RBS 2009 Annual Report Download - page 371

Additional information
369RBS Group Annual Report and Accounts 2009
State Aid Commitment Deed
As a result of the State aid granted to the company, it was required to
work with HM Treasury to submit a State aid restructuring plan to the
European Commission, which has now been approved under the State
aid rules. The company has agreed a series of measures to be
implemented over a four year period, which supplement the measures in
the company’s strategic plan.
The Group entered into a State Aid Commitment Deed with HM Treasury
which provides that the Group will comply or procure compliance with
these measures and behavioural commitments. The Group agreed to do
all acts and things necessary to ensure HM Treasury’s compliance with
its obligations under any European Commission decision approving
State aid to the Group.
The State Aid Commitment Deed also provides that if the European
Commission adopts a decision that the UK Government must recover
any State aid (a “Repayment Decision”) and the recovery order of the
Repayment Decision has not been annulled or suspended by the Court
of First Instance or the European Court of Justice, then the Group must
repay HM Treasury any aid ordered to be recovered under the
Repayment Decision.
The State Aid Commitment Deed also provides for the Group’s
undertakings in respect of State aid to be modified in certain limited
circumstances. However, HM Treasury has undertaken that it will not,
without the consent of the Group, agree modifications to the Group’s
undertakings with respect to State aid which are significantly more
onerous to the Group than those granted in order to obtain the State aid
approval.
State Aid Costs Reimbursement Deed
Under the State Aid Costs Reimbursement Deed, the Group has agreed
to reimburse HM Treasury for fees, costs and expenses associated with
the State aid and State aid approval.
Exchange Offers and Tender Offers
Pursuant to two Dealer Management Agreements dated 26 March 2009
entered into between (i) RBS Financing Limited, the Royal Bank, UBS
Limited and HSBC Bank plc and (ii) the company, RBS Financing
Limited, Greenwich Capital Markets Inc., UBS Securities LLC and HSBC
Securities (USA) Inc. and related offering memoranda dated the same
date, RBS Financing Limited, a wholly-owned subsidiary of the
company, invited (1) holders of certain existing Tier 1 capital and upper
Tier 2 capital securities of the Group to offer to exchange any or all of
such securities for new senior unsecured notes of the company and
(2) holders of certain existing Tier 1 capital and upper Tier 2 capital
securities of the Group to tender any or all of such securities for
purchase for cash. As a result of the exchange offers and tender offers,
the Group realised an aggregate pre-tax gain of £4.6 billion (including
gains from associated hedges).
Agreement by RBS Sempra Commodities to sell its metals, oil and
European energy business lines
On 16 February 2010, the company announced that RBS Sempra
Commodities, a joint venture owned by RBS plc and Sempra Energy,
had agreed to sell to J.P. Morgan its metals, oils and European energy
business lines for a total cash consideration equal to tangible net asset
value plus a premium of US$468 million, US$1.7 billion as at 30
November 2009 (unaudited), of which RBS's share post partner
distributions will be approximately 47 per cent. Completion of the
transaction is subject to certain conditions including regulatory
approvals.