecting the nature of the Issuer's obligations) to the intent
that the holder of the relevant Bond or the Trustee (as the case may be) shall receive the same amounts in respect of principal,
interest or such other amount as would have been receivable had such payments been made by the Issuer.
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7.3
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If any payment received by the Trustee or any Bondholder under the provisions of these presents
shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without limitation, on any
other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability
of BCL and this guarantee shall continue to apply as if such payment had at all times remained owing by the Issuer and BCL shall
indemnify the Trustee and the Bondholders in respect thereof PROVIDED THAT the obligations of the Issuer and/or BCL under this
subclause shall, as regards each payment made to the Trustee or any Bondholder which is avoided or set aside, be contingent upon
such payment being reimbursed to the Issuer or other persons entitled through the Issuer.
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7.4
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BCL hereby agrees that its obligations under this clause shall be unconditional and that BCL shall
be fully liable irrespective of the validity, regularity, legality or enforceability against the Issuer of, or of any defence or
counter-claim whatsoever available to the Issuer in relation to, its obligations under these presents, whether or not any action
has been taken to enforce the same or any judgment obtained against the Issuer, whether or not any of the other provisions of these
presents have been modified, whether or not any time, indulgence, waiver, authorisation or consent has been granted to the Issuer
by or on behalf of the Bondholders or the Trustee, whether or not any determination has been made by the Trustee pursuant to subclause
19.1, whether or not there have been any dealings or transactions between the Issuer, any of the Bondholders or the Trustee, whether
or not the Issuer has been dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control
or ownership, whether or not the Issuer has been prevented from making payment by foreign exchange provisions applicable at its
place of registration or incorporation and whether or not any other circumstances have occurred which might otherwise constitute
a legal or equitable discharge of or defence to a guarantor. Accordingly the validity of this guarantee shall not be affected by
reason of any invalidity, irregularity, illegality or unenforceability of all or any of the obligations of the Issuer under these
presents and this guarantee shall not be discharged nor shall the liability of BCL under these presents be affected by any act,
thing or omission or means whatever whereby its liability would not have been discharged if it had been the principal debtor.
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7.5
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Without prejudice to the provisions of subclause 9.1 the Trustee may determine from time to time
whether or not it will enforce this guarantee which it may do without making any demand of or taking any proceedings against the
Issuer and may from time to time make any arrangement or compromise with BCL in relation to this guarantee which the Trustee may
consider expedient in the interests of the Bondholders.
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7.6
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BCL waives diligence, presentment, demand of payment, filing of claims with a court in the event
of dissolution, liquidation, merger or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest
or notice with respect to these presents or the indebtedness evidenced thereby and all demands whatsoever and covenants that this
guarantee shall be a continuing guarantee, shall extend to the ultimate balance of all sums payable and obligations owed by the
Issuer under these presents, shall not be discharged except by complete performance of the obligations in these presents and is
additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any person, whether
from BCL or otherwise.
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7.7
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If any moneys shall become payable by BCL under this guarantee BCL shall not, so long as the same
remain unpaid, without the prior written consent of the Trustee:
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(a)
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in respect of any amounts paid by it under this guarantee, exercise any rights of subrogation or
contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such
payment; or
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(b)
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in respect of any other moneys for the time being due to BCL by the Issuer, claim payment thereof
or exercise any other right or remedy;
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(including
in either case claiming the benefit of any security or right of set-off or, on the liquidation of the Issuer, proving in competition
with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer, any payment
or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be received by
BCL before payment in full of all amounts payable under these presents shall have been made to the Bondholders and the Trustee,
such payment or distribution shall be received by BCL on trust to pay the same over immediately to the Trustee for application
in or towards the payment of all sums due and unpaid under these presents in accordance with clause 10.
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7.8
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Until all amounts which may be or become payable by the Issuer under these presents have been irrevocably
paid in full, the Trustee may:
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(a)
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refrain from applying or enforcing any other moneys, security or rights held or received by the
Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those
amounts or otherwise), and BCL shall not be entitled to the benefit of the same; and
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(b)
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hold in a suspense account any moneys received from BCL or on account of BCL’s liability
under this guarantee, without liability to pay interest on those moneys.
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7.9
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If any sum which, although expressed to be payable by the Issuer under these presents or the Bonds,
is for any reason (whether or not now existing and whether or not now known or becoming known to the Issuer, BCL, the Trustee or
any Bondholder) not recoverable from BCL on the basis of a guarantee then (a) it will nevertheless be recoverable from it as if
it were the sole principal debtor and will be paid by it to the Trustee on demand and (b) as a separate and additional liability
under these presents BCL agrees, as a primary obligation and on a joint and several basis, to indemnify each of the Trustee and
each Bondholder in respect of such sum by way of a full indemnity in the manner and currency as is provided for in the Bonds or
these presents (as the case may be) and to indemnify each Bondholder against all losses, claims, costs, charges and expenses to
which it may be subject or which it may incur in recovering such sum.
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7.10
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The obligations of BCL under these presents constitute direct, unconditional and (subject to the
provisions of Condition 5.1 (Negative Pledges)) unsecured obligations of BCL and (subject as aforesaid) rank and will rank
pari passu with all other outstanding unsecured and unsubordinated obligations of BCL, present and future, but, in the event
of insolvency, only to the extent permitted by applicable laws relating to creditors' rights.
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7.11
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In connection with the proposed admission of any Subsidiary of BCL as a Subsidiary Guarantor pursuant
to Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors), no such admission shall be effective until the Trustee
shall have received:
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(a)
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a duly executed deed supplemental to this Trust Deed and the Agency Agreement (or in such other
form as may be necessary or appropriate to comply with any applicable law, rule or regulation, including the law of any jurisdiction
outside England and Wales where that Subsidiary is organised or carries on business) containing a joint and several guarantee (in
the same terms, mutatis mutandis, as the Guarantee) and otherwise in form and manner satisfactory to the Trustee pursuant
to which such Subsidiary agrees to be bound by the provisions of these presents and the Agency Agreement as fully as if such Subsidiary
had been named in these presents and the Agency Agreement as a Guarantor on the date hereof; and
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(b)
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such legal opinion(s) as the Trustee shall require from legal advisers satisfactory to the Trustee
and in a form and with substance satisfactory to the Trustee as to the enforceability under the laws of all relevant jurisdictions
of the guarantee to be given by such Subsidiary and all other obligations to be assumed by such Subsidiary in the agreements described
in paragraph (a) above, and such Subsidiary
and the Issuer shall have complied with such other requirements to assure more fully that the agreements in paragraph (a) above
are enforceable as the Trustee may direct in the interests of the Bondholders.
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7.12
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If any Subsidiary Guarantor ceases to be a Subsidiary Guarantor under the Bonds pursuant to Condition
4.4 (Guarantee –Release of Subsidiary Guarantors), such Subsidiary Guarantor will be deemed to be released simultaneously
from all of its future obligations under these presents, without prejudice to any obligations which may have accrued prior to that
time.
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7.13
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All the provisions of this Trust Deed relating to BCL and Guarantors shall apply to a Subsidiary
of BCL which gives a guarantee pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors) and to the
guarantee given by the Subsidiary Guarantor in all respects as if the Subsidiary Guarantor had been a party to this Trust Deed
and references herein to a Guarantor or Guarantors had included the Subsidiary Guarantor.
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7.14
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The Issuer and each Guarantor shall be deemed to have consented to the admission of any company
as a Subsidiary Guarantor and shall be deemed to be jointly and severally liable with any new Subsidiary Guarantor by virtue of
the giving by any Subsidiary Guarantor of a guarantee without the necessity for the Issuer or any Guarantor to concur in or consent
to any deed admitting any Subsidiary Guarantor.
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7.15
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BCL, excluding any express right contained in these presents, waives any existing or future right
which it may have:
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(a)
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to require that any liability under or in connection with these presents be divided or apportioned
with any other person or reduced in any manner whatsoever, whether by virtue of the "droit de division" or otherwise;
and
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(b)
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to require that recourse be had to the assets of any other person before any claim is enforced
against it in respect of the obligations assumed by it in or in connection with these presents, whether by virtue of "droit
de discussion" or otherwise..
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8.1
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The Trustee may at any time, at its discretion and without notice, take such proceedings and/or
other steps or action (including lodging an appeal in any proceedings) as it may think fit against or in relation to each of the
Issuer and the Guarantors to enforce their respective obligations under these presents or otherwise.
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8.2
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Proof that as regards any specified Bond the Issuer or any Guarantor (as the case may be) has made
default in paying any amount due in respect of such Bond shall (unless the contrary be proved) be sufficient evidence that the
same default has been made as regards all other Bonds in respect of which the relevant amount is due and payable.
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9.
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Action, Proceedings and Indemnification
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9.1
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The Trustee shall not be bound to take any action in relation to these presents (including but
not limited to the giving of any notice pursuant to Condition 11.1 (Events of Default) or the taking of any proceedings
and/or other steps mentioned in subclause 8.1) unless respectively directed or requested to do so (a) by an Extraordinary Resolution
or (b) in writing by the holders of at least one-fifth in principal amount of the Bonds then outstanding and in either case then
only if it shall be indemnified and/or secured and/or pre-funded to its satisfaction against all Liabilities to which it may render
itself liable or which it may incur by so doing.
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9.2
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The Trustee may refrain from taking any action in any jurisdiction if the taking of such action
in that jurisdiction would, in its opinion based upon legal advice in the relevant jurisdiction, be contrary to any law of that
jurisdiction. Furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person
in that jurisdiction or if, in its opinion based upon such legal advice, it would not have the power to take the relevant action
in that jurisdiction by virtue of any applicable law in that jurisdiction or if it is determined by any court or other competent
authority in that jurisdiction that it does not have such power.
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9.3
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Only the Trustee may enforce the provisions of these presents. No Bondholder shall be entitled
to (i) take any steps or action against the Issuer or any Guarantor to enforce the performance of any of the provisions of these
presents or (ii) take any other proceedings (including lodging an appeal in an proceedings) in respect of or concerning the Issuer
or any Guarantor, in each case unless the Trustee having become bound as aforesaid to take any such action, steps or proceedings
fails to do so within a reasonable period and such failure is continuing.
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9.4
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Notwithstanding anything else contained in these presents, the Trustee shall not be required to
take any action prior to making any declaration that the Bonds are immediately due and payable (save that it will procure notice
to be given to the Bondholders of any Event of Default of which it has actual knowledge or express notice) if such action would
require the Trustee to incur any expenditure or other financial liability or risk its own funds (including obtaining any advice
which it might otherwise have thought appropriate to obtain).
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10.
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Application of Moneys
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All moneys
received by the Trustee under these presents shall be held by the Trustee upon trust to apply them (subject to clause 12):
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(a)
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First, in payment or satisfaction of all amounts then due and unpaid under clause 15 to
the Trustee and/or any Appointee;
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(b)
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Secondly, in or towards retention of an amount which the Trustee considers necessary to
pay any amounts that may thereafter become due to be paid under clause 15 to it or any Appointee, to the extent it considers that
moneys received by it thereafter under these presents may be insufficient and/or may not be received in time to pay such amounts;
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(c)
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Thirdly, in or towards reimbursement pari passu and rateably of any amounts paid
by any Indemnifying Parties as contemplated by clause 15.7, together with interest thereon as provided in clause 15.8;
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(d)
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Fourthly, in or towards payment pari passu and rateably of all principal and interest
then due and unpaid in respect of the Bonds; and
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(e)
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Fifthly, in payment of the balance (if any) to the Issuer (without prejudice to, or liability
in respect of, any question as to how such payment to the Issuer shall be dealt with as between the Issuer, the Guarantors and
any other person).
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Without prejudice
to this clause 10, if the Trustee holds any moneys which represent principal or interest in respect of Bonds which have become
void or in respect of which claims have been prescribed under Condition 10 (Prescription), the Trustee will hold such moneys
on the above trusts.
The Trustee
shall give notice to the Bondholders in accordance with Condition 14 (Notices) of the day fixed for any payment to them
under clause 10. Such payment may be made in accordance with Condition 7 (Payment) and any payment so made shall be a good
discharge to the Trustee.
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12.
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Investment by Trustee
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12.1
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The Trustee may at its discretion and pending payment invest moneys at any time available for the
payment of principal and interest on the Bonds in some or one of the investments hereinafter authorised for such periods as it
may consider expedient with power from time to time at the like discretion to vary such investments and to accumulate such investments
and the resulting interest and other income derived therefrom. The accumulated investments shall be applied under clause 10. All
interest and other income deriving from such investments shall be applied first in payment or satisfaction of all amounts then
due and unpaid under clause 15 to the Trustee and/or any Appointee and otherwise held for the benefit of and paid to the Bondholders.
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12.2
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Any moneys which under the trusts of these presents ought to or may be invested by the Trustee
may be invested in the name or under the control of the Trustee in any investments or other assets in any part of the world whether
or not they produce income or by placing the same on deposit in the name or under the control of the Trustee at such bank or other
financial institution and in such currency as the Trustee may think fit. If that bank or institution is the Trustee or a subsidiary,
holding or associated company of the Trustee, it need only account for an amount of interest equal to the amount of interest which
would, at then current rates, be payable by it on such a deposit to an independent customer. The Trustee may at any time vary any
such investments for or into other investments or convert any moneys so deposited into any other currency and shall not be responsible
for any loss resulting from any such investments or deposits, whether
due to depreciation in value, fluctuations in exchange rates or otherwise.
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Upon any payment
under clause 10 (other than payment in full against surrender of a Bond) the Bond in respect of which such payment is made shall
be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall or shall cause such
Paying Agent to enface thereon a memorandum of the amount and the date of payment but the Trustee may dispense with such production
and enfacement upon such indemnity being given as it shall think sufficient.
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14.
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Covenants by the Issuer and the Guarantors
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So long as
any of the Bonds remains outstanding (or, in the case of paragraphs (h), (i), (m), (n), (o) and (q), so long as any of the Bonds
remains liable to prescription each of the Issuer and the Guarantors severally (but in the case of paragraph 14(c), the Issuer
only) covenants with the Trustee that it shall:
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(a)
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promptly give or procure to be given to the Trustee such opinions, certificates, information and
evidence as it shall reasonably require and in such form as it shall require (including without limitation the procurement by the
Issuer or the Guarantors (as the case may be) of all such certificates reasonably called for by the Trustee pursuant to subclause
16(c)) for the purpose of the discharge or exercise of the duties, trusts, powers, authorities and discretions vested in it under
these presents or by operation of law except that the provision of any financial statements or evidence and information relating
to financial statements shall, for the avoidance of doubt, only extend to the provision of financial statements for an accounting
period prepared in relation to the Group (and in no circumstances shall extend to any specific entity within the Group (other than
the Issuer));
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(b)
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cause to be prepared and certified by its Auditors in respect of each financial accounting period
accounts of the Issuer in such form as will comply with all relevant legal and accounting requirements and all requirements for
the time being of the London Stock Exchange;
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(c)
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at all times keep and procure its Subsidiaries (if any) to keep proper books of account and allow
and procure such Subsidiaries to allow the Trustee and any person appointed by the Trustee to whom the Issuer, the Guarantors or
the relevant Subsidiary (as the case may be) shall have no reasonable objection free access to such books of account at all reasonable
times during normal business hours except that the requirement for Subsidiaries to keep proper books of account shall not, for
the avoidance of doubt, in any circumstances require such Subsidiary to prepare financial statements (for any accounting period
or otherwise);
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(d)
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send to the Trustee (in addition to any copies to which it may be entitled as a holder of any securities
of the Issuer or any Guarantor) two copies in English of every balance sheet, profit and loss account, report, circular and notice
of general meeting and every other document issued or sent to its shareholders together with any of the foregoing, and every document
issued or sent to holders of securities other than its shareholders (including the Bondholders) as soon as practicable after the
issue or publication thereof;
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(e)
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forthwith give notice in writing to the Trustee of the coming into existence of any security interest
which would require any security to be given to the Bonds pursuant to Condition 5.1 (Negative Pledges) or of the occurrence
of any Event of Default or any Potential Event of Default;
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(f)
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give to the Trustee (a) within seven days after demand by the Trustee therefor and (b) (without
the necessity for any such demand) promptly after the publication of its audited accounts in respect of each financial period commencing
with the financial period ending 31 December, 2014 and in any event not later than 180 days after the end of each such financial
period a certificate in or substantially in the form set out in Schedule 5 signed by two Directors of the Issuer and two Directors
of each Guarantor or, in the case of BCL, either two Directors of BCL or a Director and the secretary of BCL to the effect that
as at a date not more than seven days before delivering such certificate (the certification date) there did not exist and
had not existed or happened since the certification date of the previous certificate (or in the case of the first such certificate
the date hereof) any Event of Default or any Potential Event of Default (or if such exists or existed or had happened specifying
the same) and that during the period from and including the certification date of the last such certificate (or in the case of
the first such certificate the date hereof) to and including the certification date of such certificate each of the Issuer and
each Guarantor has complied with all its obligations contained in these presents or (if such is not the case) specifying the respects
in which it has not complied;
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(g)
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so long as any of the Bonds remain outstanding BCL shall supply to the Trustee:
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(i)
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as soon as they may become available, but in any event within six months of its most recent financial
year-end, a copy of its audited Consolidated Financial Statements for such financial year, together with the report thereon of
BCL’s Auditors;
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(ii)
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as soon as they may become available, but in any event within three months of the end of the first
half of each financial year, a copy of its unaudited Consolidated Financial Statements for such period; and
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(iii)
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concurrently with the delivery of items (i) and (ii) above, a Directors’ Certificate confirming
compliance with the covenant contained in Condition 5.2 (Financial Covenant) with respect to the most recent Reference Date;
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(h)
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so far as permitted by applicable law, at all times execute and do all such further documents,
acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to these presents except
that the provision of any financial statements or evidence and information relating to financial statements shall, for the avoidance
of doubt, only extend to the provision of financial statements for an accounting period prepared in relation to the Group (and
in no circumstances shall extend to any specific entity within the Group (other than the Issuer));
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(i)
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at all times maintain Paying Agents, a Registrar and Transfer Agents in accordance with the Conditions;
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(j)
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procure the Principal Paying Agent to notify the Trustee forthwith in the event that the Principal
Paying Agent does not, on or before the due date for any payment in respect of the Bonds or any of them, receive unconditionally
pursuant to the Agency Agreement payment of the full amount
in the requisite currency of the moneys payable on such due date on all such Bonds;
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(k)
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in the event of the unconditional payment to the Principal Paying Agent or the Trustee of any sum
due in respect of the Bonds or any of them being made after the due date for payment thereof forthwith give or procure to be given
notice to the Bondholders in accordance with Condition 14 (Notices) that such payment has been made;
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(l)
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use reasonable endeavours to maintain the listing of the Bonds on the London Stock Exchange or,
if it is unable to do so having used reasonable or if the Trustee considers that the maintenance of such listing is unduly onerous
and the Trustee is of the opinion that to do so would not be materially prejudicial to the interests of the Bondholders, use reasonable
endeavours to obtain and maintain a quotation or listing of the Bonds on such other stock exchange or exchanges or securities market
or markets as the Issuer may (with the prior written approval of the Trustee) decide and shall also upon obtaining a quotation
or listing of the Bonds on such other stock exchange or exchanges or securities market or markets enter into a trust deed supplemental
to this Trust Deed to effect such consequential amendments to these presents as the Trustee may require or as shall be requisite
to comply with the requirements of any such stock exchange or securities market;
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(m)
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give notice to the Bondholders in accordance with Condition 14 (Notices) of any appointment,
resignation or removal of any Paying Agent, Registrar or Transfer Agent (other than the appointment of the initial Paying Agents,
Registrar and Transfer Agents) after having obtained the prior written approval of the Trustee thereto or any change of any Paying
Agent's, Registrar's or Transfer Agent's specified office and (except as provided by the Agency Agreement or the Conditions) at
least 30 days prior to such event taking effect; PROVIDED ALWAYS THAT so long as any of the Bonds remains outstanding in the case
of the termination of the appointment of the Registrar or a Transfer Agent or so long as any of the Bonds remains liable to prescription
in the case of the termination of the appointment of the Principal Paying Agent no such termination shall take effect until a new
Registrar, Transfer Agent or Principal Paying Agent (as the case may be) has been appointed on terms previously approved in writing
by the Trustee;
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(n)
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send to the Trustee, not less than seven Business Days prior to which any such notice is to be
given, the draft form of every notice to be given to the Bondholders in accordance with Condition 14 (Notices) and obtain
the prior written approval of the Trustee (such approval not to be unreasonably withheld or delayed) to, and promptly give to the
Trustee two copies of, the final form of every notice to be given to the Bondholders in accordance with Condition 14 (Notices)
(such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial Services and Markets
Act 2000 of the United Kingdom (the FSMA) of a communication within the meaning of Section 21 of the FSMA);
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(o)
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comply with and perform all its obligations under the Agency Agreement and use its best endeavours
to procure that the Paying Agents, the Registrar and the Transfer Agents comply with and perform all their respective obligations
thereunder and (in the case of the Paying Agents and the Registrar) any notice given by the Trustee pursuant to subclause 2.3(a)
and not make any amendment or modification to such Agreement without the prior written approval of the Trustee and use all reasonable
endeavours to make such amendments to such Agreement as the Trustee may require;
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(p)
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in order to enable the Trustee to ascertain the principal amount of Bonds for the time being outstanding
for any of the purposes referred to in the proviso to the definition of outstanding in clause 1, deliver to the Trustee
forthwith upon being so requested in writing by the Trustee a certificate in writing signed by two Directors of the Issuer or two
Directors of the relevant Guarantor or, in the case of BCL, either two Directors of BCL or a Director and the secretary of BCL
(as appropriate) setting out the total number and aggregate principal amount of Bonds which:
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(i)
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up to and including the date of such certificate have been purchased by the Issuer or any member
of the Group and cancelled; and
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(ii)
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are at the date of such certificate held by, for the benefit of, or on behalf of, the Issuer, any
Guarantor, any Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding company;
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(q)
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procure its Subsidiaries to comply with all (if any) applicable provisions of Condition 8 (Redemption
and Purchase);
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(r)
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procure that each of the Paying Agents makes available for inspection by Bondholders at its specified
office copies of these presents, the Agency Agreement and the then latest audited balance sheets and profit and loss accounts (consolidated
if applicable) of the Group; and
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(s)
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give to the Trustee (i) on the date hereof, (ii) within three Business Days after a demand by the
Trustee therefor and (iii) (without the necessity for such demand) within six months of BCL’s most recent financial year-end
commencing with the financial period ending 31 December 2014 and within three months of the end of the first half of each financial
year commencing with the financial period ending 30 June 2014, a certificate in or substantially in the form set out in Schedule
6 signed by either two Directors of BCL or a Director and the secretary of BCL addressed to the Trustee listing those Subsidiaries
of BCL which as at the date hereof, as at the date of the relevant certificate or as at any specific date requested by the Trustee,
were Material Subsidiaries for the purposes of Condition 11 (Events of Default);
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(t)
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promptly give written notice signed by two directors of BCL or by a director and the secretary
of BCL to the Trustee if any Subsidiary of BCL, (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate
(without duplication) amounts to more than £2,000,000 (or its equivalent in any other currency) and BCL covenants that it
shall procure that such Subsidiary shall as soon as reasonably practicable, but in any event no later than 60 days after the date
on which it incurs such Financial Indebtedness, provide a Guarantee in respect of these presents in accordance with Clause 7 above;
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(u)
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promptly give written notice signed by two directors of BCL or by a director and the secretary
of BCL to the Trustee if a Subsidiary Guarantor is to be automatically released from the Guarantee in accordance with Condition
4.4 (Guarantee – Release of Subsidiary Guarantors);
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(v)
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prior to making any modification or amendment or supplement to these presents, procure the delivery
of (a) legal opinion(s) as to English and any other relevant law, addressed to the Trustee, dated the date of such modification
or amendment or supplement, as the case may be,
and in a form acceptable to the Trustee from legal advisers acceptable to the Trustee;
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(w)
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give notice to the Trustee of the proposed redemption of the Bonds at least 5 business days in
London prior to the giving of any notice of redemption in respect of such Bonds pursuant to Condition 14 (Notices);
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(x)
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provide the Trustee with sufficient information so as to enable it to determine whether or not
it is obliged, in respect of any payments to be made by it pursuant to these presents, to make any withholding or deduction pursuant
to an agreement described in Section 1471(b) of the US Internal Revenue Code of 1986 (the Code) or otherwise imposed pursuant
to Sections 1471 through 1474 of the Code and any regulations or agreements thereunder or official interpretations thereof (FATCA
Withholding Tax); and
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15.
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Remuneration and Indemnification of Trustee
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15.1
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The Issuer failing whom, the Guarantors shall pay to the Trustee remuneration for its services
as trustee as from the date of this Trust Deed, such remuneration to be at such rate and to be paid on such dates as may from time
to time be agreed between the Issuer and the Trustee. In the absence of any agreement to the contrary, such remuneration shall
be payable in advance on 19 August in each year, the first such payment to be made on the date hereof. Such remuneration shall
accrue from day to day and be payable (in priority to payments to the Bondholders) up to and including the date when, all the Bonds
having become due for redemption, the redemption moneys and interest thereon to the date of redemption have been paid to the Principal
Paying Agent or, as the case may be, the Trustee PROVIDED THAT if upon due presentation of any Bond (if required) or any cheque
payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will commence again to accrue.
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15.2
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In the event of the occurrence of an Event of Default or a Potential Event of Default the Issuer
and the Guarantors hereby agree that the Trustee shall be entitled to be paid additional remuneration, which may be calculated
at its normal hourly rates in force from time to time (provided that such hourly rates are comparable to the prevailing rates in
the market at such time). In any other case, if the Trustee considers it expedient or necessary or is requested by the Issuer or
the Guarantors to undertake duties which the Trustee and the Issuer or, as the case may be, the relevant Guarantor agree to be
of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents the Issuer, failing
whom the Guarantors, shall pay to the Trustee such additional remuneration as shall be agreed between them (and which may be calculated
by reference to the Trustee's normal hourly rates in force from time to time provided that such hourly rates are comparable to
the prevailing rates in the market at such time).
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15.3
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The Issuer, failing whom the Guarantors shall in addition pay to the Trustee an amount equal to
the amount of any value added tax or similar tax chargeable thereon in respect of its remuneration under these presents.
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15.4
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In the event of the Trustee and the Issuer failing or, as the case may be, the relevant Guarantor
failing to agree:
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(a)
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(in a case to which subclause 15.1 above applies) upon the amount of the remuneration; or
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(b)
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(in a case to which subclause 15.2 above applies) upon whether such duties shall be of an
exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents, or upon such
additional remuneration,
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such matters
shall be determined by a person (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer
or, failing such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society
of England and Wales (the expenses involved in such nomination and the fees of such person being payable by the Issuer) and the
determination of any such person shall be final and binding upon the Trustee and the Issuer.
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15.5
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Without prejudice to the right of indemnity by law given to trustees, the Issuer and each Guarantor
shall severally indemnify the Trustee and every Appointee and keep it or him indemnified against all Liabilities to which it or
he may be or become subject or which may be incurred by it or him in the preparation and execution or purported execution of any
of its or his trusts, powers, authorities and discretions under these presents or its or his functions under any such appointment
or in respect of any other matter or thing done or omitted in any way relating to these presents or any such appointment (including
all Liabilities incurred in disputing or defending any of the foregoing).
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15.6
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The Issuer, failing whom the Guarantors, shall also pay or discharge all Liabilities incurred by
the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under,
and in any other manner relating to, these presents, including but not limited to travelling expenses and any stamp, issue, registration,
documentary and other taxes or duties paid or payable by the Trustee in connection with any action taken or contemplated by or
on behalf of the Trustee for enforcing these presents.
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15.7
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Where any amount which would otherwise be payable by the Issuer or the Guarantors under subclause
15.5 or subclause 15.6 has instead been paid by any person or persons other than the Issuer or the Guarantors (each, an Indemnifying
Party), the Issuer or the Guarantors, as the case may be, shall pay to the Trustee an equal amount for the purpose of enabling
the Trustee to reimburse the Indemnifying Parties.
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15.8
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All amounts payable pursuant to subclause 15.5 and 15.6 above shall be payable by the Issuer on
the date specified in a demand by the Trustee and in the case of payments actually made by the Trustee prior to such demand shall
carry interest at a rate equal to the Trustee’s cost of borrowing from the date such demand is made, and in all other cases
shall (if not paid within 30 days after the date of such demand or, if such demand specifies that payment is to be made on an earlier
date, on such earlier date) carry interest at such rate from such thirtieth day of such other date specified in such demand. All
remuneration payable to the Trustee shall carry interest at such rate from the due date therefor. A certificate from the Trustee
as to the Trustee’s cost of borrowing on any particular date or during any particular period shall be conclusive and binding
on the Issuer and the Guarantors.
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15.9
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The Issuer hereby further undertakes to the Trustee that all monies payable by the Issuer, failing
which the Guarantors, to the Trustee under this clause shall be made without set-off, counterclaim, deduction or withholding unless
compelled by law in which event the Issuer, failing which the Guarantors, will pay such additional amounts as will result in the
receipt by the Trustee of the amounts which would otherwise have been payable by the Issuer, failing which the Guarantors to the
Trustee under this clause in the absence of any such set-off, counterclaim, deduction or withholding.
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15.10
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Unless otherwise specifically stated in any discharge of these presents the provisions of this
clause 15 shall continue in full force and effect notwithstanding such discharge.
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16.
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Supplement to Trustee Acts
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Section 1 of
the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents. Where
there are any inconsistencies between the Trustee Acts and the provisions of these presents, the provisions of these presents shall,
to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of these
presents shall constitute a restriction or exclusion for the purposes of that Act. The Trustee shall have all the powers conferred
upon trustees by the Trustee Acts and by way of supplement thereto it is expressly declared as follows:
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(a)
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The Trustee may in relation to these presents act on the advice or opinion of or any information
(whether addressed to the Trustee or not) obtained from any lawyer, valuer, accountant, surveyor, banker, broker, auctioneer or
other expert whether obtained by the Issuer, any Guarantor, the Trustee or otherwise and shall not be responsible for any Liability
occasioned by so acting.
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(b)
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Any such advice, opinion or information may be sent or obtained by letter, telex, telegram, facsimile
transmission, electronic mail or cable and the Trustee shall not be liable for acting on any advice, opinion or information purporting
to be conveyed by any such letter, telegram, facsimile transmission, electronic mail or cable although the same shall contain some
error or shall not be authentic.
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(c)
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The Trustee may call for and shall be at liberty to accept as sufficient evidence of any fact or
matter or the expediency of any transaction or thing a certificate signed by any two Directors of the Issuer and/or by any two
Directors of any Guarantor or, in the case of BCL, either two Directors of BCL or a Director and the secretary of BCL and the Trustee
shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by
it or any other person acting on such certificate.
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(d)
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The Trustee shall be at liberty to hold these presents and any other documents relating thereto
or to deposit them in any part of the world with any banker or banking company or company whose business includes undertaking the
safe custody of documents or lawyer or firm of lawyers considered by the Trustee to be of good repute and the Trustee shall not
be responsible for or required to insure against any Liability incurred in connection with any such holding or deposit and may
pay all sums required to be paid on account of or in respect of any such deposit.
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(e)
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The Trustee shall not be responsible for the receipt or application of the proceeds of the issue
of any of the Bonds by the Issuer, the exchange of the Global Certificate for Definitive Certificates or the delivery of the Global
Certificate or Definitive Certificates to the person(s) entitled to it or them.
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(f)
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The Trustee shall not be bound to give notice to any person of the execution of any documents comprised
or referred to in these presents or to take any steps to ascertain whether any Event of Default or Potential Event of Default has
happened and, until it shall have actual knowledge or express notice pursuant to these presents to the contrary, the Trustee shall
be entitled to assume that no Event of Default or Potential Event of Default has happened and that the Issuer and each Guarantor
is observing and performing all its obligations under these presents.
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(g)
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Save as expressly otherwise provided in these presents, the Trustee shall have absolute and uncontrolled
discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions under these presents (the exercise
or non-exercise of which as between the Trustee and the Bondholders shall be conclusive and binding on the Bondholders) and shall
not be responsible for any Liability which may result from their exercise or non-exercise and in particular the Trustee shall not
be bound to act at the request or direction of the Bondholders or otherwise under any provision of these presents or to take at
such request or direction or otherwise any other action under any provision of these presents, without prejudice to the generality
of subclause 9.1, unless it shall first be indemnified and/or secured and/or pre-funded to its satisfaction against all Liabilities
to which it may render itself liable or which it may incur by so doing and the Trustee shall incur no liability for refraining
to act in such circumstances.
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(h)
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The Trustee shall not be liable to any person by reason of having acted upon any Extraordinary
Resolution in writing or any Extraordinary Resolution purporting to have been passed at any meeting of Bondholders in respect whereof
minutes have been made and signed or any Extraordinary Resolution passed by way of electronic consents received through the relevant
Clearing System(s) in accordance with these presents or any direction or request of Bondholders even though subsequent to its acting
it may be found that there was some defect in the constitution of the meeting or the passing of the resolution or (in the case
of an Extraordinary Resolution in writing or a direction or a request) it was not signed by the requisite number of Bondholders
or (in the case of an Extraordinary Resolution passed by electronic consents received through the relevant Clearing System(s))
it was not approved by the requisite number of Bondholders or that for any reason the resolution, direction or request was not
valid or binding upon such Bondholders.
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(i)
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The Trustee shall not be liable to any person by reason of having accepted as valid or not having
rejected any Bond purporting to be such and subsequently found to be forged or not authentic.
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(j)
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Any consent or approval given by the Trustee for the purposes of these presents may be given on
such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the contrary in these
presents may be given retrospectively. The Trustee may give any consent or approval, exercise any power, authority or discretion
or take any similar action (whether or not such consent, approval, power, authority, discretion or action is specifically referred
to in these presents) if it is satisfied that the interests of the Bondholders will not be materially prejudiced thereby. For the
avoidance of doubt, the Trustee shall not have any duty to the Bondholders in relation to such matters other than that which is
contained in the preceding sentence.
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(k)
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The Trustee shall not (unless and to the extent ordered so to do by a court of competent jurisdiction)
be required to disclose to any Bondholder any information (including, without limitation, information of a confidential, financial
or price sensitive nature) made available to the Trustee by the Issuer or the Guarantors or any other person in connection with
these presents and no Bondholder shall be entitled to take any action to obtain from the Trustee any such information.
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(l)
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Where it is necessary or desirable for any purpose in connection with these presents to convert
any sum from one currency to another it shall (unless otherwise provided by these presents or required by law) be converted at
such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange, as may be agreed by the Trustee in consultation with the Issuer or the Guarantor as relevant and any rate, method and date so agreed shall be binding on the Issuer, the Guarantors, and the Bondholders.
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(m)
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The Trustee may certify that any of the conditions, events and acts set out in subparagraphs (b)
to (d) inclusive (other than the winding up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries), (e)
to (g) inclusive and (k) and (l) of Condition 11.1 (Events of Default) (each of which conditions, events and acts shall,
unless in any case the Trustee in its absolute discretion shall otherwise determine, for all the purposes of these presents be
deemed to include the circumstances resulting therein and the consequences resulting therefrom) is in its opinion materially prejudicial
to the interests of the Bondholders and any such certificate shall be conclusive and binding upon the Issuer, the Guarantors, and
the Bondholders.
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(n)
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The Trustee as between itself and the Bondholders may determine all questions and doubts arising
in relation to any of the provisions of these presents. Every such determination, whether or not relating in whole or in part to
the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Bondholders.
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(o)
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In connection with the exercise by it of any of its trusts, powers, authorities and discretions
under these presents (including, without limitation, any modification, waiver, authorisation, determination or substitution), the
Trustee shall have regard to the general interests of the Bondholders as a class and shall not have regard to any interests arising
from circumstances particular to individual Bondholders (whatever their number) and, in particular but without limitation, shall
not have regard to the consequences of any such exercise for individual Bondholders (whatever their number) resulting from their
being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular
territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Bondholder be entitled
to claim, from the Issuer, the Guarantors, the Trustee or any other person any indemnification or payment in respect of any tax
consequence of any such exercise upon individual Bondholders except to the extent already provided for in Condition 9 (Taxation)
and/or any undertaking given in addition thereto or in substitution therefor under these presents.
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(p)
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Any trustee of these presents being a lawyer, accountant, broker or other person engaged in any
profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted
and acts done by him or his firm in connection with the trusts of these presents and also his proper charges in addition to disbursements
for all other work and business done and all time spent by him or his firm in connection with matters arising in connection with
these presents.
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(q)
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The Trustee may whenever it thinks fit delegate by power of attorney or otherwise to any person
or persons or fluctuating body of persons (whether being a joint trustee of these presents or not) all or any of its trusts, powers,
authorities and discretions under these presents. Such delegation may be made upon such terms (including power to sub-delegate)
and subject to such conditions and regulations as the Trustee may in the interests of the Bondholders think fit. The Trustee shall
not be under any obligation to supervise the proceedings or acts of any such delegate or sub-delegate or be in any way responsible
for any Liability incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate. The Trustee
shall within a reasonable time after any such delegation
or any renewal, extension or termination thereof give notice thereof to the Issuer.
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(r)
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The Trustee may in the conduct of the trusts of these presents instead of acting personally employ
and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur in transacting or conducting,
any business and to do, or concur in doing, all acts required to be done in connection with these presents (including the receipt
and payment of money). The Trustee shall not be in any way responsible for any Liability incurred by reason of any misconduct or
default on the part of any such agent or be bound to supervise the proceedings or acts of any such agent.
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(s)
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The Trustee may appoint and pay any person to act as a custodian or nominee on any terms in relation
to such assets of the trusts constituted by these presents as the Trustee may determine, including for the purpose of depositing
with a custodian these presents or any document relating to the trusts constituted by these presents and the Trustee shall not
be responsible for any Liability incurred by reason of the misconduct, omission or default on the part of any person appointed
by it hereunder or be bound to supervise the proceedings or acts of such person; the Trustee is not obliged to appoint a custodian
if the Trustee invests in securities payable to bearer.
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(t)
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The Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy,
genuineness, validity, performance, enforceability or admissibility in evidence of these presents or any other document relating
or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence, consent or other authority
for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility
in evidence of these presents or any other document relating or expressed to be supplemental thereto.
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(u)
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The Trustee may call for and shall be entitled to rely on any record, certificate or other document
to be issued by Euroclear or Clearstream, Luxembourg as to the principal amount of Bonds represented by the Global Certificate
standing to the account of any person. Any such record, certificate or other document shall, in the absence of manifest error,
be conclusive and binding for all purposes. Any such record, certificate or other document may comprise any form of statement or
print out of electronic records provided by the relevant clearing system (including Euroclear’s EUCLID or Clearstream, Luxembourg's
Creation Online system) in accordance with its usual procedures and in which the holder of a particular principal amount of Bonds
is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having
accepted as valid or not having rejected any such record, certificate or other document to such effect purporting to be issued
by Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic.
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(v)
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The Trustee shall not be responsible to any person for failing to request, require or receive any
legal opinion relating to the Bonds or for checking or commenting upon the content of any such legal opinion and shall not be responsible
for any Liability incurred thereby.
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(w)
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Subject to the requirements, if any, of the London Stock Exchange, any corporation into which the
Trustee shall be merged or with which it shall be consolidated or any company resulting from any such merger or consolidation shall
be a party hereto and shall be the Trustee under these
presents without executing or filing any paper or document or any further act on the part of the parties thereto.
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(x)
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The Trustee shall not be bound to take any action in connection with these presents or any obligations
arising pursuant thereto, including, without prejudice to the generality of the foregoing, forming any opinion or employing any
financial adviser, where it is not satisfied that it will be indemnified against all Liabilities which may be incurred in connection
with such action and may demand prior to taking any such action that there be paid to it in advance such sums as it considers (without
prejudice to any further demand) shall be sufficient so to indemnify it.
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(y)
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No provision of these presents shall require the Trustee to do anything which may (i) be illegal
or contrary to applicable law or regulation; or (ii) cause it to expend or risk its own funds or otherwise incur any Liability
in the performance of any of its duties or in the exercise of any of its rights, powers or discretions (including obtaining any
advice which it might otherwise have thought appropriate or desirable to obtain), if it shall believe that repayment of such funds
or adequate indemnity against such risk or Liability is not assured to it.
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(z)
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Unless notified to the contrary, the Trustee shall be entitled to assume without enquiry (other
than requesting a certificate pursuant to subclause 14(p)) that no Bonds are held by, for the benefit of, or on behalf of, the
Issuer, any Guarantor, any Subsidiary of a Guarantor, any holding company of a Guarantor or any other Subsidiary of any such holding
company.
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(aa)
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The Trustee shall have no responsibility whatsoever to the Issuer, the Guarantors, any Bondholder
or any other person for the maintenance of or failure to maintain any rating of any of the Bonds by any rating agency.
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(bb)
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Any certificate, advice, opinion or report of the Auditors or any other expert or professional
adviser called for by or provided to the Trustee (whether or not addressed to the Trustee) in accordance with or for the purposes
of these presents may be relied upon by the Trustee as sufficient evidence of the facts stated therein notwithstanding that such
certificate, advice, opinion or report and/or any engagement letter or other document entered into by the Trustee in connection
therewith contains a monetary or other limit on the liability of the Auditors or such other expert or professional adviser in respect
thereof and notwithstanding that the scope and/or basis of such certificate, advice, opinion or report may be limited by any engagement
or similar letter or by the terms of the certificate, advice, opinion or report itself.
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(cc)
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The Trustee shall not be responsible for, or for investigating any matter which is the subject
of, any recital, statement, representation, warranty or covenant of any person contained in these presents, or any other agreement
or document relating to the transactions contemplated in these presents or under such other agreement or document.
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(dd)
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The Trustee shall not be liable or responsible for any Liabilities or inconvenience which may result
from anything done or omitted to be done by it in accordance with the provisions of these presents.
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(ee)
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The Trustee shall not incur any liability to the Issuer, Bondholders or any other person in connection
with any approval given by it pursuant to Clause 14(n) to any notice to be given to Bondholders by the Issuer; the Trustee shall not be deemed to have represented, warranted, verified or confirmed that the contents of any such notice are true, accurate or complete in any respects or that it may be lawfully issued or received in any jurisdiction.
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(ff)
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When determining whether an indemnity or any security or pre-funding is satisfactory to it, the
Trustee shall be entitled to evaluate its risk in any given circumstance by considering the worst-case scenario and, for this purpose,
it may take into account, without limitation, the potential costs of defending or commencing proceedings in England or elsewhere
and the risk, however remote, of any award of damages against it in England or elsewhere.
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(gg)
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The Trustee shall be entitled to require that any indemnity or security given to it by the Bondholders
or any of them be given on a joint and several basis and be supported by evidence satisfactory to it as to the financial standing
and creditworthiness of each counterparty and/or as to the value of the security and an opinion as to the capacity, power and authority
of each counterparty and/or the validity and effectiveness of the security.
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(hh)
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The Trustee shall not be responsible for monitoring whether any notices to Bondholders are given
in compliance with the requirements of the London Stock Exchange or with any other legal or regulatory requirements.
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(ii)
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The Trustee shall be entitled to deduct FATCA Withholding Tax, and shall have no obligation to
gross-up any payment hereunder or to pay any additional amount as a result of such FATCA Withholding Tax.
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(jj)
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Notwithstanding anything in these presents to the contrary, the Trustee shall not do, or be authorised
or required to do, anything which might constitute a regulated activity for the purpose of the FSMA, unless it is authorised under
the FSMA to do so. The Trustee shall have the discretion at any time (i) to delegate any of the functions which fall to be performed
by an authorised person under the FSMA to any agent or person which has the necessary authorisations and licences and (ii) to apply
for authorisation under the FSMA and perform any or all such functions itself if, in its absolute discretion, it considers it necessary,
desirable or appropriate to do so.
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17.1
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Nothing in these presents shall exempt the Trustee from or indemnify it against any liability which
by virtue of any rule of law would otherwise attach to it in respect of any gross negligence, wilful default or fraud of which
it may be guilty in relation to its duties under these presents where the Trustee has failed to show the degree of care and diligence
required of it as trustee having regard to the provisions of these presents conferring on it any trusts, powers, authorities or
discretions.
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17.2
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Notwithstanding any provision of these presents to the contrary, the Trustee shall not in any event
be liable for:
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(a)
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loss of profit, loss of business, loss of goodwill, loss of opportunity, whether direct or indirect;
and
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(b)
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special, indirect, punitive or consequential loss or damage of any kind whatsoever, whether or
not foreseeable, whether or not the Trustee can reasonably be regarded as having assumed responsibility at the time this Trust
Deed is entered into, even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss
or damage is made in respect of fraud on the part of the Trustee.
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18.
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Trustee Contracting with the Issuer and the Guarantors
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Neither the
Trustee nor any director or officer or holding company, Subsidiary or associated company of a corporation acting as a trustee under
these presents shall by reason of its or his fiduciary position be in any way precluded from:
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(a)
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entering into or being interested in any contract or financial or other transaction or arrangement
with the Issuer or any Guarantor or any person or body corporate associated with the Issuer or any Guarantor (including without
limitation any contract, transaction or arrangement of a banking or insurance nature or any contract, transaction or arrangement
in relation to the making of loans or the provision of financial facilities or financial advice to, or the purchase, placing or
underwriting of or the subscribing or procuring subscriptions for or otherwise acquiring, holding or dealing with, or acting as
paying agent in respect of, the Bonds or any other bonds, notes stocks, shares, debenture stock, debentures or other securities
of, the Issuer or any Guarantor or any person or body corporate associated as aforesaid); or
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(b)
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accepting or holding the trusteeship of any other trust deed constituting or securing any other
securities issued by or relating to the Issuer or any Guarantor or any such person or body corporate so associated or any other
office of profit under the Issuer or any Guarantor or any such person or body corporate so associated,
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and shall be
entitled to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such
contract, transaction or arrangement as is referred to in (a) above or, as the case may be, any such trusteeship or office of profit
as is referred to in (b) above without regard to the interests of the Bondholders and notwithstanding that the same may be contrary
or prejudicial to the interests of the Bondholders and shall not be responsible for any Liability occasioned to the Bondholders
thereby and shall be entitled to retain and shall not be in any way liable to account for any profit made or share of brokerage
or commission or remuneration or other amount or benefit received thereby or in connection therewith.
Where any holding
company, subsidiary or associated company of the Trustee or any director or officer of the Trustee acting other than in his capacity
as such a director or officer has any information, the Trustee shall not thereby be deemed also to have knowledge of such information
and, unless it shall have actual knowledge of such information, shall not be responsible for any loss suffered by Bondholders resulting
from the Trustee's failing to take such information into account in acting or refraining from acting under or in relation to these
presents.
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19.
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Waiver, Authorisation and Determination
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19.1
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The Trustee may without the consent or sanction of the Bondholders and without prejudice to its
rights in respect of any subsequent breach, Event of Default or Potential Event of Default from time to time and at any time but
only if and in so far as in its opinion the interests of the Bondholders shall not be materially prejudiced thereby waive or authorise
any breach or proposed breach by the Issuer or any Guarantor of any of the covenants or provisions contained in these presents
or the Agency Agreement or determine that any Event of Default or Potential Event of Default
shall not be treated as such for the purposes of these presents PROVIDED ALWAYS THAT the Trustee shall not exercise any powers
conferred on it by this clause in contravention of any express direction given by Extraordinary Resolution or by a request under
Condition 12 (Enforcement) but so that no such direction or request shall affect any waiver, authorisation or determination
previously given or made. Any such waiver, authorisation or determination may be given or made on such terms and subject to such
conditions (if any) as the Trustee may determine, shall be binding on the Bondholders and, if, but only if, the Trustee shall so
require, shall be notified by the Issuer to the Bondholders in accordance with Condition 14 (Notices) as soon as practicable
thereafter.
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MODIFICATION
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19.2
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The Trustee may without the consent or sanction of the Bondholders at any time and from time to
time concur with the Issuer and the Guarantors in making any modification (i) to these presents or the Agency Agreement (including,
without limitation, any Basic Terms Modification) which in the opinion of the Trustee it may be proper to make PROVIDED THAT the
Trustee is of the opinion that such modification is not materially prejudicial to the interests of the Bondholders or (ii) to these
presents or the Agency Agreement if in the opinion of the Trustee such modification is of a formal, minor or technical nature or
to correct a manifest error or an error which is, in the opinion of the Trustee, proven. Any such modification may be made on such
terms and subject to such conditions (if any) as the Trustee may determine, shall be binding upon the Bondholders and, unless the
Trustee agrees otherwise, shall be notified by the Issuer to the Bondholders in accordance with Condition 14 (Notices) as
soon as practicable thereafter.
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BREACH
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19.3
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Any breach of or failure to comply with any such terms and conditions as are referred to in subclauses
19.1 and 19.2 shall constitute a default by the Issuer or the relevant Guarantor (as the case may be) in the performance or observance
of a covenant or provision binding on it under or pursuant to these presents.
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20.
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Entitlement to treat Holder as Absolute Owner
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The Issuer,
the Guarantors, the Trustee, the Paying Agents, the Registrar and the Transfer Agents may (to the fullest extent permitted by applicable
laws) deem and treat the holder of any Bond or of a particular principal amount of the Bonds as the absolute owner of such Bond
or principal amount for all purposes (whether or not such Bond or principal amount shall be overdue and notwithstanding any notice
of ownership thereof or of trust or other interest with regard thereto, any notice of loss or theft thereof or any writing thereon),
and the Issuer, the Guarantors, the Trustee, the Paying Agents, the Registrar and the Transfer Agents shall not be affected by
any notice to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective
to satisfy and discharge the liability for the moneys payable in respect of such Bond or principal amount.
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21.1
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(a)
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The Trustee may without the consent of the Bondholders at any time agree with the Issuer
and the Guarantors to the substitution in place of the Issuer (or of the previous substitute under this clause) as the principal
debtor under these presents of BCL or any of its other Subsidiaries (such substituted company being hereinafter called the New
Company) provided that a trust deed is executed or some other form of undertaking is given by the New Company in form and manner
satisfactory to the Trustee, agreeing to be bound by
the provisions of these presents with any consequential amendments which the Trustee may deem appropriate as fully as if the New
Company had been named in these presents as the principal debtor in place of the Issuer (or of the previous substitute under the
clause) and provided further that each Guarantor (other than a Guarantor substituted in place of the Issuer) continues to unconditionally
and irrevocably guarantee all amounts payable under these presents to the satisfaction of the Trustee.
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(b)
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The following further conditions shall apply to (a) above:
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(i)
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the Issuer, each Guarantor and the New Company shall comply with such other requirements as the
Trustee may direct in the interests of the Bondholders;
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(ii)
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without prejudice to the rights of reliance of the Trustee under the immediately following paragraph
(iii), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Bondholders;
and
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(iii)
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if two Directors of the New Company (or other officers acceptable to the Trustee) shall certify
that the New Company is solvent both at the time at which the relevant transaction is proposed to be effected and immediately thereafter
(which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to have regard to the financial
condition, profits or prospects of the New Company or to compare the same with those of the Issuer or the previous substitute under
this clause as applicable.
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21.2
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Any such trust deed or undertaking shall, if so expressed, operate to release the Issuer or the
previous substitute as aforesaid from all of its obligations as principal debtor under these presents. Not later than 14 days after
the execution of such documents and compliance with such requirements, the New Company shall give notice thereof in a form previously
approved by the Trustee to the Bondholders in the manner provided in Condition 14 (Notices). Upon the execution of such
documents and compliance with such requirements, the New Company shall be deemed to be named in these presents as the principal
debtor in place of the Issuer (or in place of the previous substitute under this clause) under these presents and these presents
shall be deemed to be modified in such manner as shall be necessary to give effect to the above provisions and, without limitation,
references in these presents to the Issuer shall, unless the context otherwise requires, be deemed to be or include references
to the New Company.
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Each of the
Issuer and each of the Guarantors shall severally indemnify the Trustee, every Appointee and the Bondholders and keep them indemnified
against:
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(a)
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any Liability incurred by any of them arising from the non-payment by the Issuer or the Guarantors
of any amount due to the Trustee or the Bondholders under these presents by reason of any variation in the rates of exchange between
those used for the purposes of calculating the amount due under a judgment or order in respect thereof and those prevailing at
the date of actual payment by the Issuer or the Guarantors; and
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(b)
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any deficiency arising or resulting from any variation in rates of exchange between (i) the date
as of which the local currency equivalent of the amounts due or contingently due under these presents (other
than this clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer or any Guarantor and
(ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency
shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any
distribution of assets in connection with any such bankruptcy, insolvency or liquidation.
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The above indemnities
shall constitute obligations of the Issuer and the Guarantors separate and independent from their obligations under the other provisions
of these presents and shall apply irrespective of any indulgence granted by the Trustee or the Bondholders from time to time and
shall continue in full force and effect notwithstanding the judgment or filing of any proof or proofs in any bankruptcy, insolvency
or liquidation of the Issuer or the Guarantors for a liquidated sum or sums in respect of amounts due under these presents (other
than this clause). Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Bondholders and no proof
or evidence of any actual loss shall be required by the Issuer or the Guarantors or their liquidator or liquidators.
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23.1
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The power to appoint a new trustee of these presents shall, subject as hereinafter provided, be
vested in the Issuer but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution.
One or more persons may hold office as trustee or trustees of these presents but such trustee or trustees shall be or include a
Trust Corporation. Whenever there shall be more than two trustees of these presents the majority of such trustees shall be competent
to execute and exercise all the duties, powers, trusts, authorities and discretions vested in the Trustee by these presents provided
that a Trust Corporation shall be included in such majority. Any appointment of a new trustee of these presents shall as soon as
practicable thereafter be notified by the Issuer to the Principal Paying Agent, the Registrar, the Transfer Agents and the Bondholders.
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SEPARATE
AND CO-TRUSTEES
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23.2
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Notwithstanding the provisions of subclause 23.1 above, the Trustee may, upon giving prior notice
to the Issuer and the Guarantors (but without the consent of the Issuer, the Guarantors or the Bondholders), appoint any person
established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate trustee or as a co-trustee
jointly with the Trustee:
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(a)
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if the Trustee considers such appointment to be in the interests of the Bondholders;
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(b)
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for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction
in which any particular act or acts is or are to be performed; or
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(c)
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for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction
of either a judgment already obtained or any of the provisions of these presents against the Issuer and/or any Guarantor.
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The
Issuer and each of the Guarantors irrevocably appoints the Trustee to be its attorney in its name and on its behalf to
execute any such instrument of appointment. Such a person shall (subject always to the provisions of these presents) have
such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by these presents) and such
duties and obligations as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power in
like manner to remove any such person. Such reasonable remuneration as the Trustee may pay to any such person, together with
any attributable Liabilities incurred by it in performing its function as such separate trustee or co-trustee, shall for the
purposes of these presents be treated as Liabilities incurred by the Trustee.
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24.
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Trustee's Retirement and Removal
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A trustee of
these presents may retire at any time on giving not less than 90 days' prior written notice to the Issuer and the Guarantors without
giving any reason and without being responsible for any Liabilities incurred by reason of such retirement. The Bondholders may
by Extraordinary Resolution remove any trustee or trustees for the time being of these presents. The Issuer and each Guarantor
undertake that in the event of the only trustee of these presents which is a Trust Corporation (for the avoidance of doubt, disregarding
for this purpose any separate or co-trustee appointed under subclause 23.2) giving notice under this clause or being removed by
Extraordinary Resolution they will use their best endeavours to procure that a new trustee of these presents being a Trust Corporation
is appointed as soon as reasonably practicable thereafter. The retirement or removal of any such trustee shall not become effective
until a successor trustee being a Trust Corporation is appointed. If, in such circumstances, no appointment of such a new trustee
has become effective within 60 days of the date of such notice or Extraordinary Resolution, the Trustee shall be entitled to appoint
a Trust Corporation as trustee of these presents, but no such appointment shall take effect unless previously approved by an Extraordinary
Resolution.
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25.
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Trustee's Powers to be Additional
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The powers
conferred upon the Trustee by these presents shall be in addition to any powers which may from time to time be vested in the Trustee
by the general law or as a holder of any of the Bonds.
Any notice
or demand to the Issuer, BCL or the Trustee to be given, made or served for any purposes under these presents shall be given, made
or served by sending the same by pre-paid post (first class if inland, first class airmail if overseas) or facsimile transmission
or by delivering it by hand as follows:
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to the Issuer:
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Burford Capital PLC
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5th Floor Norfolk House
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Wellesley Road
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Croydon
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CR0 1LH
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(Attention: Hayley Leake)
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Facsimile No. 020 3530 2027
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to BCL:
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Burford Capital Limited
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Regency Court
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Glategny Esplanade
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St Peter Port
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GY1 1WW
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(Attention: Mark Woodall)
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Facsimile No. (0)1481716868
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to the Trustee:
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U.S. Bank Trustees Limited
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125 Old Broad Street
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Fifth Floor
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London
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EC2N 1AR
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(Attention: Structured Finance Relationship Management)
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Facsimile No. +44 (0)20 7354 2577
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or to such
other address or facsimile number as shall have been notified (in accordance with this clause) to the other parties hereto and
any notice or demand sent by post as aforesaid shall be deemed to have been given, made or served two days in the case of inland
post or seven days in the case of overseas post after despatch and any notice or demand sent by facsimile transmission as aforesaid
shall be deemed to have been given, made or served at the time of despatch provided that in the case of a notice or demand given
by facsimile transmission a confirmation of transmission is received by the sending party and such notice or demand shall forthwith
be confirmed by post. The failure of the addressee to receive such confirmation shall not invalidate the relevant notice or demand
given by facsimile transmission.
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27.
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Confidentiality Undertaking
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27.1
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The Trustee undertakes that it, and each of its directors, officers
and affiliates, will:
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(a)
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keep the Confidential Information confidential and not
disclose it to any person except as permitted under sub-clause 27.2 below or with the written consent of the Issuer; and
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(b)
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use the Confidential Information solely to perform its
role of Trustee pursuant to the provisions of these presents upon and subject to the terms and conditions of these presents.
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27.2
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The Trustee may disclose Confidential Information only in the
following circumstances and only if and to the extent that the Trustee reasonably determines that: (i) it is both relevant and
necessary to do so in the relevant circumstances and (ii) in the case of (d) and (f) below (and in the case of (e) below, to the
extent it relates to disclosure to the Bondholders), it is necessary for Bondholders to be aware of such Confidential Information
when considering any matter, making any relevant decision or when determining to give any relevant directions to the Trustee:
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(a)
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to its professional advisers or auditors, or to any separate
or co-trustee or Appointee, provided that the recipient is subject to professional obligations to maintain the confidentiality
of the Confidential Information or is otherwise bound by requirements of confidentiality (in mutatis mutandis the same
form as this Clause 27) in relation to the Confidential Information;
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(b)
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to comply with any court order or applicable law or regulation;
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(c)
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to defend itself (in legal proceedings or otherwise)
against any allegations of negligence, default or misconduct (howsoever described) where failure by the Trustee to disclose the
Confidential Information would otherwise materially prejudice the Trustee’s defence;
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(d)
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for the purpose of investigating the occurrence of any
Event of Default or Potential Event of Default (where it knows, or has reasonable grounds to suspect, that such an event has occurred);
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(e)
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for the purpose of enforcing any of its rights or the
rights of the Bondholders under these presents and/or the Bonds against the Issuer and/or any Guarantor (including, without limitation,
in any court proceedings); or
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(f)
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to enable it to seek directions from the Bondholders,
in circumstances where it determines that such directions are necessary or desirable.
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27.3
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To the extent permitted by applicable law, the Trustee agrees
to inform the Issuer of each disclosure of Confidential Information pursuant to paragraphs (b) to (f) of sub-clause 27.2 above
as soon as reasonably practicable after making its decision to disclose or upon becoming aware that Confidential Information has
been disclosed in breach of Clause 27.1.
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27.4
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The obligations in this Clause 27 are continuing and shall remain
in full force and effect notwithstanding redemption of the Bonds or termination of these presents.
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28.
Governing Law
These presents
and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance
with, English law.
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29.
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Submission to Jurisdiction
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29.1
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Each of the Guarantors irrevocably agrees for the benefit of the Trustee and the Bondholders that
the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with these
presents and accordingly submit to the exclusive jurisdiction of the English courts. Each of the Guarantors waives any objection
to the courts of England on the grounds that they are an inconvenient or inappropriate forum. To the extent permitted by law, the
Trustee and the Bondholders may take any suit, action or proceeding arising out of or in connection with these presents (together
referred to as Proceedings) against the Guarantors in any other court of competent jurisdiction and concurrent Proceedings
in any number of jurisdictions.
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29.2
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BCL irrevocably and unconditionally appoints the Issuer at its registered office for the time being
as its agent for service of process in England in respect of any Proceedings and undertakes that in the event of it ceasing so
to act it will appoint such other person as the Trustee may approve as its agent for that purpose. BCL:
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(a)
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agrees to procure that, so long as any of the Bonds remains liable to prescription, there shall
be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept service as
aforesaid;
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(b)
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agrees that failure by any such person to give notice of such service of process to BCL shall not
impair the validity of such service or of any judgment based thereon;
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(c)
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consents to the service of process in respect of any Proceedings by the airmailing of copies, postage
prepaid, to BCL in accordance with clause 26; and
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(d)
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agrees that nothing in these presents shall affect the right to serve process in any other manner
permitted by law.
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This Trust
Deed and any trust deed supplemental hereto may be executed and delivered in any number of counterparts, all of which, taken together,
shall constitute one and the same deed and any party to this Trust Deed or any trust deed supplemental hereto may enter into the
same by executing and delivering a counterpart.
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31.
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Contracts (Rights of Third Parties) Act 1999
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A person who
is not a party to these presents has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these
presents, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
IN WITNESS whereof
this Trust Deed has been executed as a deed by the Issuer, BCL and the Trustee and delivered on the date first stated on page 1.
Schedule
1
Form of
Global Certificate
[THIS GLOBAL CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS AND
THE ISSUER HAS NOT BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(THE 1940 ACT). NEITHER THIS GLOBAL CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND UNDER CIRCUMSTANCES WHICH DO NOT REQUIRE THE ISSUER TO REGISTER UNDER THE 1940 ACT.]
ISIN: XS1088905093
BURFORD CAPITAL PLC
(Incorporated with
limited liability under the laws of England and Wales with registered number 09077893)
GLOBAL CERTIFICATE
representing
£90,000,000 6.50 PER CENT.
GUARANTEED
BONDS DUE 19 AUGUST
2022
unconditionally and irrevocably
guaranteed
as to payment of principal
and interest by
BURFORD CAPITAL LIMITED
(Incorporated
with limited liability under the laws of Guernsey with registered number 50877)
and any Subsidiary
of Burford Capital Limited which becomes a Guarantor from time to time
Burford Capital PLC (the
Issuer) hereby certifies that [__________] is, at the date hereof, entered in the Register as the holder of the aggregate
principal amount of £90,000,000 of a duly authorised issue of Bonds (the Bonds) described above of the Issuer. References
herein to the Conditions (or to any particular numbered Condition) shall be to the Conditions (or that particular one of them)
set out in Schedule 2 to the Trust Deed referred to below. Words and expressions defined in the Conditions shall bear the same
meanings when used in this Global Certificate. This Global Certificate is issued subject to, and with the benefit of, the Conditions
and a Trust Deed dated 19 August, 2014 and made between the Issuer and U.S. Bank Trustees Limited (the Trustee) as trustee
for the Bondholders.
The Issuer, subject
to and in accordance with the Conditions and the Trust Deed, promises to pay to the registered holder hereof on 19 August,
2022 and/or on such earlier date(s) as all or any of the Bonds represented by this Global Certificate may become due and
repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such
Bonds on each such date and to pay interest (if any) on the principal amount of the Bonds outstanding from time to time
represented by this Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with
any other sums payable under the Conditions and the Trust Deed. At maturity, and prior to the payment of any amount due, the
registered holder hereof shall surrender this Global Certificate at the specified office of the Principal Paying Agent at 125
Old Broad Street, London EC2N 1AR or such other office as may be specified by the Issuer and approved by the Trustee. On any
redemption or purchase and cancellation of any of the Bonds represented by this Global Certificate, details of such
redemption or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in the Schedule
hereto and the relevant space in the Schedule hereto recording any such redemption or purchase and cancellation (as the case
may be) shall be signed by or on behalf of the Principal Paying Agent. Upon any such redemption or purchase and cancellation
the principal amount outstanding of this Global Certificate and the Bonds held by the registered holder hereof shall be
reduced by the principal amount of such Bonds so redeemed or purchased and cancelled. The principal amount outstanding of
this Global Certificate and of the Bonds held by the registered holder hereof following any such redemption or purchase and
cancellation as aforesaid or any exchange as referred to below shall be the outstanding principal amount most recently
entered in the fourth column in the Schedule hereto.
Bonds represented by
this Global Certificate are exchangeable and transferable only in accordance with, and subject to, the provisions hereof and the
rules and operating procedures of Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, société
anonyme (Clearstream, Luxembourg).
Upon the exchange of
the whole or a part of this Global Certificate for Definitive Certificates (only where Euroclear or Clearstream, Luxembourg notifies
the Issuer and the Guarantors that it is unwilling or unable to continue as a clearing system in connection with a Global Certificate,
and a successor clearing system approved by the Trustee is not appointed by the Issuer and the Guarantors within 90 days after
receiving such notice from Euroclear, Clearstream, Luxembourg), details of such exchange shall be entered by or on behalf of the
Issuer in the third column of the Schedule hereto and the relevant space in the Schedule hereto recording such exchange shall be
signed by or on behalf of the Principal Paying Agent, whereupon the outstanding principal amount of this Global Certificate and
the Bonds held by the registered holder hereof shall be increased or reduced (as the case may be) by the principal amount so exchanged.
Subject as provided in
the following paragraph, until the exchange of the whole of this Global Certificate as aforesaid, the registered holder hereof
shall in all respects be entitled to the same benefits as if he were the registered holder of Definitive Certificates in the form
set out in Part 1 of Schedule 2 to the Trust Deed.
Subject as provided in
the Trust Deed, each person who is for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg as entitled
to a particular principal amount of the Bonds represented by this Global Certificate (in which regard any certificate or other
document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Bonds standing to the account of any
person shall be conclusive and binding for all purposes save in the case of manifest error) shall be deemed to be the holder of
such principal amount of such Bonds for all purposes other than with respect to payments of principal and interest on the Bonds
for which purpose the registered holder of this Global Certificate shall be deemed to be the holder of such principal amount of
the Bonds in accordance with and subject to the terms of this Global Certificate and the Trust Deed. Whilst the Bonds are represented
by this Global Certificate payments will be made to the registered holder appearing on the Register at the close of the business
day (being for this purpose a day on which Euroclear and Clearstream, Luxembourg are open for business) preceding such due date.
For so long as all
of the Bonds are represented by this Global Certificate and this Global Certificate is held on behalf of Euroclear and/or
Clearstream, Luxembourg, notices to Bondholders may be given by delivery of the relevant notice to Euroclear and/or
Clearstream, Luxembourg (as the case may be) for communication to the relative accountholders rather than by publication as
required by Condition 14 (Notices) provided that, so long as the Bonds are admitted to the official list maintained by
the Financial Conduct Authority in its capacity as the UK Listing Authority (the UKLA) and admitted to trading on the
London Stock Exchange plc's market for listed securities, all requirements of the UKLA have been complied with. Any such
notice shall be deemed to have been given to the Bondholders on the second day after the day on which such notice is
delivered to Euroclear and/or Clearstream, Luxembourg (as the case may be) as aforesaid.
Whilst any Bonds held
by a Bondholder are represented by this Global Certificate, notices to be given by such Bondholder may be given by such Bondholder
to the Principal Paying Agent through Euroclear and/or Clearstream, Luxembourg, as the case may be, in such a manner as the Principal
Paying Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.
Claims against the Issuer
and the Guarantors in respect of principal and interest on the Bonds represented by this Global Certificate will be prescribed
after 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date (as defined in Condition
9 (Taxation)).
References herein to
Euroclear and/or Clearstream, Luxembourg shall be deemed to include references to any other clearing system approved by the Trustee.
No rights are conferred
on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Global Certificate but this does
not affect any right or remedy of any person which exists or is available apart from that Act.
This Global Certificate
and any non-contractual obligations arising out of or in connection with it is governed by, and shall be construed in accordance
with, English law.
This Global Certificate
shall not be valid unless authenticated by Elavon Financial Services Limited as Principal Paying Agent.
IN WITNESS whereof the
Issuer has caused this Global Certificate to be signed on its behalf.
BURFORD CAPITAL PLC
Issued in London, England
on 19 August, 2014.
Certificate of authentication
This Global Certificate
is duly authenticated
without recourse, warranty
or liability.
Duly authorised for
and on behalf of
Elavon Financial Services
Limited
as Principal Paying Agent
SCHEDULE
Outstanding Principal
Amount
The following (i) exchanges of this Global
Certificate for Definitive Certificates (only in the limited circumstances set forth in this Global Certificate), (ii) payments
of any redemption amount in respect of this Global Certificate and/or (iii) cancellations of interests in this Global Certificate
have been made, resulting in the principal amount outstanding hereof being the amount specified in the latest entry in the fourth
column:
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Date
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Amount of increase/ decrease in outstanding
principal amount of this Global Certificate
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Reasons for increase/ decrease in outstanding
principal amount of this Global Certificate (initial issue, cancellation, redemption or payment)
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Outstanding principal amount of this Global
Certificate following such increase/ decrease
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Notation made by or on behalf of the Principal Paying Agent
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Schedule
2
Form of
Definitive Certificate and Conditions of the Bonds
Part
1
Form of
Definitive Certificate
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[£100]
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[ISIN: XS1088905093] [SERIES]
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[SERIAL NO.]
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BURFORD CAPITAL PLC
(Incorporated with
limited liability under the laws of England and Wales with registered number 09077893)
£90,000,000 6.50 PER CENT.
GUARANTEED BONDS DUE 19 AUGUST 2022
unconditionally and irrevocably
guaranteed
as to payment of principal
and interest by
BURFORD CAPITAL LIMITED
(Incorporated with
limited liability under the laws of Guernsey with registered number 50877)
and any Subsidiary of
Burford Capital Limited which becomes a Guarantor from time to time
The issue of the Bonds
was authorised by a resolution of the Board of Directors of Burford Capital PLC (the Issuer) passed on 16 July, 2014 and
the giving of the guarantee in respect of the Bonds was authorised by a resolution of the Board of Directors of Burford Capital
Limited (BCL) passed on 16 July, 2014.
This Bond forms one of
a series of Bonds constituted by a Trust Deed (the Trust Deed) dated 19 August, 2014 made between the Issuer, the Guarantor
and U.S. Bank Trustees Limited as trustee for the holders of the Bonds and issued as Registered Bonds in the denomination of £100
each, in an aggregate principal amount of £90,000,000.
THIS IS TO CERTIFY
that
is/are the registered holder(s) of one of the above-mentioned Registered Bonds, such Bond being in the denomination of
£100 (One hundred Pounds Sterling) and is/are entitled on the Interest Payment Date (as defined in Condition 6
(Interest) endorsed hereon) falling on 19 August, 2022 (or on such earlier date as the principal sum hereinafter
mentioned may become repayable in accordance with the Conditions endorsed hereon) to the repayment of such principal sum
of:
£100 (One hundred
Pounds Sterling)
together with such other
amounts (if any) as may be payable, all subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
Interest at rates determined
in accordance with the said Conditions is payable on the said principal sum six-monthly in arrear on 19 February and 19 August
in each year, subject to and in accordance with the said Conditions and the provisions of the Trust Deed.
IN WITNESS whereof
this Registered Bond has been executed on behalf of the Issuer.
BURFORD CAPITAL PLC
Dated as of 19 August,
2014.
Issued in London, England.
Certificate of authentication
This Bond is duly authenticated
without recourse, warranty
or liability.
Duly authorised
for and on behalf of
Elavon Financial Services
Limited
as Registrar
FORM OF
TRANSFER OF REGISTERED BOND
FOR VALUE RECEIVED the
undersigned hereby sell(s), assign(s) and transfer(s) to
(Please print or type
name and address (including postal code) of transferee)
£100 principal
amount of this Bond and all rights hereunder, hereby irrevocably constituting and appointing ________________________as attorney to transfer such principal
amount of this Bond in the register maintained by BURFORD CAPITAL PLC with full power of substitution.
Date:
____________________________ [20_________]
N.B.:
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1.
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This form of transfer must be accompanied by such documents, evidence and information as may be
required pursuant to the Conditions and must be executed under the hand of the transferor or, if the transferor is a corporation,
either under its common seal or under the hand of two of its officers duly authorised in writing and, in such latter case, the
document so authorising such officers must be delivered with this form of transfer.
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2.
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The signature(s) on this form of transfer must correspond with the name(s) as it/they appear(s)
on the face of this Bond in every particular, without alteration or enlargement or any change whatever.
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Part
2
Conditions
of the Bonds
The sterling denominated
6.50 per cent. Guaranteed Bonds due 19
August 2022 (the Bonds, which
expression shall in these Conditions, unless the context otherwise requires, include any further bonds issued pursuant to Condition
18 and forming a single series with the Bonds of Burford Capital PLC (the Issuer)) are constituted by a Trust Deed dated
the Issue Date (the Trust Deed) made between the Issuer, Burford Capital Limited (BCL) as guarantor and U.S. Bank
Trustees Limited (the Trustee, which expression shall include its successor(s)) as trustee for the holders of the Bonds
(the Bondholders). References in these Conditions to the Guarantors shall be references to BCL and each Subsidiary
of BCL which becomes a Guarantor pursuant to Condition 4.3 but shall not include any Subsidiary of BCL which has ceased to be a
Guarantor pursuant to Condition 4.4.
The statements in these
Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed. Copies of the
Trust Deed and the Agency Agreement dated the Issue Date (the Agency Agreement) made between the Issuer, BCL, the Registrar,
the initial Transfer Agent, the initial Paying Agent and the Trustee are available for inspection during normal business hours
by the Bondholders at the registered office for the time being of the Trustee, being at the date of issue of the Bonds at 125 Old
Broad Street, London EC2N 1AR and at the specified office of each of the Paying Agents. The Bondholders are entitled to the benefit
of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to
them.
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1.
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FORM, DENOMINATION AND TITLE
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1.1
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Form and
Denomination
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The Bonds are
issued in registered form in amounts of £100 (referred to as the principal amount of a Bond). A certificate (each
a Certificate) will be issued to each Bondholder in respect of its registered holding of Bonds. Each Certificate will be
numbered serially with an identifying number which will be recorded on the relevant Certificate and in the register of Bondholders
which the Issuer will procure to be kept by the Registrar.
Title to the
Bonds passes only by registration in the register of Bondholders. The holder of any Bond will (except as otherwise required by
law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership,
trust or any interest or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be
liable for so treating the holder. In these Conditions Bondholder and (in relation to a Bond) holder means the person
in whose name a Bond is registered in the register of Bondholders.
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2.
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TRANSFERS OF BONDS AND ISSUE OF CERTIFICATES
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A Bond may
be transferred by depositing the Certificate issued in respect of that Bond, with the form of transfer on the back duly completed
and signed, at the specified office of any Transfer Agent.
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2.2
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Delivery of new Certificates
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Each new Certificate
to be issued upon transfer of Bonds will, within five business days of receipt by the relevant Transfer Agent of the duly completed
form of transfer endorsed on the relevant Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Bond
to the address specified in the form of transfer. For the purposes of this Condition, business day shall mean a day on which
banks are open for business in the city in which the specified office of the Transfer Agent with whom a Certificate is deposited
in connection with a transfer is located.
Where some
but not all of the Bonds in respect of which a Certificate is issued are to be transferred a new Certificate in respect of the
Bonds not so transferred will, within five business days of receipt by the relevant Transfer Agent of the original Certificate,
be mailed by uninsured mail at the risk of the holder of the Bonds not so transferred to the address of such holder appearing on
the register of Bondholders or as specified in the form of transfer.
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2.3
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Formalities free of charge
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Registration
of transfer of Bonds will be effected without charge by or on behalf of the Issuer or any Transfer Agent but upon payment (or the
giving of such indemnity as the Issuer or the relevant Transfer Agent may reasonably require) in respect of any tax or other governmental
charges which may be imposed in relation to such transfer.
No Bondholder
may require the transfer of a Bond to be registered during the period of 15 days ending on the due date for any payment of principal,
premium or interest on that Bond.
All transfers
of Bonds and entries on the register of Bondholders will be made subject to the detailed regulations concerning transfer of Bonds
scheduled to the Trust Deed. The regulations may be changed by the Issuer with the prior written approval of the Transfer Agents
and the Trustee. A copy of the current regulations will be mailed (free of charge) by the Registrar to any Bondholder who requests
one.
The Bonds are
direct, unconditional and (subject to the provisions of Condition 5.1) unsecured obligations of the Issuer and (subject as provided
above) rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and
unsubordinated obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by
applicable laws relating to creditors' rights.
The payment
of the principal and interest in respect of the Bonds and all other moneys payable by the Issuer under or pursuant to the Trust
Deed has been jointly and severally unconditionally and irrevocably guaranteed by BCL (such guarantee together with any additional
guarantees provided pursuant to Condition 4.3, the Guarantee) in the Trust Deed.
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4.2
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Status of the Guarantee
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The obligations
of each Guarantor under the Guarantee constitute direct, unconditional and (subject to the provisions of Condition 5.1) unsecured
obligations of such Guarantor and (subject as provided above) rank and will rank pari passu with all other outstanding unsecured
and unsubordinated obligations of such Guarantor, present and future, but, in the event of insolvency, only to the extent permitted
by applicable laws relating to creditors' rights.
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4.3
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Addition of Subsidiary
Guarantors
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Without prejudice
to Condition 5, if any Subsidiary of BCL (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate (without
duplication) amounts to more than £2,000,000 (or its equivalent in any other currency), BCL covenants that it shall procure
that such Subsidiary shall as soon as reasonably practicable, but in any event no later than 60 days after the date on which it
incurs such Financial Indebtedness, provide a Guarantee in respect of the Trust Deed and the Bonds by procuring the delivery to
the Trustee of a deed of accession substantially in the form scheduled to the Trust Deed or otherwise as the Trustee may agree,
duly executed, and relevant legal opinions having been delivered to the Trustee in accordance with the Trust Deed.
Notice of any
addition of a Subsidiary Guarantor (as defined below) pursuant to this Condition 4.3 will promptly be given by the Issuer to the
Bondholders in accordance with Condition 14.
Upon execution
of the deed of accession referred to above and relevant legal opinions having been delivered to the Trustee (and subject to Condition
4.4) the relevant acceding Subsidiary shall be referred to as a Subsidiary Guarantor.
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4.4
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Release of Subsidiary
Guarantors
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A Subsidiary
Guarantor which has Financial Indebtedness which in aggregate (without duplication) amounts to £2,000,000 (or its equivalent
in any other currency) or less shall be immediately, automatically and (subject to Condition 4.3) irrevocably released and relieved
of all its future obligations under the Guarantee and all of its future obligations as a Subsidiary Guarantor under the Trust Deed
upon BCL giving written notice to the Trustee signed by two directors of BCL or by a director and the secretary of BCL. Such notice
must also contain the following certifications:
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(i)
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that no Event of Default or Potential Event of Default (as defined in the Trust Deed) is continuing;
and
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(ii)
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that such Subsidiary Guarantor has Financial Indebtedness which in aggregate (without duplication)
amounts to £2,000,000 (or its equivalent in any other currency) or less.
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Neither the
Issuer, BCL nor any Subsidiary Guarantor will be required to execute or provide any other document in relation to any release pursuant
to this Condition 4.4 but, if the Issuer requests in writing, the Trustee shall (at the expense of the Issuer) enter into any documentation
in relation to the release of any Subsidiary Guarantor which the Issuer (acting reasonably) considers necessary or desirable and
in a form satisfactory to the Trustee to evidence the release of that Subsidiary Guarantor, provided that, the Trustee shall not
be obliged to enter into any documentation which, in the sole opinion of the Trustee, would have the effect of:
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(i)
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exposing the Trustee to any liability against which it has not been indemnified and/or secured
and/or pre-funded to its satisfaction; or
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(ii)
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increasing or imposing new and/or additional obligations or duties, or reducing the protections,
of the Trustee in the Trust Deed, the Agency Agreement and the Bonds.
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Notice of
any release of a Subsidiary Guarantor pursuant to this Condition 4.4 will promptly be given by the Issuer to the Bondholders in
accordance with Condition 14.
If any Subsidiary
of BCL released from the Guarantee as described above subsequently has Financial Indebtedness which in aggregate (without duplication)
amounts to more than £2,000,000 (or its equivalent in any other currency) at any time after such release, such Subsidiary
of BCL shall (unless it is an Excluded Subsidiary) be required to provide a Guarantee as described in Condition 4.3.
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4.5
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No Requirement to monitor
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The Trustee
shall not be obliged to monitor compliance by BCL with Conditions 4.3 or 4.4 and shall have no liability to any person for not
doing so. The Trustee shall be entitled to rely without further enquiry or evidence, without liability to any person, on any notice
provided by BCL in relation to this Condition 4, and until it receives such notice shall be entitled to assume that no other Subsidiary
of BCL (other than an Excluded Subsidiary) has Financial Indebtedness which in aggregate (without duplication) amounts to more
than £2,000,000 (or its equivalent in any other currency).
So long as
any of the Bonds remain outstanding (as defined in the Trust Deed):
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(a)
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the Issuer will not, create, assume or permit to subsist any mortgage, charge, lien, pledge or
other security interest (each a Security Interest) upon, or with respect to, the whole or any part of its present or future
business, undertaking, assets or revenues (including any uncalled capital) to secure any Financial Indebtedness of any person other
than an Excluded Subsidiary1 unless the Issuer, in
the case of the creation of a Security Interest, before or at the same time and, in any other case, promptly, takes any and all
action necessary to ensure that:
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(i)
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all amounts payable by it under the Bonds and the Trust Deed are secured by the Security Interest
equally and rateably with the Financial Indebtedness to the satisfaction of the Trustee; or
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(ii)
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such other Security Interest or guarantee or other arrangement (whether or not it includes the
giving of a Security Interest) is provided either (A) as the Trustee in its absolute discretion deems not materially less beneficial
to the interests of the Bondholders or (B) as is approved by an Extraordinary Resolution (as defined in the Trust Deed) of the
Bondholders;
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(b)
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no Guarantor will, and each Guarantor will procure, so far as it can by the proper exercise of
voting and other rights or powers of control exercisable by it in relation to its Subsidiaries that none of its Subsidiaries (other
than Excluded Subsidiaries) will, create, assume or permit to subsist any Security Interest upon, or with respect to, the whole
or any part of the present or future business, undertaking, assets or revenues (including any uncalled capital) of such Guarantor
and/or any of its respective Subsidiaries (other than Excluded Subsidiaries) to secure any Financial Indebtedness of any person
other than an Excluded Subsidiary1 unless the relevant Guarantor, in the case of the creation of a Security Interest,
before or at the same time and, in any other case, promptly, takes any and all action necessary to ensure that:
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1
In relation to Financial Indebtedness of Excluded Subsidiaries please see Condition 5.1(c) below.
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(i)
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all amounts payable by it under the Guarantee are secured by the Security Interest equally and
rateably with the Financial Indebtedness to the satisfaction of the Trustee; or
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(ii)
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such other Security Interest or guarantee or other arrangement (whether or not it includes the
giving of a Security Interest) is provided either (A) as the Trustee in its absolute discretion deems not materially less beneficial
to the interests of the Bondholders or (B) as is approved by an Extraordinary Resolution of the Bondholders; and
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(c)
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neither the Issuer nor any Guarantor will, and each Guarantor will procure, so far as it can by
the proper exercise of voting and other rights or powers of control exercisable by it in relation to its Subsidiaries that none
of its Subsidiaries (other than Excluded Subsidiaries) will:
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(i)
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create, assume or permit to subsist any Security Interest upon, or with respect to, the whole or
any part of the present or future business, undertaking, assets or revenues (including any uncalled capital) of the Issuer, any
Guarantor and/or any of their respective Subsidiaries (other than Excluded Subsidiaries) to secure any Financial Indebtedness of
any Excluded Subsidiary; or
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(ii)
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create, assume or permit to subsist any guarantee or indemnity of any Financial Indebtedness of
any Excluded Subsidiary.
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So long as
any Bond remains outstanding (as defined in the Trust Deed), BCL shall ensure that, as at each Reference Date the Leverage Ratio
is no more than 1:2.
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5.3
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Compliance Certificate
|
BCL shall,
concurrently with the delivery of each of the annual and semi-annual Consolidated Financial Statements referred to in Condition
5.4, provide to the Trustee a Directors’ Certificate confirming compliance with the covenant contained in Condition 5.2 with
respect to the most recent Reference Date.
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5.4
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Financial Information
|
BCL has agreed
in the Trust Deed, so long as any of the Bonds remain outstanding, to supply to the Trustee:
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(a)
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as soon as they may become available, but in any event within six months of its most recent financial
year-end, a copy of its audited Consolidated Financial Statements for such financial year, together with the report thereon of
BCL’s independent auditors; and
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(b)
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as soon as they may become available, but in any event within three months of the end of the first
half of each financial year, a copy of its unaudited Consolidated Financial Statements for such period.
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5.5
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No Requirement to Monitor
|
The Trustee shall not be obliged
to review any Consolidated Financial Statements provided to it pursuant to Condition 5.4, nor to monitor the Leverage Ratio on
any Reference Date for the purposes of Condition 5.2.
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6.1
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Interest Rate and Interest Payment Dates
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The Bonds bear
interest from (and including) 19 August 2014
at the rate of 6.50 per cent. per annum, payable
semi-annually in arrear on 19 February and
19 August (each an Interest Payment Date)
in each year until (and including) the Maturity Date. The first payment (for the period from (and including) 19
August 2014 to (but excluding) 19 February
2015 and amounting to £3.25
per £100 principal amount of Bonds) shall be made on 19
February 2015.
Each Bond will
cease to bear interest from (and including) its due date for redemption unless upon due presentation payment of the principal in
respect of the Bond is improperly withheld or refused or unless default is otherwise made in respect of payment, in which event
interest shall continue to accrue as provided in the Trust Deed.
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6.3
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Calculation of Broken Interest
|
When interest
is required to be calculated in respect of a Bond for a period of less than a full half-year, it shall be calculated by applying
the rate of interest on the Bonds to the denomination of the Bonds and multiplying the sum by the Day Count Fraction, and rounding
the resultant figure to the nearest pence wherein the Day Count Fraction is calculated on the basis of (a) the actual number
of days in the period from (and including) the date from which interest begins to accrue (the Accrual Date) to (but excluding)
the date on which it falls due divided by (b) the actual number of days from (and including) the Accrual Date to (but excluding)
the next following Interest Payment Date multiplied by two.
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6.4
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Interest Rate Step-up
|
If following the Issue Date a
Step-Up Event occurs, the rate of interest payable on the Bonds under Condition 6.1 shall increase by 1.00 per cent. per annum
from (and including) the Interest Payment Date following the occurrence of such Step-Up Event and the Bonds shall thereafter bear
interest at an increased rate of interest of 7.50
per cent. per annum.
Notice of
any increase in the rate of interest pursuant to this Condition 6.4 will promptly be given by the Issuer to the Bondholders in
accordance with Condition 14.
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7.1
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Payments in respect of Bonds
|
Payments of
principal and interest in respect of each Bond will be made by transfer to the registered account of the Bondholder or by a cheque
in Sterling drawn on a bank that processes payment in Sterling mailed to the registered address of the Bondholder if it does not
have a registered account. Payments of principal and payments of interest due otherwise than on an Interest Payment Date will only
be made against surrender of the relevant Certificate at the specified office of any of the Paying Agents. Interest on Bonds due
on an Interest Payment Date will be paid to the holder shown on the register of Bondholders at the close of business on the date
(the record date) being the fifteenth day before the relevant Interest Payment Date.
For the
purposes of this Condition, a Bondholder's registered account means the Sterling account maintained by or on behalf of it
with a bank that processes payments in Sterling, details of which appear on the register of Bondholders at the close of
business, in the case of principal and interest due otherwise than on an Interest Payment Date, on the second Payment
Business Day before the due date for payment and, in the case of interest due on an Interest Payment Date, on the relevant
record date, and a Bondholder's registered address means its address appearing on the register of Bondholders at that
time.
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7.2
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Payments subject to Applicable Laws
|
Payments will
be subject in all cases, to any fiscal or other laws and regulations applicable thereto, but without prejudice to the provisions
of Condition 9, in the place of payment. Any such amounts withheld or deducted will be treated as paid for all purposes under the
Bonds, and no additional amounts will be paid on the Bonds with respect to any such withholding or deduction.
No
commissions or expenses shall be charged to the Bondholders in respect of any payments made in accordance with this Condition.
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7.4
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Payment on Payment Business Days
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Where payment
is to be made by transfer to a registered account, payment instructions (for value the due date or, if that is not a Payment Business
Day, for value the first following day which is a Payment Business Day) will be initiated and, where payment is to be made by cheque,
the cheque will be mailed, on the Business Day preceding the due date for payment or, in the case of a payment of principal or
a payment of interest due otherwise than on an Interest Payment Date, if later, on the Business Day on which the relevant Certificate
is surrendered at the specified office of a Paying Agent.
Bondholders
will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due date
is not a Payment Business Day, if the Bondholder is late in surrendering its Certificate (if required to do so) or if a cheque
mailed in accordance with this Condition arrives after the due date for payment.
If
the amount of principal or interest which is due on the Bonds is not paid in full, the Registrar will annotate the register of
Bondholders with a record of the amount of principal or interest in fact paid.
The names of
the initial Agents and their initial specified offices are set out at the end of these Conditions. The Issuer and the Guarantors
reserve the right, subject to the prior written approval of the Trustee, at any time to vary or terminate the appointment of any
Agent and to appoint additional or other Agents provided that:
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(a)
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there will at all times be a Principal Paying Agent, a Transfer Agent and a Registrar;
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(b)
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there will at all times be at least one Paying Agent (which may be the Principal Paying Agent)
having its specified office in a European city; and
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(c)
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the Issuer undertakes that it will ensure that it maintains a Paying Agent in a Member State of
the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing
or complying with, or introduced in order to conform to, such Directive.
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Notice of any
termination or appointment and of any changes in specified offices will be given to the Bondholders promptly by the Issuer in accordance
with Condition 14.
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8.
|
REDEMPTION AND PURCHASE
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8.1
|
Redemption at Maturity
|
Unless previously
redeemed or purchased and cancelled as provided below, the Issuer will redeem the Bonds at their principal amount on the Maturity
Date.
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8.2
|
Redemption for Taxation Reasons
|
If the Issuer
satisfies the Trustee immediately before the giving of the notice referred to below that:
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|
(a)
|
as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction,
or any change in the application or official interpretation of the laws or regulations of a Relevant Jurisdiction, which change
or amendment becomes effective after (i) in the case of the Issuer or BCL, the Issue Date; or (ii) in the case of any Subsidiary
Guarantor, the first day on which such Subsidiary Guarantor becomes a Guarantor pursuant to Condition 4.3, on the next Interest
Payment Date either the Issuer would be required to pay additional amounts as provided or referred to in Condition 9.1 or any Guarantor
could, if the Guarantee was called, be required to pay such additional amounts ; and
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(b)
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the requirement cannot be avoided by the Issuer or any Guarantor taking reasonable measures available
to them (including by BCL procuring payment by the Issuer, itself or any other Guarantor),
|
the Issuer
may at its option, having given not less than 30 nor more than 60 days' notice to the Bondholders in accordance with Condition
14 (which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all the Bonds, but not some only,
at any time at their principal amount together with interest accrued to (but excluding) the date of redemption, provided that no
such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may
be, the relevant Guarantor would be required to pay such additional amounts, were a payment in respect of the Bonds then due. Prior
to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee a Directors’
Certificate from the Issuer or, as the case may be, the relevant Guarantor stating that the requirement referred to in (a) above
will apply on the next Interest Payment Date and cannot be avoided by the Issuer or the Guarantors taking reasonable measures available
to them, and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions
precedent set out above, in which event it shall be conclusive and binding on the Bondholders.
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8.3
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Redemption at the Option of the Issuer
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The Issuer
may, having given:
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(a)
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not less than 15 nor more than 30 days' notice to the Bondholders in accordance with Condition
14; and
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(b)
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notice to the Registrar, the Trustee and the Principal Paying Agent not less than 15 days before
the giving of the notice referred to in (a);
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(which notices
shall be irrevocable and shall specify the date fixed for redemption), redeem all (but not some only) of the Bonds, at any time
prior to the Maturity Date at an amount (together with interest accrued to (but excluding) the date of redemption) being the higher
of:
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(i)
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100 per cent. of the principal amount of the Bonds; and
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(ii)
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the principal amount of the Bonds multiplied by the price, as reported to the Issuer and the Trustee
by the Financial Adviser, at which the Gross Redemption Yield on the Bonds on the Make-Whole Reference Date is equal to the Gross
Redemption Yield (determined by reference to the middle market price) at 11.00 a.m. (London time) on the Make-Whole Reference Date
of the Reference Bond, plus 1.00 per cent., all as determined by the Financial Adviser.
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References
to the payment of principal in respect of the Bonds in these Conditions shall, to the extent relevant, be deemed to include
any premium payable pursuant to this Condition 8.3.
The Issuer,
any Guarantor or any other member of the Group may at any time purchase Bonds in any manner and at any price. Such Bonds may be
held, reissued or resold, or at the option of the Issuer or BCL, surrendered to any Paying Agent for cancellation.
All Bonds which
are redeemed or purchased by the Issuer, any Guarantor or any member of the Group and surrendered for cancellation in accordance
with Condition 8.4 above will forthwith be cancelled, and accordingly may not be held, reissued or resold.
Upon the expiry
of any notice as is referred to in Conditions 8.2 or 8.3 above the Issuer shall be bound to redeem the Bonds to which the notice
refers in accordance with the terms of such Condition.
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9.1
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Payment without Withholding
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All payments
in respect of the Bonds by or on behalf of the Issuer or any Guarantor shall be made without withholding or deduction for, or on
account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) imposed
or levied by or on behalf of any of the Relevant Jurisdictions, unless the withholding or deduction of the Taxes is required by
law. In that event, the Issuer or, as the case may be, the relevant Guarantor will pay such additional amounts as may be necessary
in order that the net amounts received by the Bondholders after the withholding or deduction shall equal the respective amounts
which would have been receivable in respect of the Bonds in the absence of the withholding or deduction; except that no additional
amounts shall be payable in relation to any payment in respect of any Bond:
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(a)
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presented for payment by or on behalf of, a holder who is liable to the Taxes in respect of the
Bond by reason of his having some connection with any Relevant Jurisdiction other than the mere holding of the Bond; or
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(b)
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where such withholding or deduction is imposed on a payment to an individual and is required to
be made pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to
conform to, such Directive; or
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(c)
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presented for payment by or on behalf of a holder who would have been able to avoid such withholding
or deduction by presenting the relevant Bond to another Paying Agent in a Member State of the European Union; or
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(d)
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where such withholding or deduction is imposed in respect of FATCA; or
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(e)
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where such withholding or deduction for United States federal income taxes would not have been
required but for the failure of the holder or beneficial owner to provide upon request a valid U.S. IRS Form W-8 or W-9 (or successor
forms) or other documentation as required by official IRS guidance; or
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(f)
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presented for payment more than 30 days after the Relevant Date except to the extent that a holder
would have been entitled to additional amounts on presenting the same for payment on the last day of the period of 30 days assuming,
whether or not such is in fact the case, that day to have been a Payment Business Day.
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Any reference
in these Conditions to any amounts in respect of the Bonds shall be deemed also to refer to any additional amounts which may be
payable under this Condition or under any undertakings given in addition to, or in substitution for, this Condition pursuant to
the Trust Deed.
Claims in respect
of principal and interest will become prescribed unless made within periods of 10 years (in the case of principal) and five years
(in the case of interest) from the Relevant Date in respect of the Bonds subject to the provisions of Condition 7.
The Trustee
at its discretion may, and if so requested in writing by the holders of at least one-fifth in principal amount of the Bonds then
outstanding or if so directed by an Extraordinary Resolution of the Bondholders shall (subject in each case to being indemnified
and/or secured and/or pre-funded to its satisfaction) (but, in the case of the happening of any of the events described in subparagraphs
(b) to (d) inclusive (other than the winding up or dissolution of the Issuer, any Guarantor or any of the Material Subsidiaries),
(e) to (g) inclusive and (k) and (l) below, only if the Trustee shall have certified in writing to the Issuer and the Guarantors
that such event is, in its opinion, materially prejudicial to the interests of the Bondholders) give notice to the Issuer and the
Guarantors that the Bonds are, and they shall accordingly forthwith become, immediately due and repayable at their principal amount,
together with accrued interest as provided in the Trust Deed, in any of the following events (Events of Default):
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(a)
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if default is made in the payment of any principal or interest due in respect of the Bonds or any
of them and the default continues for a period of 7 days in the case of principal or 14 days in the case of interest; or
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(b)
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if the Issuer or any Guarantor fails to perform or observe any of its other obligations under these
Conditions or the Trust Deed and (except in any case where the Trustee considers the failure to be incapable of remedy, when no
continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days (or such longer
period as the Trustee may permit) following the service by the Trustee on the Issuer or such Guarantor (as the case may be) of
notice requiring the same to be remedied; or
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(c)
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if
(i) any Financial Indebtedness of the Issuer, any Guarantor or any of Material Subsidiaries
becomes due and repayable prematurely or becomes capable of being declared due and repayable
prematurely in each case by reason of an event of default (however described); or (ii)
the Issuer, any Guarantor or any of the Material Subsidiaries fails to make any payment
in respect of any Financial Indebtedness on the due date for payment as extended by any
originally applicable grace period; provided that the amount of Financial Indebtedness
in respect of which one or more of the events mentioned in this paragraph 11.1(c)
have occurred and are continuing, individually or in aggregate exceeds £2,000,000
(or its equivalent in any other currency); or
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(d)
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(i) if any order is made by any competent court or resolution is passed for the winding up or dissolution
of the Issuer, any Guarantor or any of the Material Subsidiaries; or (ii) if the Issuer, any Guarantor or the Group ceases or threatens
to cease to carry on all or substantially all of its business or operations, save (in either case) (x) for the purposes of and
followed by a reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation on terms approved in writing
by the Trustee or by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material Subsidiary, for the purposes
of and followed by a Permitted Reorganisation; or
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(e)
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the Issuer, any Guarantor or any of the Material Subsidiaries is (or is deemed (other than where
a demand is made for less than £1,000,000 under section 123(l)(a) of the Insolvency Act 1986) by law or a court to be) insolvent
or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a material part of its
debts;
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(f)
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if:
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(i)
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proceedings are initiated against the Issuer, any Guarantor or any of the Material Subsidiaries
under any applicable liquidation, insolvency, composition, reorganisation or other similar laws or an application is made (or documents
filed with a court) for the appointment of an administrative or other receiver, manager, administrator or other similar official,
or an administrative or other receiver, manager, administrator or other similar official is appointed, in relation to the Issuer,
any Guarantor or any of the Material Subsidiaries or, as the case may be, in relation to the whole or any material part of the
undertaking or assets of any of them or an encumbrancer takes possession of the whole or any material part of the undertaking or
assets of any of them, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out
or put in force against the whole or any material part of the undertaking or assets of any of them, and
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(ii)
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in any such case (other than the appointment of an administrator or an administrative receiver
appointed following presentation of a petition for an administration order) unless initiated by the relevant company, is not discharged
or stayed within 45 days,
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save (x) for
the purposes of and followed by a reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation on terms
approved in writing by the Trustee or by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material Subsidiary,
for the purposes of and followed by a Permitted Reorganisation; or
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(g)
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if the Issuer, any Guarantor or any of the Material Subsidiaries (or their respective directors or shareholders) initiates or
consents to judicial proceedings relating to itself under any applicable liquidation, insolvency, composition, reorganisation
or other similar laws (including the obtaining of a moratorium) or makes a conveyance or assignment for the benefit of, or enters
into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened
to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors) save (in
any case) (x) for the purposes of and followed by a reconstruction, amalgamation, reorganisation, restructuring, merger or consolidation
on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Bondholders, or (y) in the case of a Material
Subsidiary, for the purposes of and followed by a Permitted Reorganisation; or
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(h)
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any action, condition or thing (including the obtaining or effecting of any necessary consent,
approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled
or done in order (i) to enable the Issuer or any Guarantor lawfully to enter into, exercise their respective rights and perform
and comply with their respective obligations under the Bonds and the Trust Deed; (ii) to ensure that those obligations are legally
binding and enforceable; and (iii) to make the Bonds and the Trust Deed, as the case may be, admissible in evidence in the courts
of England is not taken, fulfilled or done; or
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(i)
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if the Guarantee ceases to be, or is claimed by the Issuer or any Guarantor not to be, in full
force and effect; or
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(j)
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it is or will become unlawful for the Issuer or any Guarantor to perform or comply with any one
or more of its obligations under the Conditions; or
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(k)
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if the Issuer or any Subsidiary Guarantor ceases to be a Subsidiary of BCL; or
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(l)
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if any event occurs which, under the laws of any Relevant Jurisdiction, has or may have, in the
Trustee's opinion, an analogous effect to any of the events referred to in subparagraphs (d) to (g) above.
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A report by
two directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion a
Subsidiary of BCL is or is not or was or was not at any particular time or throughout any specified period a Material Subsidiary
may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence
of manifest error, be conclusive and binding on all parties.
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12.1
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Enforcement by the Trustee
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The Trustee
may at any time, at its discretion and without notice, take such proceedings and/or other steps or action (including lodging an
appeal in any proceedings) against or in relation to the Issuer and/or any one or more of the Guarantors as it may think fit to
enforce the provisions of the Trust Deed and the Bonds or otherwise, but it shall not be bound to take any such proceedings or
other steps or action unless (a) it has been so directed by an Extraordinary Resolution of the Bondholders or so requested in writing
by the holders of at least one-fifth in principal amount of the Bonds then outstanding and (b) it has been indemnified and/or secured
and/or pre-funded to its satisfaction.
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12.2
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Limitation on Trustee actions
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The Trustee
may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion
based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may
also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction or if, in its opinion
based upon such legal advice, it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable
law in that jurisdiction or if it is determined by any court or other competent authority in that jurisdiction that it does not
have such power.
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12.3
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Enforcement by the Bondholders
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No Bondholder
shall be entitled to (i) take any steps or action against the Issuer or any Guarantor to enforce the performance of any of the
provisions of the Trust Deed or the Bonds or (ii) take any other proceedings (including lodging an appeal in any proceedings) in
respect of or concerning the Issuer or any Guarantor, in each case unless the Trustee, having become bound so to take any such
action, steps or proceedings, fails so to do within a reasonable period and the failure shall be continuing.
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13.
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REPLACEMENT OF Certificates
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Should any
Certificate be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Registrar upon payment
by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnify as the
Issuer and the Guarantors may reasonably require. Mutilated or defaced Certificates must be surrendered before replacements will
be issued.
All notices
to the Bondholders will be valid if mailed to them at their respective addresses in the register of Bondholders maintained by the
Registrar. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations
of any stock exchange or the relevant authority on which the Bonds are for the time being listed. Any such notice will be deemed
to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the second
day after being so mailed or on the date of publication or, if so published more than once or on different dates, on the date of
first publication.
The Trustee
may, without the consent of the Bondholders, agree with the Issuer and the Guarantors to the substitution in place of the Issuer
(or of any previous substitute under this Condition) as the principal debtor under the Bonds and the Trust Deed, of BCL or any
other Subsidiaries of BCL subject to:
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(a)
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the Bonds remaining jointly and severally, unconditionally and irrevocably guaranteed by the Guarantors
(other than a Guarantor substituted in place of the Issuer);
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(b)
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the Trustee being satisfied that the substitution is not materially prejudicial to the interests
of the Bondholders; and
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(c)
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certain other conditions set out in the Trust Deed being complied with.
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16.
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MEETINGS OF BONDHOLDERS, MODIFICATION, WAIVER, AUTHORISATION AND DETERMINATION
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16.1
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Meetings of Bondholders
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The Trust
Deed contains provisions for convening meetings of the Bondholders to consider any matter affecting their interests,
including the modification or abrogation by Extraordinary Resolution of any of these Conditions or any of the provisions of
the Trust Deed. The quorum at any meeting for passing an Extraordinary Resolution will be one or more persons present holding
or representing more than 50 per cent. in principal amount of the Bonds for the time being outstanding, or at any adjourned
such meeting one or more persons present whatever the principal amount of the Bonds held or represented by him or them,
except that, at any meeting the business of which includes any matter defined in the Trust Deed as a Basic Terms
Modification, including the modification or abrogation of certain of the provisions of these Conditions and certain of the
provisions of the Trust Deed, the necessary quorum for passing an Extraordinary Resolution will be one or more persons
present holding or representing not less than two-thirds, or at any adjourned such meeting not less than one-third, of
the principal amount of the Bonds for the time being outstanding. The Trust Deed provides that (i) a resolution passed at a
meeting duly convened and held in accordance with the Trust Deed by a majority consisting of not less than three-fourths of
the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of not less than
three-fourths in principal amount of the Bonds for the time being outstanding or (iii) consent given by way of electronic
consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of
not less than three-fourths in principal amount of the Bonds for the time being outstanding, shall, in each case, be
effective as an Extraordinary Resolution of the Bondholders. An Extraordinary Resolution passed by the Bondholders will be
binding on all Bondholders, whether or not they are present at any meeting and whether or not they voted on the
resolution.
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16.2
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Modification,
Waiver, Authorisation and Determination
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The Trustee
may agree, without the consent of the Bondholders, to any modification of, or to the waiver or authorisation of any breach or proposed
breach of, any of these Conditions or any of the provisions of the Trust Deed or the Agency Agreement, or determine, without any
such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be
treated as such (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests
of the Bondholders) or may agree, without any such consent as aforesaid, to any modification which, in its opinion, is of a formal,
minor or technical nature or to correct a manifest error or an error which is, in the opinion of the Trustee, proven.
16.3
Trustee to have Regard to Interests of Bondholders as a Class
In connection
with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification,
waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Bondholders
as a class but shall not have regard to any interests arising from circumstances particular to individual Bondholders (whatever
their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual
Bondholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected
with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not
be entitled to require, nor shall any Bondholder be entitled to claim, from the Issuer, any Guarantor, the Trustee or any other
person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Bondholders except
to the extent already provided for in Condition 9 and/or any undertaking given in addition to, or in substitution for, Condition
9 pursuant to the Trust Deed.
16.4
Notification to the Bondholders
Any modification,
abrogation, waiver, authorisation, determination or substitution shall be binding on the Bondholders and, unless the Trustee agrees
otherwise, any modification or substitution shall be notified by the Issuer to the Bondholders as soon as practicable thereafter
in accordance with Condition 14.
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17.
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INDEMNIFICATION and protection OF THE TRUSTEE AND ITS CONTRACTING WITH THE ISSUER AND THE GUARANTORs
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17.1
Indemnification and protection of the Trustee
The Trust
Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility and liability towards
the Issuer, the Guarantors and the Bondholders, including (i) provisions relieving it from taking action unless indemnified
and/or secured and/or pre-funded to its satisfaction and (ii) provisions limiting or excluding its liability in certain
circumstances. The Trust Deed provides that, when determining whether an indemnity or any security or pre-funding is
satisfactory to it, the Trustee shall be entitled (i) to evaluate its risk in any given circumstance by considering the
worst-case scenario and (ii) to require that any indemnity or security given to it by the Bondholders or any of them be given
on a joint and several basis and be supported by evidence satisfactory to it as to the financial standing and
creditworthiness of each counterparty and/or as to the value of the security and an opinion as to the capacity, power and
authority of each counterparty and/or the validity and effectiveness of the security.
17.2
Trustee Contracting with the Issuer and the Guarantors
The Trust Deed
also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions
with the Issuer and/or any Guarantor and/or any other member of the Group and to act as trustee for the holders of any other securities
issued or guaranteed by, or relating to, the Issuer and/or any Guarantor and/or any other member of the Group, (b) to exercise
and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as
the case may be, any such trusteeship without regard to the interests of, or consequences for, the Bondholders, and (c) to retain
and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
The Issuer
is at liberty from time to time without the consent of the Bondholders to create and issue further notes or bonds (whether in bearer
or registered form) either (a) ranking pari passu in all respects (or in all respects save for the first payment of interest
thereon) and so that the same shall be consolidated and form a single series with the outstanding notes or bonds of any series
(including the Bonds) constituted by the Trust Deed or any supplemental deed or (b) upon such terms as to ranking, interest, conversion,
redemption and otherwise as the Issuer may determine at the time of the issue. Any further notes or bonds which are to form a single
series with the outstanding notes or bonds of any series (including the Bonds) constituted by the Trust Deed or any supplemental
deed shall, and any other further notes or bonds may (with the consent of the Trustee), be constituted by a deed supplemental to
the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Bondholders and the holders of notes or
bonds of other series in certain circumstances where the Trustee so decides.
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19.
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GOVERNING LAW AND SUBMISSION TO JURISDICTION
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19.1
Governing Law
The Trust Deed
(including the Guarantee), the Bonds and any non-contractual obligations arising out of or in connection with them are governed
by, and will be construed in accordance with, English law.
19.2 Jurisdiction
of English Courts
Each of the
Guarantors has in the Trust Deed, irrevocably agreed (or will be required to agree) for the benefit of the Trustee and the Bondholders
that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with
the Trust Deed or the Bonds (including a dispute relating to any non-contractual obligations arising out of or in connection with
the Trust Deed or the Bonds) and accordingly has submitted (or will be required to submit) to the exclusive jurisdiction of the
English courts.
Each of
the Guarantors has, in the Trust Deed, waived (or will be required to waive) any objection to the courts of England on the
grounds that they are an inconvenient or inappropriate forum. To the extent permitted by law, the Trustee and the Bondholders
may take any suit, action or proceeding arising out of or in connection with the Trust Deed or the Bonds respectively
(including any suit, action or proceedings relating to any non-contractual obligations arising out of or in connection with
the Trust Deed or the Bonds) (together referred to as Proceedings) against the Issuer or
any Guarantor in any other court of competent jurisdiction and concurrent Proceedings in any number of
jurisdictions.
19.3 Appointment
of Process Agent
Each of the
Guarantors incorporated in a jurisdiction other than England and Wales has in the Trust Deed irrevocably and unconditionally appointed
(or will be required to appoint) the Issuer at the latter’s registered office for the time being as its agent for service
or process in England in respect of any Proceedings and has undertaken that in the event of such agent ceasing so to act it will
appoint such other person as the Trustee may approve as its agent for that purpose.
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20.
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RIGHTS OF THIRD PARTIES
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No rights are
conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Bond, but this does
not affect any right or remedy of any person which exists or is available apart from that Act.
In these Conditions:
Business
Day means, in relation to any place, a day on which commercial banks and foreign exchange markets settle payments and are open
for general business (including dealing in foreign exchange and foreign currency deposits) in that place.
Cash and
Cash Equivalents as at any Reference Date shall be equal to the amount recorded as “Cash and cash equivalents”
in the relevant Consolidated Financial Statements; minus (ii) any such “Cash and cash equivalents” to which any Excluded
Subsidiary is beneficially entitled; and (iii) any such “Cash and cash equivalents” upon which there is any Security
Interest.
Cash Management
Investments as at any Reference Date shall be equal to the amount recorded as “Cash management investments at fair value
through profit or loss” in the relevant Consolidated Financial Statements; minus (ii) any such “Cash management investments
at fair value through profit or loss” to which any Excluded Subsidiary is beneficially entitled; and (iii) any such “Cash
management investments at fair value through profit or loss” upon which there is a Security Interest.
Consolidated
Financial Statements means BCL’s audited annual consolidated financial statements or its unaudited semi-annual consolidated
financial statements, as the case may be, including the relevant accounting policies and notes to the accounts in each case prepared
in accordance with IFRS from time to time.
Directors’
Certificate means a certificate addressed to the Trustee, signed on behalf of the Issuer or the relevant Guarantor (as the
case may be) (but without personal liability) by two directors of the Issuer or the relevant Guarantor (as applicable) or any one
director and the secretary of the Issuer or the relevant Guarantor (as applicable).
Excluded
Financial Indebtedness means Financial Indebtedness of any Excluded Subsidiary which is not also Financial Indebtedness of
a member of the Group which is not an Excluded Subsidiary.
A report by
two directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion Financial
Indebtedness is or is not or was or was not at any particular time or throughout any specified period Excluded Financial Indebtedness
may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence
of manifest error, be conclusive and binding on all parties.
Excluded
Subsidiary means Burford Lending LLC and its Subsidiaries, provided that BCL may by irrevocable
notice to the Trustee permanently deem any entity which could otherwise be an Excluded Subsidiary not to be an Excluded Subsidiary
and such entity shall no longer be an Excluded Subsidiary for the purposes of these Conditions.
A report by
two directors of BCL or by a director and the secretary of BCL whether or not addressed to the Trustee that in their opinion a
Subsidiary of BCL is or is not or was or was not at any particular time or throughout any specified period an Excluded Subsidiary
may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence
of manifest error, be conclusive and binding on all parties.
FATCA
means Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (the Code) (including an agreement described
in Section 1471(b) thereof) together with any regulations thereunder or any official interpretations thereof, any intergovernmental
agreement between the US and another jurisdiction facilitating the implementation thereof or any law implementing such an intergovernmental
agreement.
Financial
Adviser means a financial adviser selected by the Issuer after consultation with the Trustee.
Financial
Conduct Authority means the United Kingdom Financial Conduct Authority.
Financial
Indebtedness means any indebtedness (other than indebtedness owed by any member of the Group which is not an Excluded Subsidiary
to another member of the Group which is also not an Excluded Subsidiary) whether or not contingent, for or in respect of:
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(b)
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any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
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(c)
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any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures,
loan stock or any similar instrument;
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(d)
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the amount of any liability in respect of any lease or hire purchase contract which would, in accordance
with IFRS, be treated as a finance or capital lease;
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(e)
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receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse
basis);
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(f)
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any amount raised under any other transaction (including any forward sale or purchase agreement)
having the commercial effect of a borrowing;
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(g)
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any derivative transaction entered into in connection with protection against or benefit from fluctuation
in any rate, index or price (and, when calculating the value of any derivative transaction, only the marked-to-market value shall
be taken into account);
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(h)
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any counter-indemnity obligation in respect of a guarantee, indemnity, bond or any other instrument
issued by a bank or financial institution; and
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(i)
|
the amount of any liability in respect of any guarantee or indemnity for any of the items referred
to in paragraphs (a) to (h) above.
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Gross
Redemption Yield means, with respect to a security, the gross redemption yield on such security, expressed as a percentage
and calculated by the Financial Adviser on the basis set out by the UK Debt Management Office in the paper "Formulae for Calculating
Gilt Prices from Yields", page 4, Section One: Price/Yield Formulae "Conventional Gilts; Double dated and Undated Gilts
with Assumed (or Actual) Redemption on a Quasi-Coupon Date" (published 8 June, 1998, as amended or updated from time to time)
on a semi-annual compounding basis (converted to an annualised yield and rounded up (if necessary) to four decimal places) or on
such other basis as the Trustee may approve.
Group
means BCL and its Subsidiaries taken as a whole.
Group
Net Debt means (i) the aggregate of all Financial Indebtedness of the Group (other than Excluded Financial Indebtedness) at
the relevant time less (ii) the sum of (x) Cash and Cash Equivalents; and (y) Cash Management Investments (other than any Cash
and Cash Equivalents and Cash Management Investments to which any Excluded Subsidiary is beneficially entitled).
Group
Total Assets as at any Reference Date shall be equal to:
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(i)
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the sum of (a) the amount recorded as “Total assets” in the relevant Consolidated Financial
Statements and (b) Uncalled Preference Share Amounts; minus
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(ii)
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the sum (without duplication) of (x) any “Total assets” referred to in (a) above to
which any Excluded Subsidiary is beneficially entitled and (y) any goodwill and intangible assets which are included in the “Total
assets” referred to in (a) above.
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IFRS
means the generally accepted accounting practice and principles applicable to the business BCL conducts, currently International
Financial Reporting Standards.
Issue Date
means 19 August 2014.
Leverage
Ratio means the ratio of:
Make-Whole
Reference Date means the date which is three London Business Days prior to the date fixed for redemption pursuant to Condition
8.3 by the Issuer.
Material
Subsidiary means at any time a Subsidiary (other than an Excluded Subsidiary) of BCL:
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(a)
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whose gross assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent
(or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited consolidated accounts
of BCL and its Subsidiaries relate, are equal to) not less than 5.00 per cent. of the consolidated gross assets of the Group,
all as calculated respectively by reference to the then latest Directors’ Certificate relating to such Subsidiary delivered
to the Trustee in accordance with the relevant provisions of the Trust Deed and the then latest audited consolidated accounts of
BCL and its Subsidiaries, provided that:
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(A)
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in the event that the relevant Subsidiary itself has Subsidiaries which are Excluded Subsidiaries,
the gross assets of such Excluded Subsidiaries are excluded from the calculation of the consolidated gross assets of such Subsidiary;
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(B)
|
the gross assets of all Excluded Subsidiaries are excluded from the calculation of the consolidated
gross assets of the Group; and
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(C)
|
in the case of a Subsidiary of BCL acquired after the end of the financial period to which the
then latest audited consolidated accounts of BCL and its Subsidiaries relate, the reference to the then latest audited consolidated
accounts of BCL and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts for the financial
period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned
accounts as if such Subsidiary had been shown in such accounts by reference to the then latest Directors’ Certificate relating
to such Subsidiary delivered to the Trustee in accordance with the relevant provisions of the Trust Deed, adjusted as deemed appropriate
by BCL; or
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(b)
|
to which is transferred the whole or substantially the whole of the undertaking and assets of a
Subsidiary of BCL which immediately prior to such transfer is a Material Subsidiary, provided that the transferor Subsidiary shall
upon such transfer forthwith cease to be a Material Subsidiary and the transferee Subsidiary shall cease to be a Material Subsidiary
pursuant to this subparagraph (b) on the date on which the consolidated accounts of BCL and its Subsidiaries for the financial
period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary
or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such consolidated accounts
have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after such date,
by virtue of any other applicable provision of this definition; or
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(c)
|
to which is transferred an undertaking or assets which, taken together with the undertaking or
assets of the transferee Subsidiary, represent (or, in the case of the transferee Subsidiary being acquired after the end of the
financial period to which the then latest audited consolidated accounts of BCL and its Subsidiaries relate, are equal to) not less
than 5 per cent. of the consolidated gross assets of the Group, all as calculated as referred to in subparagraph (a) above,
provided that the transferor Subsidiary (if a Material Subsidiary) shall upon such transfer forthwith cease to be a Material Subsidiary
unless immediately following such transfer its undertaking and assets represent (or, in the case aforesaid, are equal to) not less
than 5 per cent. of the consolidated gross assets of the Group, all as calculated as referred to in subparagraph (a) above,
and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to this subparagraph (c) on the date on which
the consolidated accounts of BCL and its Subsidiaries for the financial period current at the date of such transfer have been prepared
and audited but so that such transferor Subsidiary or such transferee Subsidiary may be a Material Subsidiary on or at any time
after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph
(a) above or, prior to or after such date, by virtue of any other applicable provision of this definition,
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all as more
particularly defined in the Trust Deed.
In accordance
with the provisions of the Trust Deed, BCL has agreed to give to the Trustee a Director’s Certificate which provides a list
of Material Subsidiaries (a) on the Issue Date; (b) within three business days after demand by the Trustee therefor and (c) (without
the necessity for such demand) within six months of its most recent financial year-end commencing with the financial period ending
31 December 2014 and within three months of the end of the first half of each financial year commencing with the financial period
ending 30 June 2014.
Maturity
Date means 19 August 2022.
Payment
Business Day means a day (other than a Saturday or Sunday) on which commercial banks are open for business in London and, in
the case of presentation of a Certificate, in the place in which the Certificate is presented.
Permitted
Reorganisation means, in the case of a Material Subsidiary, any reconstruction, amalgamation, reorganisation, restructuring,
merger or consolidation the result of which will be that all or substantially all of the assets and undertaking of such Material
Subsidiary will be transferred to or otherwise vested in the Issuer, any Guarantor or another Subsidiary of BCL (other than an
Excluded Subsidiary).
Rating Agency
means Moody’s Investors Services Limited, Fitch Ratings Ltd. or Standard & Poor’s Credit Market Services Europe
Limited (or any of their respective affiliates).
Reference
Date means such annual or semi-annual date or dates as at which BCL prepares its audited annual Consolidated Financial Statements
or unaudited semi-annual annual Consolidated Financial Statements, as the case may be and as at the Issue Date those are 31 December
and 30 June in each year, respectively.
Reference
Bond means the 4.00 per cent. Treasury
Stock due 2022, or if such stock is no longer
in issue such other UK government stock with a maturity date as near as possible to the Maturity Date as the Financial Adviser
may determine to be appropriate by way of substitution for the 4.00
per cent. Treasury Stock due 2022.
Relevant
Date means the date on which the payment first becomes due but, if the full amount of the money payable has not been received
by the Principal Paying Agent or the Trustee on or before the due date, it means the date on which, the full amount of the money
having been so received, notice to that effect has been duly given to the Bondholders by the Issuer in accordance with Condition
14.
Relevant
Jurisdiction means: (i) in the case of the Issuer, the UK or any political subdivision or any authority thereof or therein
having power to tax; (ii) in the case of BCL, Guernsey or any political subdivision or any authority thereof or therein having
power to tax; and (iii) in the case of any Subsidiary Guarantor, any jurisdiction under the laws of which that Subsidiary Guarantor
for the time being is organised or in which it is treated as resident for tax purposes or any political subdivision or any authority
thereof or therein having power to tax or (in each case) any other jurisdiction or any political subdivision or any authority thereof
or therein having power to tax to which the Issuer or the relevant Guarantor, as the case may be, becomes subject in respect of
payments made by it of principal and interest on the Bonds.
Step-Up Event means that
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(i)
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any member of the Group (other than an Excluded Subsidiary); or
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(ii)
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any Financial Indebtedness of any member of the Group (other than Excluded Financial Indebtedness),
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is assigned a credit rating solicited
by a member of the Group by any Rating Agency and, in either case, the credit rating initially assigned by such Rating Agency is
below:
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(a)
|
Ba3 in the case of Moody’s Investors Services Limited (or any of its affiliates);
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(b)
|
BB- in the case of Fitch Ratings Ltd. (or any of its affiliates); or
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(c)
|
BB- in the case of Standard & Poor’s Credit Market Services Europe Limited (or any of
its affiliates)
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(or, in each case, their respective
equivalent ratings for the time being).
Subsidiary
means a subsidiary within the meaning of Section 1159 of the Companies Act 2006 as amended.
UK
means the United Kingdom.
Uncalled
Preference Share Amounts means, for so long as it is a Subsidiary of BCL, any amounts which BC Capital Limited is entitled
upon notice to receive pursuant to the Capital Call Right on its “A” Preference Shares (as each such term is defined
in the Articles of Association of BC Capital Limited).
US means
the United States of America.
PRINCIPAL PAYING AGENT
Elavon Financial Services
Limited (acting through its UK Branch)
125 Old Broad Street
Fifth Floor
London EC2N 1AR
REGISTRAR
Elavon Financial Services
Limited
Block E
Cherrywood Business Park
Loughlinstown
Dublin, Ireland
TRANSFER AGENTS
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Elavon Financial Services
Limited (acting through its UK Branch)
125 Old Broad Street
Fifth Floor
London EC2N 1AR
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and/or such other or
further Principal Paying Agent and other Paying Agents, Registrar and Transfer Agents and/or specified offices as may from time
to time be appointed by the Issuer and the Guarantors with the approval of the Trustee and notice of which has been given to the
Bondholders.
Schedule
3
Register
and Transfer of Bonds
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1.
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The Issuer shall at all times ensure that the Registrar maintains in London, or at such other place
in the United Kingdom as the Trustee may agree, a register showing the amount of the Bonds from time to time outstanding and the
dates of issue and all subsequent transfers and changes of ownership thereof and the names and addresses of the holders of the
Bonds. The Trustee and the holders of the Bonds or any of them and any person authorised by it or any of them may at all reasonable
times during office hours inspect the register and take copies of or extracts from it. The register may be closed by the Issuer
for such periods at such times (not exceeding in total 30 days in any one year) as it may think fit.
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2.
|
Each Bond shall have an identifying serial number which shall be entered on the register.
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3.
|
The Bonds are transferable by execution of the form of transfer endorsed thereon under the hand
of the transferor or, where the transferor is a corporation, under its common seal or under the hand of two of its officers duly
authorised in writing.
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4.
|
The Bonds to be transferred must be delivered for registration to the specified office of the Registrar
or any Transfer Agent with the form of transfer endorsed thereon duly completed and executed and must be accompanied by such documents,
evidence and information as may be required pursuant to the Conditions and such other evidence as the Issuer may reasonably require
to prove the title of the transferor or his right to transfer the Bonds and, if the form of transfer is executed by some other
person on his behalf or in the case of the execution of a form of transfer on behalf of a corporation by its officers, the authority
of that person or those persons to do so.
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5.
|
The executors or administrators of a deceased holder of Bonds (not being one of several joint holders)
and in the case of the death of one or more of several joint holders the survivor or survivors of such joint holders shall be the
only person or persons recognised by the Issuer as having any title to such Bonds.
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6.
|
Any person becoming entitled to Bonds in consequence of the death or bankruptcy of the holder of
such Bonds may upon producing such evidence that he holds the position in respect of which he proposes to act under this paragraph
or of his title as the Issuer shall require be registered himself as the holder of such Bonds or, subject to the preceding paragraphs
as to transfer, may transfer such Bonds. The Issuer shall be at liberty to retain any amount payable upon the Bonds to which any
person is so entitled until such person shall be registered as aforesaid or shall duly transfer the Bonds.
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7.
|
Unless otherwise requested by him, the holder of Bonds shall be entitled to receive only one Certificate
in respect of his entire holding.
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8.
|
The joint holders of Bonds shall be entitled to one Certificate only in respect of their joint
holding which shall, except where they otherwise direct, be delivered to the joint holder whose name appears first in the register
of the holders of Bonds in respect of such joint holding.
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9.
|
Where a holder of Bonds has transferred part only of his holding there shall be delivered to him
without charge a Certificate in respect of the balance of such holding.
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10.
|
The Issuer shall make no charge to the Bondholders for the registration of any holding of Bonds
or any transfer thereof or for the issue thereof or for the delivery thereof at the specified office of the Registrar or of any
Transfer Agent or by post to the address specified by the Bondholder. If any Bondholder entitled to receive a Certificate wishes
to have the same delivered to him otherwise than at the specified office of the Registrar or of any Transfer Agent, such delivery
shall be made, upon his written request to the Registrar or such Transfer Agent, at his risk and (except where sent by post to
the address specified by the Bondholder) at his expense.
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11.
|
The holder of a Bond may (to the fullest extent permitted by applicable laws) be treated at all
times, by all persons and for all purposes as the absolute owner of such Bond notwithstanding any notice any person may have of
the right, title, interest or claim of any other person thereto. The Issuer, each Guarantor and the Trustee shall not be bound
to see to the execution of any trust to which any Bond may be subject and no notice of any trust shall be entered on the register.
The holder of a Bond will be recognised by the Issuer and each Guarantor as entitled to his Bond free from any equity, set-off
or counterclaim on the part of the Issuer or each Guarantor against the original or any intermediate holder of such Bond.
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Schedule
4
Provisions
for Meetings of Bondholders
DEFINITIONS
|
1.
|
As used in this Schedule the following expressions shall have the following meanings unless the
context otherwise requires:
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Block Voting
Instruction means an English language document issued by a Paying Agent in which:
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|
(a)
|
it is certified that on the date thereof Bonds represented by the Global Certificate or Definitive
Certificates which are held in an account with any Clearing System (in each case not being Bonds in respect of which a Voting Certificate
has been issued and is outstanding in respect of the meeting specified in such Block Voting Instruction) are blocked in an account
with a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1) the
conclusion of the meeting specified in such Block Voting Instruction; and
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(2)
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the Bonds ceasing with the agreement of the Paying Agent to be so blocked and the giving of notice
by the Paying Agent to the Issuer in accordance with paragraph 3(E) of the necessary amendment to the Block Voting Instruction;
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(b)
|
it is certified that each holder of such Bonds has instructed such Paying Agent that the vote(s)
attributable to the Bonds so blocked should be cast in a particular way in relation to the resolution(s) to be put to such meeting
and that all such instructions are, during the period commencing 48 Hours prior to the time for which such meeting is convened
and ending at the conclusion or adjournment thereof, neither revocable nor capable of amendment;
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(c)
|
the aggregate principal amount of the Bonds so blocked is listed distinguishing with regard to
each such resolution between those in respect of which instructions have been given that the votes attributable thereto should
be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto
should be cast against the resolution; and
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(d)
|
one or more persons named in such Block Voting Instruction (each hereinafter called a proxy)
is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Bonds so listed in accordance with
the instructions referred to in (c) above as set out in such Block Voting Instruction;
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Clearing
System means Euroclear and/or Clearstream, Luxembourg and includes in respect of any Bond any clearing system on behalf of
which such Bond is held or which is the holder or (directly or through a nominee) registered owner of a Bond, in either case whether
alone or jointly with any other Clearing System(s). For the avoidance of doubt, the provisions of subclause 1.2(g) shall apply
to this definition;
Eligible
Person means any one of the following persons who shall be entitled to attend and vote at a meeting:
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(a)
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a holder of a Bond in definitive form which is not held in an account with any Clearing System;
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(b)
|
a bearer of any Voting Certificate;
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(c)
|
a proxy specified in any Block Voting Instruction; and
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(d)
|
a proxy appointed by a holder of a Bond in definitive form which is not held in an account with
any Clearing System;
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Extraordinary
Resolution means:
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|
(a)
|
a resolution passed at a meeting duly convened and held in accordance with these presents by a
majority consisting of not less than three-fourths of the Eligible Persons voting thereon upon a show of hands or, if a poll is
duly demanded, by a majority consisting of not less than three-fourths of the votes cast on such poll;
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(b)
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a resolution in writing signed by or on behalf of the holders of not less than three fourths in
principal amount of the Bonds for the time being outstanding which resolution may be contained in one document or in several documents
in like form each signed by or on behalf of one or more of the holders; or
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(c)
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consent given by way of electronic consents through the relevant Clearing System(s) (in a form
satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in principal amount of the Bonds for
the time being outstanding;
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Voting Certificate
means an English language certificate issued by a Paying Agent in which it is stated:
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(a)
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that on the date thereof Bonds represented by the Global Certificate or Definitive Certificates
which are held in an account with any Clearing System (in each case not being Bonds in respect of which a Block Voting Instruction
has been issued and is outstanding in respect of the meeting specified in such Voting Certificate) are blocked in an account with
a Clearing System and that no such Bonds will cease to be so blocked until the first to occur of:
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(1) the
conclusion of the meeting specified in such Voting Certificate; and
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(2)
|
the surrender of the Voting Certificate to the Paying Agent who issued the same; and
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(b)
|
that the bearer thereof is entitled to attend and vote at such meeting in respect of the Bonds
represented by such Voting Certificate;
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24 Hours
means a period of 24 hours including all or part of a day upon which banks are open for business in both the place where the relevant
meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose
the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more
periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of
the places as aforesaid; and
48
Hours means a period of 48 hours including all or part of two days upon which banks are open for business both in the
place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices
(disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period
or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of two days upon which
banks are open for business in all of the places as aforesaid.
For the purposes
of calculating a period of Clear Days in relation to a meeting, no account shall be taken of the day on which the notice
of such meeting is given (or, in the case of an adjourned meeting, the day on which the meeting to be adjourned is held) or the
day on which such meeting is held.
All references
in this Schedule to a "meeting" shall, where the context so permits, include any relevant adjourned meeting.
EVIDENCE OF ENTITLEMENT
TO ATTEND AND VOTE
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2.
|
A holder of a Bond represented by the Global Certificate or a Definitive Certificate which is held
in an account with any Clearing System may require the issue by a Paying Agent of Voting Certificates and Block Voting Instructions
in accordance with the terms of paragraph 3.
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For the purposes
of paragraph 3, the Principal Paying Agent and each Paying Agent shall be entitled to rely, without further enquiry, on any information
or instructions received from a Clearing System and shall have no liability to any holder or other person for any loss, damage,
cost, claim or other liability occasioned by its acting in reliance thereon, nor for any failure by a Clearing System to deliver
information or instructions to the Principal Paying Agent or any Paying Agent.
The holder
of any Voting Certificate or the proxies named in any Block Voting Instruction shall for all purposes in connection with the relevant
meeting be deemed to be the holder of the Bonds to which such Voting Certificate or Block Voting Instruction relates.
PROCEDURE FOR ISSUE
OF VOTING CERTIFICATES, BLOCK VOTING INSTRUCTIONS AND PROXIES
|
3.
|
(A)
|
Definitive Certificates not held in a Clearing System
|
If Bonds have
been issued in definitive form and are not held in an account with any Clearing System, the Trustee may from time to time prescribe
further regulations (in accordance with paragraph 23) to enable the holders of such Bonds to attend and/or vote at a meeting in
respect of such Bonds.
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(B)
|
Global Certificate and Definitive Certificates held in a Clearing System - Voting Certificate
|
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A holder of
a Bond (not being a Bond in respect of which instructions have been given to the Principal Paying Agent in accordance with
paragraph 3(C)) represented by the Global Certificate or which is in definitive form and is held in an account with any
Clearing System may procure the delivery of a Voting Certificate in respect of such Bond by giving notice to the Clearing
System through which such holder's interest in the Bond is held specifying by name a person (an Identified Person)
(which need not be the holder himself) to collect the Voting Certificate and attend and vote at the meeting. The relevant
Voting Certificate will be made available at or shortly prior to the commencement of the meeting by the Principal Paying
Agent against presentation by such Identified Person of the form of identification previously notified by such holder to the
Clearing System. The Clearing System may prescribe forms of identification (including, without limitation, a passport or
driving licence) which it deems appropriate for these purposes. Subject to receipt by the Principal Paying Agent from the
Clearing System, no later than 24 Hours prior to the time for which such meeting is convened, of notification of the
principal amount of the Bonds to be represented by any such Voting Certificate and the form of identification against
presentation of which such Voting Certificate should be released, the Principal Paying Agent shall, without any obligation to
make further enquiry, make available Voting Certificates against presentation of the form of identification corresponding to
that notified.
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(C)
|
Global Certificate and Definitive Certificates held in a Clearing System - Block Voting Instruction
|
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A holder of a
Bond (not being a Bond in respect of which a Voting Certificate has been issued) represented by the Global Certificate or which
is in definitive form and is held in an account with any Clearing System may require the Principal Paying Agent to issue a Block
Voting Instruction in respect of such Bond by first instructing the Clearing System through which such holder's interest in the
Bond is held to procure that the votes attributable to such Bond should be cast at the meeting in a particular way in relation
to the resolution or resolutions to be put to the meeting. Any such instruction shall be given in accordance with the rules of
the Clearing System then in effect. Subject to receipt by the Principal Paying Agent of instructions from the Clearing System,
no later than 24 Hours prior to the time for which such meeting is convened, of notification of the principal amount of the Bonds
in respect of which instructions have been given and the manner in which the votes attributable to such Bonds should be cast, the
Principal Paying Agent shall, without any obligation to make further enquiry, appoint a proxy to attend the meeting and cast votes
in accordance with such instructions.
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(D)
|
Each Block Voting Instruction, together (if so requested by the Trustee) with proof satisfactory
to the Trustee of its due execution on behalf of the relevant Paying Agent shall be deposited by the relevant Paying Agent or (as
the case may be) by the Registrar or the relevant Transfer Agent at such place as the Trustee shall approve not less than 24 Hours
before the time appointed for holding the meeting at which the proxy or proxies named in the Block Voting Instruction proposes
to vote, and in default the Block Voting Instruction shall not be treated as valid unless the Chairman of the meeting decides otherwise
before such meeting proceeds to business. A copy of each Block Voting Instruction shall be deposited with the Trustee before the
commencement of the meeting but the Trustee shall not thereby be obliged to investigate or be concerned with the validity of or
the authority of the proxy or proxies named in any such Block Voting Instruction.
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(E)
|
Any vote given in accordance with the terms of a Block Voting Instruction shall be valid notwithstanding
the previous revocation or amendment of the Block Voting Instruction or of any of the instructions of the relevant holder or the
relevant Clearing System (as the case may be) pursuant to which it was executed provided that no intimation in writing of such
revocation or amendment has been received from the relevant Paying Agent by the Issuer at its registered office (or such other
place as may have been required or approved by the Trustee for the purpose) by the time being 24 Hours (in the case of a Block
Voting Instruction) or 48 Hours (in the case of a proxy) before the time appointed for holding the meeting at which the Block Voting
Instruction is to be used.
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CONVENING OF MEETINGS,
QUORUM AND ADJOURNED MEETINGS
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4.
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The Issuer, the Guarantors or the Trustee may at any time, and the Issuer shall upon a requisition
in writing in the English language signed by the holders of not less than ten per cent. in principal amount of the Bonds for the
time being outstanding, convene a meeting and if the Issuer makes default for a period of seven days in convening such a meeting
the same may be convened by the Trustee or the requisitionists. Whenever the Issuer or any Guarantor is about to convene any such
meeting the Issuer or the relevant Guarantor, as the case may be, shall forthwith give notice in writing to the Trustee of the
day, time and place thereof and of the nature of the business to be transacted thereat. Every such meeting shall be held at such
time and place as the Trustee may appoint or approve in writing.
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5.
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At least 21 Clear Days' notice specifying the place, day and hour of meeting shall be given to
the holders prior to any meeting in the manner provided by Condition 14 (Notices). Such notice, which shall be in the English
language, shall state generally the nature of the business to be transacted at the meeting thereby convened and, where an Extraordinary
Resolution will be proposed at the meeting, shall either specify in such notice the terms of such resolution or state fully the
effect on the holders of such resolution, if passed. Such notice shall include statements as to the manner in which holders may
arrange for Voting Certificates or Block Voting Instructions to be issued and, if applicable, appoint proxies. A copy of the notice
shall be sent by post to the Trustee (unless the meeting is convened by the Trustee), to the Issuer (unless the meeting is convened
by the Issuer) and to each of the Guarantors (unless the meeting is convened by that Guarantor).
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6.
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A person (who may but need not be a holder) nominated in writing by the Trustee shall be entitled
to take the chair at the relevant meeting, but if no such nomination is made or if at any meeting the person nominated shall not
be present within 15 minutes after the time appointed for holding the meeting the holders present shall choose one of their number
to be Chairman, failing which the Issuer may appoint a Chairman. The Chairman of an adjourned meeting need not be the same person
as was Chairman of the meeting from which the adjournment took place.
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7.
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At any such meeting one or more Eligible Persons present and holding or representing in the aggregate
more than 50 per cent. in principal amount of the Bonds for the time being outstanding shall (subject as provided below) form a
quorum for the transaction of business (including the passing of an Extraordinary Resolution) PROVIDED THAT at any meeting the
business of which includes any Basic Terms Modification (which shall, subject only to subclause 19.2 and clause 21, only be capable
of being effected after having been approved by Extraordinary Resolution) the quorum shall be one or more Eligible Persons present
and holding or representing in the aggregate not less than two-thirds of the principal amount of the Bonds for the time being outstanding.
No business (other than the choosing of a Chairman) shall be transacted at any meeting unless the requisite quorum is present at
the commencement of the relevant business.
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8.
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If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide)
after the time appointed for any such meeting a quorum is not present for the transaction of any particular business, then, subject
and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting shall if convened
upon the requisition of holders be dissolved. In any other case it shall stand adjourned for such period, being not less than 13
Clear Days nor more than 42 Clear Days, and to such place as may be appointed by the Chairman either at or subsequent to such meeting
and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide)
after the time appointed for any adjourned meeting a quorum is not present for the transaction of
any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is
present, the Chairman may either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period,
being not less than 13 Clear Days (but without any maximum number of Clear Days), and to such place as may be appointed by the
Chairman either at or subsequent to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall
apply to all further adjourned such meetings.
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9.
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At any adjourned meeting one or more Eligible Persons present (whatever the principal amount of
the Bonds so held or represented by them) shall (subject as provided below) form a quorum and shall have power to pass any resolution
and to decide upon all matters which could properly have been dealt with at the meeting from which the adjournment took place had
the requisite quorum been present PROVIDED THAT at any adjourned meeting the quorum for the transaction of business comprising
any Basic Terms Modification shall be one or more Eligible Persons present and holding or representing in the aggregate not less
than one-third of the principal amount of the Bonds for the time being outstanding.
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10.
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Notice of any adjourned meeting shall be given in the same manner as notice of an original meeting
but as if 10 were substituted for 21 in paragraph 5 and such notice shall state the required quorum.
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CONDUCT OF BUSINESS
AT MEETINGS
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11.
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Every question submitted to a meeting shall be decided in the first instance by a show of hands.
A poll may be demanded (before or on the declaration of the result of the show of hands) by the Chairman, the Issuer, any Guarantor,
the Trustee or any Eligible Person (whatever the amount of the Bonds so held or represented by him).
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12.
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At any meeting, unless a poll is duly demanded, a declaration by the Chairman that a resolution
has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence
of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
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13.
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Subject to paragraph 15, if at any such meeting a poll is so demanded it shall be taken in such
manner and, subject as hereinafter provided, either at once or after an adjournment as the Chairman directs and the result of such
poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll.
The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the motion
on which the poll has been demanded.
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14.
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The Chairman may, with the consent of (and shall if directed by) any such meeting, adjourn the
same from time to time and from place to place; but no business shall be transacted at any adjourned meeting except business which
might lawfully have been transacted at the meeting from which the adjournment took place.
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15.
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Any poll demanded at any such meeting on the election of a Chairman or on any question of adjournment
shall be taken at the meeting without adjournment.
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16.
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Any director or officer of the Trustee, its lawyers and financial advisors, any director or officer
of the Issuer or, as the case may be, the Guarantors, their lawyers and financial advisors, any director or officer of any of the
Paying Agents and any other person authorised so to do by the Trustee may attend and speak at any meeting. Save as aforesaid, no
person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting unless he is an Eligible Person.
No person shall be entitled to vote at any meeting in respect of Bonds which are deemed to
be not outstanding by virtue of the proviso to the definition of "outstanding" in clause 1.
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(a)
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on a show of hands every Eligible Person present shall have one vote; and
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(b)
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on a poll every Eligible Person present shall have one vote in respect of each £1 or such
other amount as the Trustee may in its absolute discretion stipulate in principal amount of the Bonds held or represented by such
Eligible Person.
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Without prejudice
to the obligations of the proxies named in any Block Voting Instruction, any Eligible Person entitled to more than one vote need
not use all his votes or cast all the votes to which he is entitled in the same way.
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18.
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The proxies named in any Block Voting Instruction need not be holders. Nothing herein shall prevent
any of the proxies named in any Block Voting Instruction from being a director, officer or representative of or otherwise connected
with the Issuer or any Guarantor.
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19.
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The Bondholders shall in addition to the powers hereinbefore given have the following powers exercisable
(without prejudice to any powers conferred on other persons by these presents) only by Extraordinary Resolution (subject, in the
case of an Extraordinary Resolution to be proposed at a meeting, to the provisions relating to quorum contained in paragraphs 7
and 9) namely:
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(a)
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Power to sanction any compromise or arrangement proposed to be made between the Issuer, the Guarantors,
the Trustee, any Appointee and the holders or any of them.
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(b)
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Power to sanction any abrogation, modification, compromise or arrangement in respect of the rights
of the Trustee, any Appointee, the holders, the Issuer or the Guarantors against any other or others of them or against any of
their property whether such rights arise under these presents or otherwise.
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(c)
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Power to assent to any modification of the provisions of these presents which is proposed by the
Issuer, the Guarantors, the Trustee or any holder.
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(d)
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Power to give any authority or sanction which under the provisions of these presents is required
to be given by Extraordinary Resolution.
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(e)
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Power to appoint any persons (whether holders or not) as a committee or committees to represent
the interests of the holders and to confer upon such committee or committees any powers or discretions which the holders could
themselves exercise by Extraordinary Resolution.
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(f)
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Power to approve of a person to be appointed a trustee and power to remove any trustee or trustees
for the time being of these presents.
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(g)
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Power to discharge or exonerate the Trustee and/or any Appointee from all liability in respect
of any act or omission for which the Trustee and/or such Appointee may have become responsible under these presents.
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(h)
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Power to authorise the Trustee and/or any Appointee to concur in and execute and do all such deeds,
instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution.
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(i)
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Power to sanction any scheme or proposal for the exchange or sale of the Bonds for or the conversion
of the Bonds into or the cancellation of the Bonds in consideration of shares, stock, notes, bonds, debentures, debenture stock
and/or other obligations and/or securities of the Issuer or any other company formed or to be formed, or for or into or in consideration
of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other
obligations and/or securities as aforesaid and partly for or into or in consideration of cash and for the appointment of some person
with power on behalf of the holders to execute an instrument of transfer of the Bonds held by them in favour of the persons with
or to whom the Bonds are to be exchanged or sold respectively.
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(j)
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Power to approve the substitution of any entity for the Issuer (or any previous substitute) as
principal debtor under these presents.
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20.
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Any Extraordinary Resolution (i) passed at a meeting of the holders duly convened and held in accordance
with these presents, (ii) passed as an Extraordinary Resolution in writing in accordance with these presents or (iii) passed by
way of electronic consents given by holders through the relevant Clearing System(s) in accordance with these presents shall be
binding upon all the holders whether or not present or whether or not represented at any meeting and whether or not voting on such
Extraordinary Resolution and each of them shall be bound to give effect thereto accordingly and the passing of any such Extraordinary
Resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of the result of the voting
on any Extraordinary Resolution duly considered by the holders shall be published in accordance with Condition 14 (Notices)
by the Issuer within 14 days of such result being known, PROVIDED THAT the non-publication of such notice shall not invalidate
such result.
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21.
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Minutes of all resolutions and proceedings at every meeting shall be made and entered in books
to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid, if purporting to be signed by
the Chairman of the meeting at which such resolutions were passed or proceedings transacted, shall be conclusive evidence of the
matters therein contained and, until the contrary is proved, every such meeting in respect of the proceedings of which minutes
have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted thereat
to have been duly passed or transacted.
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22.
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(A)
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If and whenever the Issuer has issued and has outstanding Bonds of more than one series the foregoing provisions of this Schedule
shall have effect subject to the following modifications:
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(i)
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a resolution which in the opinion of the Trustee affects the Bonds of only one series shall be
deemed to have been duly passed if passed at a separate meeting (or by a separate resolution in writing or by a separate resolution
passed by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds of that series;
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(ii)
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a resolution which in the opinion of the Trustee affects the Bonds of more than one series but
does not give rise (in the opinion of the Trustee) to an actual or potential conflict of interest between the holders of Bonds
of any of the series so affected shall be deemed to have been duly passed if passed at a single meeting (or by a single resolution
in writing or by a single resolution passed by way of consents received through the relevant Clearing System(s)) of the holders
of the Bonds of all the series so affected;
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(iii)
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a resolution which in the opinion of the Trustee affects the Bonds of more than one series and
gives or may give rise (in the opinion of the Trustee) to a conflict of interest between the holders of the Bonds of one series
or group of series so affected and the holders of the Bonds of another series or group of series so affected shall be deemed to
have been duly passed only if passed at separate meetings (or by separate resolutions in writing or by separate resolutions passed
by way of consents received through the relevant Clearing System(s)) of the holders of the Bonds of each series or group of series
so affected; and
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(iv)
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to all such meetings all the preceding provisions of this Schedule shall mutatis mutandis apply
as though references therein to Bonds and holders were references to the Bonds of the series or group of series in question or
to the holders of such Bonds, as the case may be.
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(B)
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Subject as provided below, if the Issuer has issued and has outstanding Bonds which are not denominated
in Pounds Sterling, or in the case of any meeting of Bonds of more than one currency, the principal amount of such Bonds shall
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(i)
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for the purposes of paragraph 4, be the equivalent in Pounds Sterling at the spot rate of a bank
nominated by the Trustee for the conversion of the relevant currency or currencies into Pounds Sterling on the seventh dealing
day prior to the day on which the requisition in writing is received by the Issuer; and
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(ii)
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for the purposes of paragraphs 7, 9 and 17 (whether in respect of the meeting or any adjourned
such meeting or any poll resulting therefrom), be the equivalent at such spot rate on the seventh dealing day prior to the day
of such meeting.
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In such circumstances,
on any poll each person present shall have one vote for each £1 (or such other Pounds Sterling amount as the Trustee may
in its absolute discretion stipulate) in principal amount of the Bonds (converted as above) which he holds or represents. For the
avoidance of doubt, in the case of a meeting of Bonds which are denominated in a single currency which is not pounds sterling,
the Trustee (in its sole discretion) may agree with the Issuer that the relevant currency for the purposes of the meeting (including,
without limitation, the quorum and voting calculations) shall be the currency of the relevant Bonds, in which case the provisions
of this Schedule shall be construed accordingly.
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23.
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Subject to all other provisions of these presents the Trustee may (after consultation with the
Issuer and the Guarantors where the Trustee considers such consultation to be practicable but without the consent of the Issuer,
the Guarantors or the holders) prescribe such further or alternative regulations regarding the requisitioning and/or the holding
of meetings and attendance and voting thereat as the Trustee may in its sole discretion reasonably think fit (including, without
limitation, the substitution for periods of 24 Hours and 48 Hours referred to in this Schedule of shorter periods). Such regulations
may, without prejudice to the generality of the foregoing, reflect the practices and facilities of any relevant Clearing System.
Notice of any such further or alternative regulations may, at the sole discretion of the Trustee, be given to holders in accordance
with Condition 14 (Notices) at the time of service of any notice convening a meeting or at such other time as the Trustee
may decide.
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Schedule
5
Form of
Directors' Certificate
[ON THE HEADED PAPER OF
THE ISSUER/GUARANTOR]
To: [Trustee]
[Date]
Dear Sirs
£90,000,000
6.50 per cent. Guaranteed Bonds due 2022
This certificate is delivered
to you in accordance with Clause 14(f) of the Trust Deed dated 19 August 2014 (the Trust Deed) and made between Burford
Capital PLC (the Issuer), Burford Capital Limited (BCL) and U.S. Bank Trustees Limited (the Trustee). All
words and expressions defined in the Trust Deed shall (save as otherwise provided herein or unless the context otherwise requires)
have the same meanings herein.
We hereby certify that:
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(a)
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as at [ ]1,
no Event of Default or Potential Event of Default existed [other than [ ]]2
and no Event of Default or Potential Event of Default had existed or happened at any time since [ ]3
[the certification date (as defined in the Trust Deed) of the last certificate delivered under Clause [14(f)]]4
[other than [ ]]5; and
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(b)
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from and including [ ]3 [the certification date of the last certificate delivered
under Clause [14(f)]]4 to and including [ ]1, [each of] the Issuer and the Guarantors have complied in
all respects with its obligations under these presents (as defined in the Trust Deed) [other than [ ]]6.
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For and on behalf of
[BURFORD CAPITAL PLC
/ BURFORD CAPITAL LIMITED]
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Director
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Director[/Secretary]
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1
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Specify a date not more than 7 days before the date of delivery of the certificate.
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2
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If any Event of Default or Potential Event of Default did exist, give details; otherwise delete.
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3
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Insert date of Trust Deed in respect of the first certificate delivered under Clause 14(f), otherwise delete.
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4
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Include unless the certificate is the first certificate delivered under Clause 14(f) , in which case delete.
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5
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If any Event of Default or Potential Event of Default did exist or had happened, give details; otherwise delete.
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6
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If the Issuer and/or Guarantors have failed to comply with any obligation(s), give details; otherwise delete.
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Schedule
6
Form of
Material Subsidiaries Certificate
[ON THE HEADED PAPER OF
BCL]
To: [Trustee]
[Date]
Dear Sirs
£90,000,000
6.50 per cent. Guaranteed Bonds due 2022
Please note that the
contents of this certificate constitutes Confidential Information (as defined in the Trust Deed) and is subject to the confidentiality
provisions set out in clause 27 of the Trust Deed.
This certificate is delivered
to you in accordance with Clause 14(s) of the Trust Deed dated 19 August 2014 (the Trust Deed) and made between Burford
Capital PLC (the Issuer), Burford Capital Limited (BCL) and U.S. Bank Trustees Limited (the Trustee). All
words and expressions defined in the Trust Deed shall (save as otherwise provided herein or unless the context otherwise requires)
have the same meanings herein.
We hereby certify that
as at [insert date] the following Subsidiaries were Material Subsidiaries:
[insert
list of Material Subsidiaries]
For and on behalf of
BURFORD CAPITAL LIMITED
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Director
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Director/Secretary
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Schedule
7
Form
of Supplemental Deed
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DEED
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[l] 20[l]
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BURFORD CAPITAL PLC
and
BURFORD CAPITAL LIMITED
and
[enter name of Subsidiary Guarantor]
(as the Subsidiary Guarantor)
and
U.S. BANK TRUSTEES LIMITED
relating to
£90,000,000
6.50 per cent. Guaranteed
Bonds due 19 August 2022
unconditionally and irrevocably guaranteed
by
Burford Capital Limited
|
THIS SUPPLEMENTAL
DEED is made on [l] 20[l]
BETWEEN:
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(1)
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BURFORD CAPITAL PLC, a company incorporated under the laws of England and Wales with company
number 09077893, whose registered office is at 5th Floor Norfolk House, Wellesley Road, Croydon, United Kingdom CR0 1LH (the
Issuer);
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(2)
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BURFORD CAPITAL LIMITED, a company incorporated under the laws of Guernsey with company
number 50877, whose registered office is at Regency Court, Glategny Esplanade, St Peter Port GY1 1WW, Guernsey (BCL);
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(3)
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[l] a company incorporated under the laws of [l]
whose registered office is at [l] (the Subsidiary Guarantor);
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(4)
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U.S. BANK TRUSTEES LIMITED, a limited liability company registered in England and Wales
with company number 02379632 having its registered office at 125 Old Broad Street, Fifth Floor, London EC2N 1AR (the Trustee,
which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being
the trustee or trustees of these presents) as trustee for the Bondholders (each as defined below);
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(5)
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ELAVON FINANCIAL SERVICES LIMITED (the Registrar); and
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(6)
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ELAVON FINANCIAL SERVICES LIMITED, ACTING THROUGH ITS U.K. BRANCH (the Paying Agent and
the Transfer Agent).
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WHEREAS:
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(A)
|
This Supplemental Deed is supplemental to the Trust Deed dated 19 August, 2014 (the Principal
Trust Deed) made between the Issuer, BCL and the Trustee constituting the £90,000,000 6.50 per cent. Guaranteed Bonds
due 19 August 2022 (the Bonds) and the Agency Agreement dated 19 August, 2014 (the Principal Agency Agreement) made
between the Issuer, BCL, the Trustee and the various Agents set out therein.
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(B)
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Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors) of the Bonds provides
that, BCL may from time to time appoint or procure to be appointed, a Subsidiary (as defined in the Principal Trust Deed) of BCL
which is not a Guarantor (as defined in the Principal Trust Deed) as a Subsidiary Guarantor in order to comply with its obligations
under Condition 4.1 (Guarantee) of the Bonds.
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(C)
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Clause 7.11 of the Principal Trust Deed provides that in connection with the proposed admission
of any Subsidiary of BCL as a Guarantor pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary Guarantors)
of the Bonds, no such admission shall be effective until the Trustee shall have received (inter alia) a duly executed deed
supplemental to the Principal Trust Deed (or in such other form as may be necessary or appropriate to comply with any applicable
law, rule or regulation, including the law of any jurisdiction where that Subsidiary is organised or carries on business) containing
a joint and several guarantee (in terms substantially similar to the Guarantee) and otherwise in form and manner satisfactory to
the Trustee pursuant to which such Subsidiary agrees to be bound by the provisions of the Principal Trust Deed as fully as if such
Subsidiary had been named in the Principal Trust Deed as a Guarantor.
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(D)
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The Subsidiary Guarantor is a Subsidiary of the Guarantor and is not an Excluded Subsidiary.
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(E)
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By [a resolution of the shareholders of the Subsidiary Guarantor
passed on [l] and] a resolution of the Board of Directors of the Subsidiary Guarantor
passed on [l], and pursuant to Condition 4.3 (Guarantee – Addition of Subsidiary
Guarantors) of the Bonds and Clause 7.11 of the Principal Trust Deed, the Subsidiary Guarantor (being of the opinion that it
will be to its benefit and interest and in the furtherance of its objects to do so) has agreed to guarantee the said Bonds and
to enter into certain covenants as set out or referred to in this Supplemental Deed and BCL has procured that the Subsidiary Guarantor
will be a party to this Supplemental Deed for such purposes.
|
NOW THIS SUPPLEMENTAL DEED WITNESSES
AND IT IS HEREBY AGREED AND DECLARED as follows:
|
1.
|
Interpretation and construction
|
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1.1
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Save as herein otherwise provided and unless there is something
in the subject or context inconsistent therewith all words and expressions defined in the Principal Trust Deed shall have the same
meanings in this Supplemental Deed.
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1.2
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The Principal Trust Deed and the Agency Agreement shall henceforth
be read and construed as one document with this Supplemental Deed.
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2.1
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The Subsidiary Guarantor hereby irrevocably and unconditionally,
and notwithstanding the release of any other guarantor or any other person under the terms of any composition or arrangement with
any creditors of the Issuer, BCL or any other Subsidiary of BCL, guarantees on a joint and several basis with each of the current
Guarantors set out in the Schedule hereto to the Trustee:
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(a)
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the due and punctual payment in accordance with the provisions of these presents of the principal
of and interest on the Bonds and of any other amounts payable by the Issuer under these presents; and
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(b)
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the due and punctual performance and observance by the Issuer of each of the other provisions of
these presents on the Issuer's part to be performed or observed.
|
[Insert any legally
applicable limitations on guarantee for jurisdiction of Subsidiary Guarantor, as appropriate]
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2.2
|
If the Issuer fails for any reason whatsoever punctually to pay
any such principal, interest or other amount, the Subsidiary Guarantor shall cause each and every such payment to be made as if
the Subsidiary Guarantor instead of the Issuer were expressed to be the primary obligor under these presents and not merely as
surety (but without affecting the nature of the Issuer's obligations) to the intent that the holder of the relevant Bond or the
Trustee (as the case may be) shall receive the same amounts in respect of principal interest or such other amount as would have
been receivable had such payments been made by the Issuer.
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2.3
|
If any payment received by the Trustee or any Bondholder under
the provisions of these presents shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer
or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging
or diminishing the liability of the Subsidiary Guarantor and this guarantee shall continue to apply as if such payment had at all
times remained owing by the Issuer and each other Guarantor shall severally indemnify the Trustee and the Bondholders (as the case
may be) in respect thereof PROVIDED THAT the obligations of the Issuer
and/or the Subsidiary Guarantor under this subclause shall, as regards each payment made to the Trustee or any Bondholder which
is avoided or set aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled through the Issuer.
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2.4
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The Subsidiary Guarantor hereby agrees that its obligations under
this clause shall be unconditional and that the Subsidiary Guarantor shall be fully liable irrespective of the validity, regularity,
legality or enforceability against the Issuer of, or of any defence or counter-claim whatsoever available to the Issuer in relation
to, its obligations under these presents, whether or not any action has been taken to enforce the same or any judgment obtained
against the Issuer, whether or not any of the other provisions of these presents have been modified, whether or not any time, indulgence,
waiver, authorisation or consent has been granted to the Issuer by or on behalf of the Bondholders or the Trustee, whether or not
any determination has been made by the Trustee pursuant to subclause 19.1 of the Principal Trust Deed, whether or not there have
been any dealings or transactions between the Issuer, any of the Bondholders or the Trustee, whether or not the Issuer has been
dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control or ownership, whether or
not the Issuer has been prevented from making payment by foreign exchange provisions applicable at its place of registration or
incorporation and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge
of or defence to a guarantor. Accordingly the validity of this guarantee shall not be affected by reason of any invalidity, irregularity,
illegality or unenforceability of all or any of the obligations of the Issuer under these presents and this guarantee shall not
be discharged nor shall the liability of the Subsidiary Guarantor under these presents be affected by any act, thing or omission
or means whatever whereby its liability would not have been discharged if it had been the principal debtor.
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2.5
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Without prejudice to the provisions of subclause 9.1 of the Principal
Trust Deed the Trustee may determine from time to time whether or not it will enforce this guarantee which it may do without making
any demand of or taking any proceedings against the Issuer and may from time to time make any arrangement or compromise with the
Subsidiary Guarantor in relation to this guarantee which the Trustee may consider expedient in the interests of the Bondholders.
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2.6
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The Subsidiary Guarantor waives diligence, presentment, demand
of payment, filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Issuer, any right
to require a proceeding first against the Issuer, protest or notice with respect to these presents or the indebtedness evidenced
thereby and all demands whatsoever and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate
balance of all sums payable and obligations owed by the Issuer under these presents, shall not be discharged except by complete
performance of the obligations in these presents and is additional to, and not instead of, any security or other guarantee or indemnity
at any time existing in favour of any person, whether from the Subsidiary Guarantor or otherwise.
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2.7
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If any moneys shall become payable by the Subsidiary Guarantor
under this guarantee the Subsidiary Guarantor shall not, so long as the same remain unpaid, without the prior written consent of
the Trustee:
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(a)
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in respect of any amounts paid or payable by it under this guarantee, exercise any rights of subrogation
or contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such
payment or any such obligation to make payment; or
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(b)
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in respect of any other moneys for the time being due to the Guarantors by the Issuer, claim payment
thereof or exercise any other right or remedy;
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(including
in either case claiming the benefit of any security or right of set-off or contribution or, on the liquidation of the Issuer, proving
in competition with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer,
any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be
received by the Subsidiary Guarantor before payment in full of all amounts payable under these presents shall have been made to
the Bondholders and the Trustee, such payment or distribution shall be received by the Subsidiary Guarantor on trust to pay the
same over immediately to the Trustee for application in or towards the payment of all sums due and unpaid under these presents
in accordance with clause 10 of the Principal Trust Deed.
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2.8
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Until all amounts which may be or become payable by the Issuer
under these presents have been irrevocably paid in full, the Trustee may:
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(a)
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refrain from applying or enforcing any other moneys, security or rights held or received by the
Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those
amounts or otherwise), and the Subsidiary Guarantor shall not be entitled to the benefit of the same; and
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(b)
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hold in a suspense account any moneys received from the Subsidiary Guarantor or on account of the
Subsidiary Guarantor's liability under this guarantee, without liability to pay interest on those moneys.
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2.9
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If any sum which, although expressed to be payable by the Issuer
under these presents or the Bonds, is for any reason (whether or not now existing and whether or not now known or becoming known
to the Issuer, the Subsidiary Guarantor, the Trustee or any Bondholder) not recoverable from the Subsidiary Guarantor on the basis
of a guarantee then (a) it will nevertheless be recoverable from it as if it were the sole principal debtor and will be paid by
it to the Trustee on demand and (b) as a separate and additional liability under these presents the Subsidiary Guarantor agrees,
as a primary obligation and on a joint and several basis, to indemnify each of the Trustee and each Bondholder in respect of such
sum by way of a full indemnity in the manner and currency as is provided for in the Bonds or these presents (as the case may be)
and to indemnify each Bondholder against all losses, claims, costs, charges and expenses to which it may be subject or which it
may incur in recovering such sum.
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2.10
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The obligations of the Subsidiary Guarantor under these presents
constitute direct, unconditional and (subject to the provisions of Condition 5.1 (Negative Pledges)) unsecured obligations
of the Subsidiary Guarantor and (subject as aforesaid) rank and will rank pari passu with all other outstanding unsecured
and unsubordinated obligations of the Subsidiary Guarantor, present and future, but, in the event of insolvency, only to the extent
permitted by applicable laws relating to creditors' rights.
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3.
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Applicability of Provision of Trust Deeds AND AGENCY AGREEMENT
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3.1
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On and from the date hereof, the Subsidiary Guarantor will become
a Guarantor for the purposes of the Trust Deed and the Agency Agreement (as amended and restated pursuant to this Supplemental
Deed) pursuant to Clause 7 of the Principal Trust Deed and Clause 21.10 of the Principal Agency Agreement respectively.
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3.2
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All the provisions of the Principal Trust Deed relating to each
other Guarantor shall apply to the Subsidiary Guarantor and to the guarantee given by the Subsidiary Guarantor under Clause 2 hereof
in all respects as if the Subsidiary Guarantor had been a party to the Principal Trust Deed and references therein to the Guarantors
had included the Subsidiary Guarantor and the Subsidiary Guarantor hereby covenants with the Trustee that it will henceforth duly
observe and perform and be bound by all such of the covenants, conditions and provisions contained in the Principal Trust Deed
as are expressed to be binding on the Guarantors.
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3.3
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All the provisions of the Principal Agency Agreement relating
to each other Guarantor shall apply to the Subsidiary Guarantor as if the Subsidiary Guarantor had been a party to the Principal
Agency Agreement and references therein to the Guarantors had included the Subsidiary Guarantor and the Subsidiary Guarantor hereby
covenants with the Trustee, the Registrar, the Paying Agent and the Transfer Agent that it will henceforth duly observe and perform
and be bound by all such of the covenants, conditions and provisions contained in the Principal Agency Agreement as are expressed
to be binding on the Guarantors.
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The
Issuer and the Subsidiary Guarantor shall, at their own cost, take such action and execute such documentation as the Trustee shall
reasonably request in respect of the matters contemplated by this Supplemental Deed.
Any notice or
demand to the Subsidiary Guarantor to be given, made or served for any purposes under these presents shall be given, made or served
by sending the same by pre-paid post (first class if inland, first class airmail if overseas) or facsimile transmission or by delivering
it by hand as follows:
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to the Additional
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[Name
of Subsidiary Guarantor]
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Guarantor:
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[Address]
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(Attention:
l)
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Facsimilie
No. l
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These presents and any non-contractual
obligations arising out of or in connection with these presents are governed by, and shall be construed in accordance with, English
law.
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7.
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Contracts (Rights of Third Parties) Act 1999
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A person who is not a party
to these presents has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these presents, but
this does not affect any right or remedy of a third party which exists or is available apart from that Act.
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8.
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[Submission to Jurisdiction
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8.1
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The Subsidiary Guarantor irrevocably agrees for the benefit
of the Trustee and the Bondholders that the courts of England are to have exclusive jurisdiction to settle any dispute which
may arise out of or in connection with these presents and that accordingly any suit, action or proceedings arising out of or
in connection with these presents (together referred to as Proceedings) may be
brought in the courts of England. The Subsidiary Guarantor irrevocably and unconditionally waives and agrees not to raise any
objection which it may have now or subsequently to the laying of the venue of any Proceedings in the courts of England and any claims that
any Proceedings have been brought in an inconvenient or inappropriate forum and unconditionally agrees that a judgement in any
Proceedings brought in the courts of England shall be conclusive and binding upon it and may be enforced in the courts of any other
jurisdiction. To the extent permitted by law, the Trustee and the Bondholders may take any Proceedings against the Subsidiary Guarantor
in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions.
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8.2
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The Subsidiary Guarantor irrevocably and unconditionally appoints
[l] at its registered office for the time being and in the event of its ceasing so
to act will appoint such other person as the Trustee may approve and as the Subsidiary Guarantor may nominate in writing to the
Trustee for the purpose to accept service of process on its behalf in England in respect of any Proceedings. The Subsidiary Guarantor:
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(a)
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agrees to procure that, so long as any of the Bonds remains liable to prescription, there shall
be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept service as
aforesaid;
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(b)
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agrees that failure by any such person to give notice of such service of process to the Issuer
or any Subsidiary Guarantor shall not impair the validity of such service or of any judgment based thereon;
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(c)
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consents to the service of process in respect of any Proceedings by the airmailing of copies, postage
prepaid, to the Issuer or the Subsidiary Guarantor in accordance with Clause 26 of the Principal Trust Deed; and
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(d)
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agrees that nothing in these presents shall affect the right to serve process in any other manner
permitted by law.]
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This Supplemental Deed may
be executed and delivered in any number of counterparts, all of which, taken together, shall constitute one and the same deed and
any party to this Supplemental Deed may enter into the same by executing and delivering a counterpart.
IN WITNESS whereof
this Supplemental Deed has been executed as a deed by the Issuer, the Subsidiary Guarantor and the Trustee and delivered on the
date first stated on page 1.
SCHEDULE
THE CURRENT GUARANTORS
Burford Capital Limited
[insert names of
the other current Guarantors (if any)]
SIGNATORIES
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EXECUTED as a deed
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)
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by BURFORD CAPITAL PLC,
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)
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acting by:
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Director:
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Director/Secretary:
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EXECUTED as a deed
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)
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by BURFORD CAPITAL LIMITED,
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)
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acting by:
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Director:
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Director/Secretary:
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EXECUTED as a deed
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)
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by [SUBSIDIARY GUARANTOR],
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)
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acting by •
and •
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)
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acting under the authority
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)
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of that company[ in the presence of:
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)
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Witness's signature
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Name
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Address
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Occupation]
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EXECUTED as a deed
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)
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by U.S. BANK TRUSTEES LIMITED,
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)
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acting by:
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)
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Name:
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Name:
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Signatories
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EXECUTED as a deed
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)
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by BURFORD CAPITAL PLC,
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)
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acting by:
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Director:
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/s/ Hayley Leake
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Director/Secretary:
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/s/ Miriam Connole
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EXECUTED as a deed
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)
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by BURFORD CAPITAL LIMITED,
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)
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acting by:
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Director:
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/s/ Charles Parkinson
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Director/Secretary:
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/s/ International Administration Group
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EXECUTED as a deed
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)
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by U.S. BANK TRUSTEES LIMITED,
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)
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acting by:
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)
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Name:
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/s/ Chris Yates
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Name:
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/s/ Anatoly Sorin
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Exhibit 4.5
Burford
Capital LIMITED
The
Burford Capital
2016 Long Term Incentive Plan
Approved by resolution of the general
meeting
on 15 December 2016
Amended and renewed by resolution of
the general meeting on 13 May 2020
Contents
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RULe
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Page
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1. Definitions
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1
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2. Grant of Awards
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3
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3. Number of Shares in respect of which Awards may be granted
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5
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4. Rights of exercise of Awards
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5
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5. Method and Extent of Exercise
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8
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6. Issue or Transfer of Shares
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8
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7. Lapse of Awards
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9
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8. General Offer for the Company etc.
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9
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9. Taxation
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11
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10. Adjustments of Awards
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11
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11. Amendment and Administration
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12
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12. General
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13
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Schedule 1 US Schedule
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BURFORD CAPITAL
2016 LONG TERM INCENTIVE PLAN
RULES
1. Definitions
1.1
In this Plan, unless the context otherwise requires, the following words and expressions shall have the following meanings,
namely:
AIM means
the Alternative Investment Market of the London Stock Exchange;
Award means
an award granted in the form referred to in rule 2.1;
Award Certificate
means the notification to a Participant setting out the specific conditions of an Award;
Basic Salary
means an Employee’s annual basic salary (or, if the Committee considers it appropriate in the case of a particular employee,
his recurring compensation (excluding any annual discretionary bonus and fringe benefits)) in respect of his employment with the
Group for the year for which the Award is granted;
Capital Reorganisation
means any variation in the share capital or reserves of the Company (including, without limitation, by way of capitalisation issue,
rights issue, sub-division, consolidation or reduction);
Committee means
the Remuneration Committee of the board of directors of the Company;
Company
means Burford Capital Limited, a company incorporated in Guernsey with company registration number 50877;
Control
has the meaning given by section 995 of the UK Income Tax Act 2007;
Date of Grant means
the date on which the Committee grants an Award;
Dealing Day
means a date on which the London Stock Exchange is open for the transaction of business;
Employee
means any employee (including an executive director) of any member of the Group whose terms of service require him to devote substantially
the whole of his working time to the businesses of the Group;
Employees’
Share Scheme has the meaning given by section 532 of The Companies (Guernsey) Law, 2008 (which, for the avoidance of doubt,
includes a share scheme under which participation is discretionary);
Financial Year
means a financial year of the Company;
Grant Period
means a period of 42 days commencing on any of the following:
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(a)
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15 December 2016, being the date of the approval of the Plan by the Company in general meeting;
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(b)
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the day on which the Company makes an announcement of (i) its results for any period or (ii) its
interim management report;
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(c)
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the first day of the calendar month preceding the last business day of any calendar quarter; or
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(d)
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any day on which the Committee resolves that exceptional circumstances exist that justify the grant
of Awards;
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Group means
the Company and its Subsidiaries and member of the Group shall be construed accordingly;
Holding Period
has the meaning given to it in rule 6.5;
the London Stock
Exchange means London Stock Exchange Plc;
MAR means
the Market Abuse Regulation (EU) 596/2016, as amended from time to time;
Market Value
means, in relation to Shares on any day, if such Shares are listed on the London Stock Exchange, its middle-market quotation as
derived from the Daily Official List of the London Stock Exchange and otherwise (including if the Shares are dealt in on AIM) shall
mean their market value as defined by section 272 of the UK Taxation of Chargeable Gains Act 1992, provided that, if on any day,
Shares are listed on any other securities exchange and such other securities exchange shall be the principal market for Shares,
as determined by the Committee, Market Value shall mean, as of such day, either (i) the closing per share sales price of the Shares
as reported by such securities exchange for such date or, if there were no sales on such date, on the closest preceding date on
which there were sales of Shares or (ii) any other price or prices (including a mean of such prices) of Shares as reported on such
securities exchange as determined by the Committee in its discretion (subject to compliance with applicable laws, including applicable
tax laws and the rules of the applicable securities exchange);
Official List
means the Official List of the UK Listing Authority;
Participant
means any individual to whom an Award has been granted (including, where the context permits, the legal personal representatives
of a deceased Participant);
the Performance
Conditions means the performance conditions set by the Committee on the Date of Grant;
the Performance
Period means, unless foreshortened pursuant to rule 4 or rule 8, the three consecutive Financial Years of which
the first is the Financial Year in which the Date of Grant falls or such longer period as the Committee may determine at the Date
of Grant;
the Plan
means the Burford Capital 2016 Long Term Incentive Plan as amended from time to time;
Share Dealing Code
means the Company’s code on share dealing as in force from time to time;
Shares
means fully paid ordinary shares in the capital of the Company or shares representing those shares following any Capital Reorganisation;
Subsidiary
means any company which is a subsidiary of the Company within the meaning of section 531 of The Companies (Guernsey) Law, 2008,
excluding the effect of sub-section (6) and (7) such that an overseas company can be regarded as a subsidiary or holding company;
Termination Date
means the date on which a Participant ceases to be employed by the Group;
Trustees means
the trustees or trustee for the time being of any appropriate employee benefit trust established by the Company or any member of
the Group from time to time for the benefit of employees of the Group;
UK Listing Authority
means the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial
Services and Markets Act 2000;
Vested Shares means Shares
subject to Awards in respect of which the Committee has determined that the Performance Conditions have been satisfied and, subject
to rules 4.5 and 8.8, the Performance Period has ended, and Vest and Vesting Date shall be construed
accordingly.
1.2
References to any statute or statutory instrument or to any part or parts thereof include any modification, amendment or
re-enactment thereof for the time being in force.
1.3
Words of the masculine gender shall include the feminine and vice versa and words in the singular shall include the plural
and vice versa unless in either case the context otherwise requires.
2. Grant
of Awards
2.1
The Committee may, during a Grant Period, in its discretion, grant Awards to acquire Shares to any Employees selected by
the Committee. Awards shall be granted in the form of a right to call for Shares at no cost or a conditional allocation of Shares.
References to “realise”, “realised” or “realisable” shall, in the case of an Award which is
granted in the form of a right to call for Shares, be construed as “call for”, “called for” or “may
be called for” respectively.
2.2 The
Vesting of all Awards will be dependent upon the satisfaction of stretching Performance Conditions set at the Date of Grant
that are considered by the Committee to be appropriate to the strategic objectives of the Group. The Committee can set
different Performance Conditions for Awards granted in different years (in terms of the type of condition, the weighting
given to that condition and the targets applicable to each condition) provided that, in the reasonable opinion of the
Committee, the Performance Conditions are not materially less challenging from any one Award to the next. Notwithstanding the
foregoing, the Committee may also in its discretion grant Awards to any Employees that do not require the satisfaction of any
Performance Conditions; provided, however, that no more than 50% of the total Market Value of the Shares comprised in an
Award (measured as at the Date of Grant) granted to an Employee who is part of the Company’s senior management (as
determined from time to time by the Committee) shall be granted without Performance Conditions.
2.3
When granting any Award, the Committee shall specify the percentage of the total number of Shares comprised in the Award
that is subject to a particular Performance Condition.
2.4
The Committee may vary the Performance Conditions applying to existing Awards if an event occurs or there are circumstances
(for example, an acquisition or disposal of a business or a significant part of a business) such that the conditions are no longer
a fair measure of performance provided that, in the reasonable opinion of the Committee, the new conditions are not materially
less challenging than the original conditions would have been but for the event or circumstances in question. In exercising any
power to vary Performance Conditions the Committee will have regard to ensuring fairness between Participants and shareholders.
2.5
Immediately prior to the granting of any Awards, the Company may, in its absolute discretion, enter into a deed poll recording
its intention to grant Awards and agreeing to be bound by the Award Certificates issued pursuant to rule 2.6 below. No cash
amount shall be payable in respect of the grant or realisation of an Award.
2.6
Each Award shall be made by an Award Certificate issued by the Company and shall be subject to such terms and conditions
consistent with the Plan as the Committee may determine in its sole discretion. The Award Certificate shall state the Date of Grant,
the number of Shares comprised in an Award and the Performance Conditions, if any, that must be satisfied by the Vesting Date.
The Committee may require a Participant to evidence his agreement to be bound by the terms of the Plan in writing. If a Participant
fails to comply with any such requirement within the period specified by the Committee, his Award shall be treated as renounced
and shall lapse forthwith.
2.7
Every Award granted under this Plan shall be personal to the Participant to whom it is granted and, except to the extent
necessary to enable a personal representative to realise the Award following the death of a Participant, neither the Award nor
the benefit thereof may be transferred, assigned, charged or otherwise alienated. Any transfer of an Award otherwise than as permitted
by this rule 2.7 shall cause an Award to lapse.
2.8
The grant of any Award under the Plan shall be subject to the provisions of MAR and the Company’s Share Dealing Code
and to obtaining any approval or consent required under the provisions of the Listing Rules published by the UK Listing Authority
or the City Code on Takeovers and Mergers or of any regulation or enactment applicable to such grant.
3.
Number of Shares in respect of which Awards may be granted
3.1
No Award shall be granted under the Plan to the extent that the result of that grant would be that the aggregate number
of Shares that could be issued on the realisation of that Award and any other Award granted at the same time, when added to the
number of Shares that:
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(a)
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could be issued on the realisation of any subsisting share awards or options granted during the
preceding ten years under the Plan or any other Employees’ Share Scheme established by the Company; and
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(b)
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have been issued on the realisation of any share awards or options granted during the preceding
ten years under the Plan or any other Employees’ Share Scheme established by the Company,
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would exceed 10 per cent of the ordinary
share capital of the Company for the time being in issue.
3.2
Reference in this rule 3 to the issue of Shares shall, for the avoidance of doubt, mean the issue and allotment (but not
transfer) of Shares, including Shares issued to the trustee of an employee benefit trust established by the Company for the purposes
of satisfying any right under an Employees’ Share Scheme. Transfers of treasury shares shall also count towards the percentage
limits set out in rule 3.1 above for so long as institutional shareholder guidelines recommend this.
3.3
In determining the above limits no account shall be taken of any Shares attributable to an Award which was released, lapsed
or otherwise became incapable of realisation.
3.4
An Award shall not be granted to an Employee if such grant would cause the total Market Value of the maximum number of Shares
that may be acquired on realisation of the Award (as measured at the Date of Grant of the Award), when aggregated with the total
Market Value of the maximum number of Shares that may be acquired pursuant to any other Award (measured as at the Date of Grant
of that Award) granted to the Employee under the Plan in relation to the same Financial Year, to exceed 200% of the Employee’s
Basic Salary as at the Date of Grant, provided that the Committee may make an Award up to a Market Value of 300% of the Employee’s
Basic Salary if it determines that exceptional circumstances exist for a larger grant.
4.
Rights of exercise of Awards
4.1
Save as otherwise permitted in these rules an Award may only be realised:
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(a)
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if the Award has Vested; and
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(b)
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by a Participant who has remained an Employee during the relevant Performance Period and until
the Vesting Date.
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4.2
As soon as reasonably practicable after the end of the Performance Period the Committee shall notify Participants of the
extent to which any Performance Conditions have been satisfied and the Award has Vested. An Award may be realised in respect of
such number of Shares as have Vested in accordance with these rules.
4.3
Save as otherwise provided in these rules, an Award shall lapse automatically on the Participant ceasing to be an employee
of a member of the Group at any time before the Vesting Date applicable to the Award.
4.4
Where a Participant ceases to be employed by a member of the Group at any time before the Vesting Date applicable to an
Award by reason of:
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(b)
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disability (as agreed by the Committee); or
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(c)
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any other reason where the Committee so determines in its absolute discretion,
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his Award shall continue, and will Vest
and be realised at the end of the Performance Period subject to the achievement of any relevant Performance Conditions at that
time PROVIDED THAT in all cases where the Termination Date occurs before the expiry of any relevant Performance Period and
Awards are realised pursuant to this rule 4.4, the number of Shares in respect of which an Award may be realised shall be the number
in respect of which the Award has Vested (subject to any adjustments under rule 10) multiplied by the fraction A/B (where
A is that part of the Performance Period measured in complete months from the start of the Performance Period to
the Termination Date and B is 36 or such other number as is equal to the number of months in the Performance Period)
SAVE THAT:
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(d)
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the Committee may at its discretion, in appropriate circumstances, determine that Awards may be
realised immediately in accordance with rule 4.5;
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(e)
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if the Participant ceases to be an employee of the Group in appropriate cases under rule 4.4(c),
the Committee may, in its absolute discretion, disapply or alter the fraction stated above to release a greater number of Shares
if it considers that the Participant’s contribution to the business of the Group would not otherwise be properly recognised;
and
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(f)
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the Committee may at its discretion, in appropriate circumstances, make a provisional determination
as to preservation of an Award in accordance with this rule 4.4 and only make a final determination at the end of the Performance
Period.
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Failing any such realisation the Awards
shall lapse automatically. For the avoidance of doubt, an Award realisable under this rule 4.4 may lapse at an earlier date by
virtue of rule 8.
4.5
Where the Committee determines that an Award may be realised immediately under rule 4.4, the number of Shares in respect
of which the Award Vests shall be determined by the Committee by reference to the extent to which any applicable Performance Conditions
are met on the Termination Date, subject to modification if the Committee considers that the Performance Conditions would be met
to a greater or lesser extent at the end of the original Performance Period. The number of Shares in respect of which an Award
may be realised under this rule 4.5 shall (unless proviso (e) to rule 4.4 applies) be the number of Shares in respect
of which the Award has Vested (subject to any adjustment under rule 10) multiplied by the fraction A/B (where
A is that part of the Performance Period measured in complete months from the start of the Performance Period until
the Termination Date and B is 36 or equal to such other number of months in the original Performance Period.
4.6
For the purpose of rules 4.4 and 4.5, a Participant shall not, to the extent required by applicable law, be treated as ceasing
to be an Employee if absent from work wholly or partly because of new child leave, until he or she ceases to be entitled to exercise
any statutory or contractual entitlement to return to work.
4.7
For the purposes of rules 4.4 and 4.5, the Committee may, in its absolute discretion, determine that where a Participant
provides services as an independent contractor or self-employed consultant to a member of the Group after ceasing employment with
the Group, the Participant shall not be treated as ceasing to be an Employee until the end of the consultancy or contractual period.
4.8
Where a Participant ceases to be employed by a member of the Group at any time before the Vesting Date applicable to an
Award by reason of the demerger by the Company of the business or division in which he is employed, the Committee may determine
in its absolute discretion for some or all Participants leaving the Group as a result of the demerger that part or all of the Award
shall vest (in which case the provisions of rule 4.4 or 4.5 shall apply) and/or that Awards held by such Participants should be
rolled over into equivalent awards over shares in the demerged company (or such terms as the Committee shall agree with that company).
This is without prejudice to the operation of the provisions in rules 8.6 and 10.1 in the event of a demerger.
4.9
The Committee may, at its discretion, decide that (i) if any Award (whether or not it has Vested) is discovered to have
been granted (or, if relevant, to have Vested) on the basis of a material mis-statement or miscalculation in the published results
of the Group; (ii) if any Award is discovered to have Vested on the basis of a performance condition whose assessment was based
on error, misleading information or inaccurate assumptions; or (iii) if any Award is held by a Participant who is found to have
committed an act of gross misconduct, the number of Shares under such Award should be reduced or eliminated; (for the avoidance
of doubt, adjustments in the fair value of the Company’s assets shall not be treated as falling within subclauses (i) or
(ii) of this clause 4.9 unless the Committee demonstrates bad faith in the assessment of fair value of the Company’s assets
in a previous year which is affected by such adjustment). To achieve this in the case of an Award that has Vested, the Committee
may, no later than six months following the event in (i) to (iii) of this clause 4.9 (but in any event before the fifth anniversary
of the Vesting Date), decide that the Participant should repay (whether by re-transfer of Shares, or payment of cash proceeds)
to the Company (or as it shall direct) an amount equal to some or all of the benefit received (such benefit to be computed on an
after-tax basis unless the Participant is able to recover or obtain relief for the tax so paid).
4.10
Where a Participant holds Vested Shares that are subject to a Holding Period and ceases to be employed by a member of the
Group during that Holding Period, such Shares shall continue to be subject to the Holding Period imposed by the Committee save
that the Committee may, at its discretion, allow early release of some or all of the Vested Shares prior to the end of the Holding
Period.
5.
Method and Extent of Exercise
5.1
Save as otherwise provided in these rules, subject to the Committee being satisfied that any applicable Performance Conditions
have been fulfilled, a Participant’s Award will be realised at the end of the Performance Period. Subject to rule 5.2, a
Participant need take no action to realise his Award.
5.2
Where an Award is granted on terms that the Participant must call for Vested Shares, he may exercise the call by written
notice to the Company in the form required by the Company at any time during the period of 6 months following the Vesting
Date SAVE THAT where the Vested Shares may be called for as a result of a
relevant event occurring under rule 8, the Participant shall be deemed to have called for such Vested Shares on the occurrence
of the relevant event.
5.3
Where the realisation of an Award or the transfer of any Shares under the Plan would be prohibited by law, by MAR, or the
Company’s Share Dealing Code, the Vesting Date shall not occur and the period during which Shares may be allotted, issued
or transferred shall not be treated as commencing, until such period of prohibition has ceased (but, for the avoidance of doubt
the Performance Conditions shall only be treated as applying in respect of the original Performance Period).
6.
Issue or Transfer of Shares
6.1 The
Committee shall procure the issue or transfer of Shares to be allotted or transferred pursuant to the realisation of an Award
within 30 days following the Vesting Date of the Award. Treasury Shares may be used to satisfy Awards.
6.2
Shares to be issued pursuant to the Plan will rank pari passu in all respects with the Shares then in issue, except that
they will not rank for any rights attaching to Shares by reference to a record date preceding the Vesting Date.
6.3
Save for where a Holding Period applies to the Shares pursuant to rule 6.5 below, Shares to be transferred pursuant to the
Plan will be transferred free of all liens, charges and encumbrances and together with all rights attaching thereto, except that
they will not rank for any rights attaching to Shares by reference to a record date preceding the Vesting Date.
6.4
Subject to rule 12.1 below, the Company and its Subsidiaries may provide funds to the Trustees to enable the Trustees
to purchase existing Shares or subscribe for new Shares in the Company for the purpose of the Plan.
6.5
At the Date of Grant the Committee will in its absolute discretion decide whether or not to impose a mandatory holding
period on the Shares to be allotted or transferred on the Vesting Date pursuant to the realisation of the Award (a Holding
Period). Notwithstanding any other rules of the Plan, a Participant will (a) be entitled to sell sufficient Shares to
satisfy any tax liability of the Participant incurred in connection with the vesting of the Award and (b) in respect of the remaining
Shares, be the full beneficial owner of such Shares during the Holding Period (which includes, for the avoidance of doubt, the
right to receive any dividends paid during the Holding Period), save that the Shares may not be transferred, assigned, sold, pledged
or otherwise disposed of during the Holding Period. The duration of the Holding Period will be communicated to the Participant
at the Date of Grant. The Committee may impose such requirements as it considers necessary or desirable to ensure Participants
observe the Holding Period including, but not limited to, requiring Participants to hold the Shares via a nominee.
7.
Lapse of Awards
7.1
Awards shall lapse upon the occurrence of the earliest of the following events:
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(a)
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to the extent that it is determined that the Performance Conditions applicable to an Award have
not been met following the expiry of the Performance Period, the date of expiry of the Performance Period;
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(b)
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in relation to an Award which is granted on terms that the Participant must call for Vested Shares,
the date of six months following the Vesting Date;
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(c)
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the date of the expiry of any relevant period specified in rule 8; or
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(d)
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the date of the Participant being deprived of the legal or beneficial ownership of the Award by
operation of law, or doing or omitting to do anything which causes him to be so deprived or becomes bankrupt.
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8.
General Offer for the Company etc.
8.1
If any person (either alone or together with any person acting in concert with him) makes a general offer to acquire the
whole of the share capital of the Company (other than those shares which are already owned by him and/or any person acting in concert
with him), the Company shall, as soon as reasonably practicable thereafter, give notice to each Participant of such general or
other offer. Each Participant may realise his Awards in accordance with rule 8.8 on the date on which the offer becomes or
is declared unconditional in all respects, or in the case of an Award which is granted in the form of a right to call for Shares,
within the period of 7 days following that date (or such shorter period as the Board shall permit). Failing any permitted realisation,
the Awards shall lapse automatically upon the expiry of the 7 day period.
Scheme of Arrangement
8.2
If a court shall direct that a meeting of the holders of Shares be convened pursuant to section 107 of The Companies (Guernsey)
Law, 2008 for the purposes of considering a scheme of arrangement, each Participant may realise his Awards conditionally in accordance
with rule 8.8 on the scheme of arrangement being either approved by the shareholders' meeting or sanctioned by the court
(as determined by the Committee in its absolute discretion) (the Relevant Condition), between the date of the court's
direction and twelve noon on the day immediately preceding the date for which the shareholders' meeting is convened.
8.3
Failing any permitted realisation, the Awards (or such part thereof as the Committee may specify) shall be incapable of
realisation between the last time upon which permitted realisation may occur and the first date on which it can be determined whether
or not the Relevant Condition is satisfied. If the Relevant Condition is not satisfied, the Awards shall continue. If the Relevant
Condition is satisfied, the Awards (or such part thereof as the Committee may specify) shall lapse automatically on the day immediately
after the date on which the scheme of arrangement is sanctioned by the court.
8.4
The Committee shall endeavour to procure that, where a Participant has conditionally realised his Awards in accordance with
rule 8.2 above prior to twelve noon on the day immediately preceding the date for which the shareholders’ meeting is
initially convened, the scheme of arrangement shall, so far as it relates to Shares, be extended to such Participant as if each
Share in respect of which the Award was conditionally realised had been allotted and issued, or transferred, to him by that time.
8.5
Awards shall not be realisable without the consent of the Committee under the foregoing provisions of this rule 8 if
the purpose and effect of the scheme of arrangement is to create a new holding company for the Company, such company having substantially
the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement. Awards
will in such circumstances continue and be treated as an award over such number of shares in the holding company as is determined
to be appropriate by the Committee, and references in this Plan to “the Company” shall be construed as references to
such holding company as appropriate.
Demerger
8.6
If the Committee becomes aware that the Company is or is expected to be affected by any demerger, dividend in specie, super-dividend
or other transaction which, in the opinion of the Committee, would affect the current or future value of any Awards, the Committee,
acting fairly, reasonably and objectively, may in its absolute discretion allow some or all Awards to be realised in accordance
with rule 8.8. The Committee shall specify the period in which such Awards shall be realisable and whether such Awards shall
lapse at the end of the specified period.
Voluntary Winding-up
8.7
If notice is duly given of a resolution for a voluntary winding-up of the Company then the Committee, acting fairly,
reasonably and objectively, may in its absolute discretion allow some or all Awards to be realised in accordance with rule 8.8.
The Committee shall specify the period in which such Awards shall be realisable, and whether such Awards shall lapse at the end
of the specified period. The Awards shall be realisable within the period of 30 days following the date of a resolution for the
voluntary winding up of the Company being passed and shall lapse automatically thereafter.
Application of Performance Conditions
and pro rating
8.8
Where an Award becomes realisable before the expiry of the relevant Performance Period under rules 8.1 to 8.7, the number
of Shares in respect of which the Award shall Vest shall be determined by the Committee by reference to the extent to which any
applicable Performance Conditions are met as at the date of the relevant event, subject to modification if the Committee considers
that the Performance Conditions would have been met to a greater or lesser extent at the end of the original Performance Periods.
The number of Shares in respect of which an Award may be realised shall be the number of Shares in respect of which the Award has
Vested (subject to any adjustments under rule 10) multiplied by the fraction A/B (where A is that part
of the Performance Period measured in complete months from the start of the Performance Period to the date on which the relevant
event occurs and B is 36 or such other number as is equal to the number of months in the original Performance Period),
SAVE THAT the Committee may at its discretion, in appropriate circumstances,
disapply or alter the fraction stated above to release a greater number of Shares if it considers that the contribution of Participants
to the creation of shareholder value during the Performance Period would not otherwise be properly recognised.
9.
Taxation
9.1
Any liability of a Participant to taxation or social security contributions in respect of an Award shall be for the account
of the relevant Participant, and the release of any Shares the subject of a Participant’s Award or the exercise of any such
Award shall be conditional on the Participant complying with any arrangements specified by the Company or the Trustees for the
payment of taxation and any social security contributions (including, without limitation, the sale of sufficient Shares to enable
the Company or the trustee or any employing company in the Group to satisfy its obligations in respect of deduction of taxation
and employee’s social security contributions at source).
9.2
A Participant shall enter into such tax elections (including pursuant to section 431 of the UK Income Tax (Earnings and
Pensions) Act 2003) in respect of his Shares as the Company may reasonably require.
10.
Adjustments of Awards
10.1
In the event of any Capital Reorganisation (or the implementation by the Company of a demerger or payment of a super-dividend
which would otherwise materially affect the value of an Award) the Committee may adjust the number of Shares subject to Awards
(including, for the avoidance of doubt, Vested Shares in respect of which any Award has been realised but Shares have not yet been
transferred to the Participant) to such extent and in such manner as it thinks fit.
10.2
Any adjustments to Awards made pursuant to this rule 10 shall be notified to the relevant Participants.
11.
Amendment and Administration
11.1
The decision of the Committee shall be final and binding in all matters relating to the Plan and it may at any time discontinue
the grant of further Awards.
11.2
The Committee may amend any of the provisions of the Plan in any way it thinks fit, provided that:
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(a)
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the Committee shall not make any amendment that would materially prejudice the interests of existing
Participants except with the prior consent or sanction of Participants who, if they realised their Awards in full, would thereby
become entitled to not less than three-quarters of all the Shares which would fall to be allotted or transferred upon realisation
in full of all outstanding Awards, provided that the foregoing consent requirement shall not apply to any such amendment that the
Committee determines is made in order to comply with applicable law, tax rules, securities exchange rules or accounting rules;
and
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(b)
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no amendment which in the reasonable opinion of the Committee is to the advantage of Employees
or Participants may be made to:
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(i)
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the definition of Employee in rule 1.1;
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(ii)
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the limitations on the numbers of Shares subject to the Plan;
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(iii)
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the maximum entitlement of an Employee under the Plan;
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(iv)
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the basis for determining a Participant’s entitlement to Shares under the Plan;
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(v)
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the terms of Shares to be provided under the Plan;
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(vi)
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the adjustment provisions of the Plan;
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without the prior approval of
the Company in general meeting (aa) except in the case of minor amendments to benefit the administration of the Plan, to take account
of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for Participants or
any member of the Group, or (bb) as otherwise permitted under these rules; and
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(c)
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without prejudice to any provision of the Plan which provides for the lapse of an Award, the Committee
may not cancel an Award unless the Participant agrees in writing to such cancellation.
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11.3
Notwithstanding any other provision of the Plan, the Committee may establish appendices to the Plan for the purpose of
granting Awards (i) to Employees who are or may become primarily liable to tax outside the United Kingdom on their remuneration,
subject to such modifications as may be necessary or desirable to take account of overseas tax, exchange control, securities laws
or other applicable laws; or (ii) to employees of any member of the Group whose terms of service require him to devote substantially
the whole of his working time to a specific division within the Group, provided that any Shares made available under such appendices
shall count towards the limits set out in rule 3.
11.4
Where the Committee is satisfied that an Award involving real Shares is not appropriate for legal, regulatory or tax reasons,
a phantom Award may be granted. This will deliver a cash payment equal to the net benefit a Participant would have derived from
the Vesting or exercise of a share Award. In appropriate circumstances, share based Awards may be satisfied (in whole or in part)
in cash.
12.
General
12.1
Any member of the Group may provide money to the trustees of any trust or any other person to enable them or him to acquire
Shares to be held for the purposes of the Plan, or enter into any guarantee or indemnity for the purposes, to the extent not prohibited
by The Companies (Guernsey) Law, 2008 or otherwise.
12.2
The Plan shall terminate on the tenth anniversary of the approval of the Plan by shareholders at the Company’s general
meeting on 13 May 2020 or at any earlier time by the passing of a resolution by the Committee or an ordinary resolution of the
Company in general meeting. Termination of the Plan shall be without prejudice to the subsisting rights of Participants.
12.3
An Award will not constitute a contract of employment. The rights and obligations of any individual under the terms of his
office or employment with the Group shall not be affected by his participation in the Plan or any right he may have to participate
in the Plan. An individual who participates in the Plan waives all and any rights to compensation or damages in consequence of
the termination of his office or employment with any company for any reason whatsoever (whether lawfully or unlawfully) insofar
as those rights arise or may arise from his ceasing to have rights under the Plan as a result of such termination, or from the
loss or diminution in value of such rights or entitlements. In the event of any conflict between the terms of this rule 12.3 and
the Participant’s terms of employment, this rule will take precedence.
12.4
The existence of any Award shall not affect in any way the right or power of the Company or its shareholders to make or
authorise any or all adjustments, recapitalisations, reorganisations or other changes in the Company’s capital structure,
or any merger or consolidation of the Company, or any issue of Company shares, bonds, debentures, preferred or prior preference
stocks ahead of, or convertible into, or otherwise affecting the Shares or the rights thereof, or the dissolution or liquidation
of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
12.5 Any
notice or other document required to be given under or in connection with the Plan may be delivered to a Participant or sent
by post to him at his home address according to the records of his employing company or such other address as may appear to
the Company to be appropriate including any electronic address. Notices sent by post shall be deemed to have been given on
the day following the date of posting and notices sent by electronic means shall be deemed to have been given twelve hours
after the time of despatch or at such earlier time as receipt is acknowledged. Any notice or other document required to be
given to the Company under or in connection with the Plan may be delivered or sent by post to it at its registered office (or
such other place or places as the Company may from time to time determine and notify to Participant).
12.6
Benefits under the Plan shall not be pensionable.
12.7
The Company, or where the Committee so directs any member of the Group, shall pay the appropriate stamp duty on behalf of
Participants in respect of any transfer of Shares on the realisation of Awards.
12.8
These Rules shall be governed by and construed in accordance with English law. All disputes arising out of or in connection
with the rules shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules shall be deemed to be
incorporated by reference into this rule 12.8. The number of arbitrators shall be one. The seat, or legal place, of arbitration
shall be London. The language to be used in the arbitral proceedings shall be English. The governing law of the contract shall
be the substantive law of England.
Schedule
1
US Schedule
1.1 Pursuant
to rule 11.3 of the Plan, the Committee has established this Schedule 1 for the purpose of granting Awards to Employees who are
or become US Taxpayers, US Participants or California Participants. This Schedule 1 shall apply to all Awards to Employees who
are US Taxpayers, US Participants or California Participants. In the event that a Participant becomes a US Taxpayer, US Participant
or California Participant subsequent to the Date of Grant of an Award under the Plan, then such Award shall immediately be amended
in a manner consistent with this Schedule 1.
1.2 In
this Schedule 1, the following words and expressions shall have the following meanings, respectively, and such words and expressions
shall be appended to the end of the existing rule 1.1:
California Participant
means a US Participant who is a resident of the State of California;
California Securities Law
means, collectively, Section 25102(o) of the California Corporate Securities Law of 1968, as amended, and the regulations issued
thereunder by the California Commissioner of Corporations, including Section 260.140.42 relating to compensatory purchase plans;
Code means the
US Internal Revenue Code of 1986, as it may be amended from time to time;
Rule 701 means
Rule 701 of the Securities Act;
Section 409A means
Section 409A of the Code and the treasury regulations, interpretations and administrative guidance issued thereunder;
Securities Act
means the US Securities Act of 1933, as it may be amended from time to time;
Short-Term Deferral Period
means the period commencing on the date that an Award first is no longer subject to a substantial risk of forfeiture for US federal
income tax purposes and ending upon the fifteenth day of the third month following the end of the calendar year in which the Award
first is no longer subject to such substantial risk of forfeiture, or if later, the fifteenth day of the third month following
the end of the taxable year of the Company in which the Award first is no longer subject to such substantial risk of forfeiture,
which shall be determined and administered consistent with the short-term deferral exception to Section 409A described in Section
1.409A-1(b)(4) of the US Treasury Regulations.
US means the United
States of America;
US Participant
means an Employee or a Participant who is a US citizen or resident or is otherwise subject to the tax and securities laws of the
US;
US Taxes mean applicable
US federal, state and local income taxes and employment taxes;
US Taxpayer means
an Employee or a Participant who is subject to US Taxes at the Date of Grant, is expected to become subject to US Taxes following
the Date of Grant or does become subject to US Taxes following the Date of Grant, while any part of an Award remains outstanding;
and
US Treasury Regulations
means the treasury regulations issued under the Code.
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1.3
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The definition of “Termination Date” shall be deleted from the existing
rule 1.1 and replaced with the following:
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“Termination
Date means the date on which the Participant has a separation from service from the Group within the meaning of Section
409A.”
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1.4
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References to a rule in this Schedule 1 shall be to the rules of the Plan.
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2.
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Provisions Applicable to Awards to US Taxpayers
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2.1 The
following sentence shall be appended to the end of the existing rule 2.1:
“Awards to US Taxpayers
will only be granted in the form of a conditional allocation of Shares, and pursuant to these rules but subject to the additions,
deletions and revisions to these rules set forth at Schedule 1 (US Schedule).”
2.2 Rule
4.6 shall be deleted and replaced with the following:
“For the purposes of rules
4.4 and 4.5, a Participant shall not, to the extent required by applicable law, be treated as ceasing to be an Employee if absent
from work by reason of any approved leave that does not constitute a termination of the Participant’s employment, until such
Participant ceases to be entitled to exercise any statutory or contractual entitlement to return to work.”
2.3 A new rule 4.11 shall be added as
follows:
“For Awards granted to
US Taxpayers, if payment of the Award pursuant to rule 4.4 following the end of the Performance Period would result in payment
of the Award being made later than the latest possible date for payment of Awards to US Taxpayers under rule 6.2 (or rule 8.9,
if applicable), then the Committee shall attempt to use its discretion under rule 4.4 to determine that the Award be realised in
accordance with rule 4.5, and the Vested Shares as determined under rule 4.5, shall be issued or transferred in accordance with
rule 6.2 (or rule 8.9, if applicable), and the payment for the dividends (grossed-up, where relevant, for any associated tax credit)
that would have been paid on those Vested Shares over the Performance Period, shall be made in accordance with rule 6.7 (or rule
8.9, if applicable).”
2.4 Rule
5 shall be deleted.
2.5 Rule
6 shall be deleted and replaced with the following:
“6.1 Save as otherwise
provided in these rules, if the Committee is satisfied that the Performance Conditions have been fulfilled, a Participant’s
Award will be realised at the end of the Performance Period. A Participant need take no action to realise his Award.
6.2 The
Committee shall procure the issue or transfer of Shares to be allotted or transferred pursuant to the realisation of an Award within
30 days following the Vesting Date of the Award; provided, however, notwithstanding any other provision of the Plan, such issuance
or transfer of Shares must be made no event later than the end of the Short-Term Deferral Period or such later date, if any, permissible
under Section 409A. Treasury Shares may be used to satisfy Awards.
6.3 Where
the realisation of an Award or the transfer of any Shares under the Plan would be prohibited by law, by MAR, or the Company’s
Share Dealing Code, the payment under rule 6.2 may be delayed until such period of prohibition has ceased, provided that the issuance
or transfer of the Shares must be made no later than the end of the Short-Term Deferral Period or such later date that would not
result in adverse tax consequences under Section 409A.
6.4 Shares
to be issued pursuant to the Plan will rank pari passu in all respects with the Shares then in issue, except that they will not
rank for any rights attaching to Shares by reference to a record date preceding the Vesting Date.
6.5 Save
where a Holding Period applies to the Shares pursuant to rule 6.7, Shares to be transferred pursuant to the Plan will be transferred
free of all liens, charges and encumbrances and together with all rights attaching thereto, except that they will not rank for
any rights attaching to Shares by reference to a record date preceding the Vesting Date.
6.6 Subject
to rule 12.1 below, the Company and its Subsidiaries may provide funds to the Trustees to enable the Trustees to purchase existing
Shares or subscribe for new Shares in the Company for the purpose of the Plan. No Participant who is a US Taxpayer shall have a
right to any funds or Shares held by such a trust to the extent necessary to avoid such Participant from becoming subject to US
Taxes on a date prior to the date on which payment of the Award would otherwise be made to such Participant under the Plan, and
the Company or its Subsidiaries may take such action as needed to avoid such early subjection to US Taxes to Participants who are
US Taxpayers.
6.7 At
the Date of Grant the Committee will in its absolute discretion decide whether or not to impose a mandatory holding period on
the Shares to be allotted or transferred on the Vesting Date pursuant to the realisation of the Award (a Holding
Period). Notwithstanding any other rules of the Plan, a Participant will (a) be entitled to sell sufficient Shares to
satisfy any tax liability of the Participant incurred in connection with the vesting of the Award and (b) in respect of the
remaining Shares, be the full beneficial owner of such Shares during the Holding Period (which includes, for the avoidance of
doubt, the right to receive any dividends paid during the Holding Period), save that the Shares may not be transferred,
assigned, sold, pledged or otherwise disposed of during the Holding Period. The duration of the Holding Period will be
communicated to the Participant at the Date of Grant. The Committee may impose such requirements as it considers necessary or
desirable to ensure Participants observe the Holding Period including, but not limited to, requiring Participants to hold the
Shares via a nominee.”
2.6 Except
for the additional and replacement language to the Plan made by this Schedule 1, references in the Plan to rule 5.1, 5.3, 6.1,
6.2, 6.3, 6.4 or 6.5 shall be revised to refer to rule 6.1, 6.3, 6.2, 6.4, 6.5, 6.6 and 6.7, respectively.
2.7 Rule 7.1(b) shall be deleted.
2.8 Rule
8.1 shall be deleted and replaced with the following:
“If any person (either
alone or together with any person acting in concert with him) makes a general offer to acquire the whole of the share capital of
the Company (other than those shares which are already owned by him and/or any person acting in concert with him), the Company
shall, as soon as reasonably practicable thereafter, give notice to each Participant of such general or other offer. Each Participant
may Vest in his Awards in accordance with rule 8.8 upon the date on which the offer becomes or is declared unconditional in
all respects, and the Company may pay the Award to the Participant and issue or procure the transfer to the Participant of the
number of Shares realised in accordance with rule 8.8. Failing any permitted realisation, the Awards shall continue.”
2.9 A
new rule 8.9 shall be added as follows:
“In the event that an Award
is realized and Vests pursuant to this rule 8, and notwithstanding any other provision of the Plan, the Committee shall issue or
procure the transfer of Shares in respect of which the Award has Vested to the Participant following the event giving rise to the
realisation under this rule 8, but in no event later than the end of the Short-Term Deferral Period (or such later date, if any,
permissible without adverse tax consequences, under Section 409A).”
2.10 Rule
9.1 shall be deleted and replaced with the following:
“Any liability of a
Participant to withholding for any US Taxes in respect of an Award (including, for the avoidance of doubt, any cash amount
paid under rule 6.7 or 8.9) shall be for the account of the relevant Participant, and the release of any Shares the subject
of a Participant’s Award shall be conditional on the Participant complying with any arrangements specified by the
Company for the payment of any US Taxes required to be withheld (including, without limitation, the sale of sufficient Shares
to enable the Company or any employing company in the Group to satisfy its obligations in respect of deduction of the US
Taxes required to be withheld at source).”
2.11 A
new rule 12.9 shall be added as follows:
“Awards granted to US Taxpayers
are intended to be exempt from the requirements of Section 409A pursuant to the short-term deferral exception described in Section
1.409A-1(b)(4) of the US Treasury Regulations, and otherwise compliant with Section 409A, and the Plan and any Award granted to
a US Taxpayer shall be interpreted, operated and administered in a manner consistent with such intention. Notwithstanding anything
contrary contained in the Plan or any Award, the Shares acquired upon Vesting of any Award shall be transferred and any cash payment
for dividends (grossed-up, where relevant, for any associated tax credit) on those Shares shall be made to a US Taxpayer no later
than the end of the applicable Short-Term Deferral Period or such later date, if any, permissible under Section 409A.
Notwithstanding any other provision
of the Plan to the contrary, the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the
right, but shall not be required, to unilaterally amend or modify the Plan, Schedule 1 or any Award Certificate with respect to
an Award granted to a US Taxpayer so that the Award qualifies for the short-term deferral exemption from Section 409A; provided,
however, that the Committee makes no representations that Awards granted to US Taxpayers shall comply with Section 409A and
makes no undertaking to preclude Section 409A from applying to Awards granted to US Taxpayers.
No amendment may be made to the
Plan or this Schedule 1, or apply to an Award granted to a US Taxpayer, if and to the extent that the amendment would cause such
Award to violate Section 409A.”
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3.
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Supplemental Terms for US Participants (including California Participants)
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3.1 The
Committee establishes these terms for purposes of satisfying US federal and any applicable US state securities laws.
3.2 Any
Award granted under the Plan to a Participant who is a US Participant on the Date of Grant shall be subject to the following additional
limitations, terms, and conditions:
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(a)
|
except to the extent that the Shares to be issued pursuant to an Award are subject to a valid and
effective registration statement that has been filed by the Company with the US Securities and Exchange Commission or as otherwise
provided by rule 3.3 of this Schedule 1, each Award shall be granted in accordance with Rule 701;
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(b)
|
no Award shall be granted and no Share shall be delivered or sold unless such grant, delivery and
sale is in compliance with US federal securities laws and any applicable US state securities laws; and
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|
(c)
|
Shares acquired pursuant to the Plan may only be resold in compliance with the registration requirements
or an applicable exemption from the registration requirements of the Securities Act.
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3.3 Notwithstanding
rule 3.2 of this Schedule 1, Awards may be granted under the Plan to any US Participant in accordance with any other registration
exemption permitted under applicable US law or by qualification under such law, subject to such conditions as required by the applicable
US law.
3.4 In
the event that Awards are intended to be granted in accordance with Rule 701, the amount of Shares sold under the Plan to US Participants
during any consecutive 12-month period shall not exceed $10 million.
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4.
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Supplemental Terms for California Participants
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4.1 The
Committee establishes these terms for purposes of satisfying the requirements of California Securities Law. The terms of this rule
4 to this Schedule 1 shall apply to Awards granted to California Participants except to the extent that the Shares to be issued
pursuant to such Awards are subject to a valid and effective registration statement that has been filed by the Company with the
US Securities and Exchange Commission.
4.2 Subject
to the final sentence of rule 4.1 of this Schedule 1, any Award granted under the Plan to a Participant who is a California Participant
on the Date of Grant shall be subject to the following additional limitations, terms, and conditions, which for purposes of compliance
with California Securities Law only shall be deemed to be a separate plan maintained solely for California Participants:
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(a)
|
except to the extent otherwise provided by rule 4.3 of this Schedule 1, each Award shall be granted
in accordance with Rule 701;
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(b)
|
Shares must be realised, if at all, prior to 17 November 2025;
|
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(c)
|
the rights of a California Participant to acquire Shares under the Plan shall be non-transferable
except to the extent of a transfer by will, laws of descent and distribution, to a revocable trust, or as permitted by Rule 701;
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(d)
|
for purposes of rule 10 of the Plan, the Committee shall proportionately adjust (in the manner
it deems appropriate) the number of Shares issuable under an Award in the event of a stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification or other distribution of the Company’s equity securities without the receipt
of consideration by the Company of or on the Shares; and
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(e)
|
the number of California Participants may not exceed 35 unless the Plan is approved by holders
of a majority of the outstanding securities of the Company entitled to vote within 12 months of the issuance of Shares under the
Plan in California.
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4.3 Notwithstanding
rule 4.2 of this Schedule 1, Awards may be granted under the Plan to any California Participant in accordance with any other registration
exemption permitted under California Securities Law or by qualification under such law, subject to such conditions as required
by such law.
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5.
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Amendment and Administration
|
5.1 For
avoidance of doubt, the Committee, or any sub-committee appointed by the Committee, has full authority, consistent with the rules,
to administer this Schedule 1, including authority to interpret and construe any provision of this Schedule 1, to identify Employees
with respect to whom the provisions of this Schedule 1 may apply, and to adopt any regulations for administering this Schedule
1 and any documents it thinks necessary or appropriate. The decision of the Committee on any matter concerning this Schedule 1
will be final and binding on all parties, notwithstanding any delegation of authority to a sub-committee. The authority of the
Committee to amend the Plan in rule 11 shall apply equally to this Schedule 1.
Exhibit 8.1
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Name of Subsidiary
|
Jurisdiction of Incorporation
|
Proportion of Ownership Interest
|
|
Burford Capital LLC
|
United States
|
100%
|
|
Ireton LLC
|
United States
|
100%
|
|
Prospect Investments LLC
|
United States
|
100%
|
|
Winfields LLC
|
United States
|
100%
|
|
Burford Capital Holdings (UK) Limited
|
United Kingdom
|
100%
|
|
Burford Capital PLC
|
United Kingdom
|
100%
|
Exhibit 15.1
Consent of Independent Registered Public
Accounting Firm
We
consent to the reference to our firm under the caption “Experts” and to the use of our report dated July 6, 2020 (except
for the section titled “Sensitivity of level 3 valuations” of Note 21, as to which the date is September 11, 2020),
in the Registration Statement on Form 20-F of Burford Capital Limited dated September 11, 2020.
/s/ Ernst & Young LLP
London, United Kingdom
September 11, 2020
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