Use these links to rapidly review the document
Table of Contents Prospectus Supplement
Table of Contents
Table of Contents
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-236162
The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement together with the
accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not
permitted.
Subject to Completion
Preliminary Prospectus Supplement dated February 11, 2020
Prospectus Supplement
(to Prospectus dated January 30, 2020)
Novartis Capital Corporation
$ % Notes due February , 2025
Issue price: %
$ % Notes due February , 2027
Issue price: %
$ % Notes due August , 2030
Issue price: %
$ % Notes due August , 2050
Issue price: %
fully and unconditionally guaranteed by
Novartis AG
Interest payable on each February and August
The % Notes due February , 2025, which we refer to as the "2025 notes", will bear interest at a rate of % per
year. The % Notes due February , 2027, which we refer to as the "2027 notes", will bear interest at a rate of % per year.
The % Notes due
August , 2030, which we refer to as the "2030 notes", will bear interest at a rate of % per year. The % Notes due
August , 2050,
which we refer to as the "2050 notes", will bear interest at a rate of % per year. We will pay interest on each of the 2025 notes, the 2027 notes, the 2030 notes and the 2050 notes each
February and August , commencing on August , 2020.
We
refer to the 2025 notes, the 2027 notes, the 2030 notes and the 2050 notes collectively as the "notes." Unless we redeem the notes earlier, the 2025 notes will mature on
February , 2025, the 2027 notes will mature on February , 2027, the 2030 notes will mature on August , 2030 and the 2050 notes will
mature on August , 2050. There is no sinking fund for the notes. The notes will rank equally in right of payment with all other senior, unsecured debt obligations of Novartis
Capital Corporation. The guarantees of the notes by Novartis AG will rank equally in right of payment with all other senior, unsecured debt obligations of Novartis AG.
We
may redeem some or all of the notes of each series at any time and from time to time at our option at the applicable redemption prices determined in the manner described in this prospectus
supplement. See "Description of the Notes Optional Redemption of the Notes." The notes will otherwise not be redeemable prior to maturity except upon the occurrence of
certain tax events described in this prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or
the accompanying prospectus to which it relates is truthful or complete. Any representation to the contrary is a criminal offense.
Investing in the notes involves risks. See "Risk factors" beginning on page S-11 of this prospectus supplement and on page 11 of Novartis AG's annual report on
Form 20-F for the year ended December 31, 2019 incorporated herein by reference.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price to
Public (1)
|
|
Underwriting
Discount
|
|
Proceeds to Issuer
before Expenses
|
|
|
|
|
|
|
|
Per 2025 Note
|
|
%
|
|
%
|
|
%
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Per 2027 Note
|
|
%
|
|
%
|
|
%
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Per 2030 Note
|
|
%
|
|
%
|
|
%
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Per 2050 Note
|
|
%
|
|
%
|
|
%
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
-
(1)
-
Plus
accrued interest, if any, from February , 2020.
The
underwriters expect to deliver the notes to purchasers in book-entry form only through the facilities of The Depository Trust Company, or "DTC", for the accounts of its participants, including
Clearstream Banking S.A., or "Clearstream", and Euroclear Bank S.A./N.V., or "Euroclear", against payment in New York, New York on or about February , 2020.
Joint Book-Running Managers
|
|
|
|
|
|
|
|
|
|
|
|
|
Citigroup
|
|
HSBC
|
|
Morgan Stanley
|
|
MUFG
|
|
|
,
2020
Table of Contents
Table of Contents
Prospectus Supplement
i
Table of Contents
ABOUT THIS PROSPECTUS SUPPLEMENT
No person has been authorized to provide you with information that is different from what is contained in, or incorporated by reference into,
this prospectus supplement and the accompanying prospectus, and, if given or made, such information must not be relied upon as having been authorized. This prospectus supplement and the accompanying
prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the notes and the related guarantees to which they relate or an offer to sell or the
solicitation of an offer to buy such securities by any person in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus supplement and the
accompanying prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus supplement or
that the information contained in this prospectus supplement and the accompanying prospectus is correct as of any time subsequent to its date.
As
used in this prospectus supplement and the accompanying prospectus, the terms "we", "our", "us", "Novartis", "Group", and similar words or phrases refer to Novartis AG and its
consolidated affiliates. However, each Group company is legally separate from all other Group companies and manages its business independently through its respective board of directors or similar
supervisory body or other top local management body, if applicable.
The
notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic
Area (the "EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive
2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client as defined in
point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the "Prospectus Regulation"). Consequently no key information
document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the notes or otherwise making them available to retail investors in the EEA has been
prepared and therefore offering or selling the notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
In
the United Kingdom, this prospectus supplement is for distribution only to persons who (i) have professional experience in matters relating to investments falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Financial Promotion Order"), (ii) are persons falling within
Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") of the Financial Promotion Order or (iii) are persons to whom an invitation or inducement
to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000, as amended ("FSMA")) in connection with the issue or sale of any notes may
otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). In the United Kingdom, this prospectus supplement is directed only
at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available in the United
Kingdom only to relevant persons and will, in the United Kingdom, be engaged in only with relevant persons.
The
distribution or possession of this prospectus supplement and the accompanying prospectus in or from certain jurisdictions may be restricted by law. You should inform yourself about
and observe any such restrictions, and neither we nor any of the underwriters accepts any liability in relation to any such restrictions. See "Underwriting."
S-1
Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports with and furnish other reports and information to the Securities and Exchange Commission ("SEC"). You may read and copy
any document we file with or furnish to the SEC on the SEC's website at www.sec.gov. The address of the SEC's website is provided solely for the information of prospective investors and is not
intended to be an active link. Reports and other information concerning our business may also be inspected at the offices of the New York Stock Exchange at 11 Wall Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information contained in documents we file with or furnish to the SEC, which means that we can
disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus supplement and the accompanying prospectus.
Each
document incorporated by reference is current only as of the date of such document, and the incorporation by reference of such documents is not intended to create any implication
that there has been no change in our affairs since the date of the relevant document or that the information contained in such document is current as of any time subsequent to its date. Any statement
contained in such incorporated documents is deemed to be modified or superseded for the purpose of this prospectus supplement and the accompanying prospectus to the extent that a subsequent statement
contained in another document we incorporate by reference at a later date modifies or supersedes that statement. Any such statement so modified or superseded will not be deemed, except as so modified
or superseded, to constitute a part of this prospectus supplement and the accompanying prospectus.
We
hereby incorporate by reference into this prospectus supplement and the accompanying prospectus the documents listed below. Unless otherwise noted, all of the documents listed below
have the SEC file number 001-15024:
-
-
Annual Report on Form 20-F for the year ended December 31, 2019;
-
-
Report on Form 6-K furnished to the SEC on January 31, 2020; and
-
-
Each of the following documents that we file with or furnish to the SEC after the date of this prospectus supplement from now until we
terminate the offering of securities under this prospectus supplement, the accompanying prospectus and the registration statement:
-
-
reports filed under Section 13(a), 13(c) or 15(d) of the Securities Exchange Act of 1934, as amended; and
-
-
reports filed or furnished on Form 6-K that indicate that they are incorporated by reference in this prospectus supplement
or the accompanying prospectus.
You
may obtain copies of these documents in the manner described above. You may also request copies of these documents at no cost by contacting us as follows:
|
|
|
Novartis International AG
|
|
Novartis Services, Inc.
|
Investor Relations
|
|
Investor Relations
|
P.O. Box
|
|
One Health Plaza
|
CH-4002 Basel
|
|
East Hanover, NJ 07936
|
Switzerland
|
|
USA
|
Tel: + 41 61 324 79 44
|
|
Tel: + 1 862 778 5052
|
Fax: + 41 61 324 84 44
|
|
E-mail: investor.relations@novartis.com
|
E-mail: investor.relations@novartis.com
|
|
|
Novartis
Capital Corporation does not, and will not, file separate reports with the SEC.
S-2
Table of Contents
PRESENTATION OF FINANCIAL INFORMATION
We present our consolidated financial statements in U.S. dollars and in accordance with International Financial Reporting Standards ("IFRS") as
issued by the International Accounting Standards Board. When we refer to "$", we mean U.S. dollars. Except where noted, all financial information is presented in accordance with IFRS.
S-3
Table of Contents
SUMMARY
This summary highlights selected information from this prospectus supplement, the accompanying prospectus and the
documents incorporated by reference and does not contain all of the information that may be important to you. You should carefully read this entire prospectus supplement, the accompanying prospectus
and the documents incorporated by reference.
Novartis AG
Novartis AG was incorporated on February 29, 1996 under the laws of Switzerland as a stock corporation
(Aktiengesellschaft) with an indefinite duration. On December 20, 1996, our predecessor companies, Ciba Geigy AG and Sandoz AG, merged into this
new entity, creating Novartis. Novartis AG is domiciled in and governed by the laws of Switzerland. Its registered office is located at Novartis AG, Lichtstrasse 35, CH 4056 Basel, Switzerland, and
its telephone number is +41 61 324 1111.
Novartis
is a multinational group of companies specializing in the research, development, manufacturing and marketing of a broad range of healthcare products, led by innovative
pharmaceuticals and also including high-quality generic pharmaceuticals. The Group is headquartered in Basel, Switzerland. Novartis AG, our Swiss holding company, owns, directly or indirectly, all of
our significant operating companies.
Our
purpose is to reimagine medicine to improve and extend people's lives. We use innovative science and technology to address some of society's most challenging healthcare issues. We
discover and develop breakthrough treatments and find new ways to deliver them to as many people as possible. We also aim to reward those who invest their money, time and ideas in our company. Our
vision is to be a trusted leader in changing the practice of medicine. Our strategy is to build a leading, focused medicines company powered by advanced therapy platforms and data science. As we
implement our strategy, we have five priorities to shape our future and help us continue to create value for our company, our shareholders and society: unleash the power of our people; deliver
transformative innovation; embrace operational excellence; go big on data and digital; and build trust with society.
In
2019, Novartis achieved net sales from continuing operations of USD 47.4 billion, while net income from continuing operations amounted to USD 7.1 billion
and net income to USD 11.7 billion. The Group's largest, second-largest and third-largest customers accounted for approximately 18%, 13% and 8% of net sales, respectively, in 2019.
Headquartered in Basel, Switzerland, our Group companies
employed 104,000 full-time equivalent associates as of December 31, 2019. Our products are sold in approximately 155 countries around the world.
The
Group comprises two global operating divisions:
-
-
Innovative Medicines: innovative patent-protected prescription medicines; and
-
-
Sandoz: generic pharmaceuticals and biosimilars.
Our
Innovative Medicines Division researches, develops, manufactures, distributes and sells patented prescription medicines to enhance health outcomes for patients and healthcare
providers. Innovative Medicines is organized into two global business units: Novartis Oncology and Novartis Pharmaceuticals. Novartis Pharmaceuticals consists of the following global business
franchises: Ophthalmology; Neuroscience; Immunology, Hepatology and Dermatology; Respiratory; Cardiovascular, Renal and Metabolism; and Established Medicines.
Our
Sandoz Division develops, manufactures, distributes and sells prescription medicines as well as pharmaceutical active substances that are not protected by valid and enforceable
third-party patents. Sandoz is organized globally into three franchises: Retail Generics; Anti-Infectives and Biopharmaceuticals. In Retail Generics, Sandoz develops, manufactures and markets active
ingredients and finished dosage forms of small molecule pharmaceuticals to third parties across a broad range of
S-4
Table of Contents
therapeutic
areas, as well as finished dosage form anti-infectives sold to third parties. In Anti-Infectives, Sandoz manufactures and supplies active pharmaceutical ingredients and
intermediatesmainly antibioticsfor internal use by Retail Generics and for sale to third-party customers. In Biopharmaceuticals, Sandoz develops, manufactures and markets
protein- or other biotechnology-based products, including biosimilars, and provides biotechnology manufacturing services to other companies.
In
April 2019, we completed the previously announced spin-off of Alcon into a separately traded standalone company. In Novartis AG's annual report for the year ended December 31,
2019, to comply with IFRS, we have separated the Group's reported financial data for 2019 and prior years into "continuing" and "discontinued" operations. Discontinued operations include the Alcon eye
care devices business and certain corporate activities attributable to the Alcon business prior to the spin-off, the gain on distribution of Alcon to Novartis AG shareholders and certain other
expenses related to the spin-off.
Our
divisions are supported by the following organizational units: the Novartis Institutes for BioMedical Research, Global Drug Development, Novartis Technical Operations and Novartis
Business Services. The financial results of these organizational units are included in the results of the divisions for which their work is performed. The Novartis Institutes for BioMedical Research
("NIBR") is the innovation engine of Novartis, which conducts drug discovery research and early clinical development trials for our Innovative Medicines Division. Approximately 5,600 full time
equivalent scientists, physicians and business professionals at NIBR are working to discover new medicines for various diseases at sites located in the US, Switzerland and China.
Our
Global Drug Development ("GDD") organization oversees drug development activities for our Innovative Medicines Division and collaborates with our Sandoz Division on development of
its biosimilars portfolio. GDD works collaboratively with NIBR and with the Innovative Medicines and Sandoz Divisions to execute our overall pipeline strategy. The GDD organization includes
centralized global functions such as Regulatory Affairs and Global Development Operations, as well as Global Development units aligned with our business franchises. GDD includes approximately 11,000
full-time equivalent associates worldwide.
Novartis
Technical Operations ("NTO") manages manufacturing operations, supply chain, and quality across our Innovative Medicines and Sandoz Divisions. As the Novartis portfolio evolves,
we continue to transform our operations to help ensure we can deliver the innovation and expertise needed to enable the production of new medical technologies, while increasing efficiency. NTO is
expected to enhance capacity planning and adherence to quality standards, and to lower costs through simplification, standardization and external spend optimization. NTO includes approximately 25,100
full-time equivalent associates and 60 manufacturing sites across our Innovative Medicines and Sandoz Divisions.
Novartis
Business Services ("NBS"), our shared services organization, delivers integrated solutions to all Novartis divisions and units worldwide. NBS seeks to drive efficiency and
effectiveness across
Novartis by simplifying and standardizing services across six service domains: human resources, real estate and facility services, procurement, information technology, commercial and medical support
activities, and financial reporting and accounting operations. NBS has approximately 10,000 full-time equivalent associates in more than 30 countries. NBS works to leverage the full scale of Novartis
to create value across the Company and to free up resources to invest in innovation and our product pipeline. NBS continues to transfer the delivery of selected services to its five Global Service
Centers in Dublin, Ireland; Hyderabad, India; Kuala Lumpur, Malaysia; Mexico City, Mexico; and Prague, Czech Republic.
Our
shares are listed on the SIX Swiss Exchange under the symbol "NOVN" and on the New York Stock Exchange ("NYSE") in the form of American Depositary Receipts ("ADRs") representing
American Depositary Shares ("ADSs") under the symbol "NVS".
S-5
Table of Contents
Novartis Capital Corporation
Novartis Capital Corporation is a finance subsidiary indirectly owned 100% by Novartis AG and was incorporated as a corporation under the laws
of Delaware on July 23, 2008. It exists for the purpose of issuing debt securities, the proceeds of which will be invested by it in marketable securities or advanced to, or otherwise invested
in, subsidiaries or affiliates of Novartis AG. The principal office of Novartis Capital Corporation is located at 1 Health Plaza, East Hanover, New Jersey 07936, USA, and its telephone number
is + 1 202 887 1585.
S-6
Table of Contents
The Offering
|
|
|
Notes
|
|
$ aggregate principal amount of 2025 notes (the "2025 notes")
|
|
|
$ aggregate principal amount of 2027 notes (the "2027 notes")
|
|
|
$ aggregate principal amount of 2030 notes (the "2030 notes")
|
|
|
$ aggregate principal amount of 2050 notes (the "2050 notes")
|
Issuer
|
|
Novartis Capital Corporation
|
Guarantees
|
|
Novartis AG will fully and unconditionally guarantee the payment of principal, interest and additional amounts, if any,
payable in respect of the notes.
|
Maturity
|
|
The 2025 notes will mature on February , 2025.
|
|
|
The 2027 notes will mature on February , 2027.
|
|
|
The 2030 notes will mature on August , 2030.
|
|
|
The 2050 notes will mature on August , 2050.
|
Interest Rate
|
|
The 2025 notes will bear interest at a rate of % annually.
|
|
|
The 2027 notes will bear interest at a rate of % annually.
|
|
|
The 2030 notes will bear interest at a rate of % annually.
|
|
|
The 2050 notes will bear interest at a rate of % annually.
|
Interest Payment Dates
|
|
Each February and August , commencing on
August , 2020. If an interest payment date or redemption date, or the maturity date, as the case may be, would fall on a day that is not a business day (as defined in this prospectus supplement), then the required payment
will be made on the next succeeding business day, but no additional interest shall accrue and be paid unless we fail to make payment on such next succeeding business day.
|
Regular Record Dates for Interest
|
|
Each and .
|
Calculation of Interest
|
|
Interest on the notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months.
|
S-7
Table of Contents
|
|
|
Optional Redemption
|
|
Prior to January , 2025 (the date that is one month prior to the scheduled maturity date for the 2025 notes)
(the "2025 par call date") in the case of the 2025 notes, December , 2026 (the date that is two months prior to the scheduled maturity date for the 2027 Notes) (the "2027 par call date") in the case of the 2027 notes,
May , 2030 (the date that is three months prior to the scheduled maturity date for the 2030 notes) (the "2030 par call date") in the case of the 2030 notes and February , 2050 (the date that
is six months prior to the scheduled maturity date for the 2050 notes) (the "2050 par call date" and, together with the 2025 par call date, the 2027 par call date and the 2030 par call date, the "par call dates" and each a "par call date") in the
case of the 2050 notes, the notes of each series will be redeemable at our option, in whole or in part, at any time and from time to time at a redemption price equal to the greater of:
|
|
|
100% of the principal
amount of the notes to be redeemed; and
|
|
|
the sum of the present
values of the remaining scheduled payments of principal and interest on the notes to be redeemed that would be due if the applicable series of notes matured on the applicable par call date, together with, in each case, accrued and unpaid interest to,
but excluding, the date of redemption.
|
|
|
The present value will be determined by discounting the remaining principal and interest payments to the redemption date on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), using the Treasury Rate (as defined in this prospectus supplement) plus % in the case of the 2025
notes, % in the case of the 2027 notes, % in the case of the 2030 notes
and % in the case of the 2050 notes.
|
|
|
At any time on or after the applicable par call date, the notes will be redeemable at our option, in whole or in part, at
any time and from time to time at a redemption price equal to 100% of the principal amount of the notes to be redeemed on that redemption date, together with, in each case, accrued and unpaid interest to, but excluding, the date of
redemption.
|
S-8
Table of Contents
|
|
|
|
|
See "Description of the NotesOptional Redemption of the Notes."
|
Tax Redemption
|
|
In the event of changes in withholding taxes applicable to payments of interest on the notes in Switzerland or any other
Relevant Taxing Jurisdiction (but excluding, for this purpose, the United States), we may redeem the notes of each series in whole (but not in part) at any time, at a price equal to 100% of their principal amount plus accrued and unpaid interest to,
but excluding, the redemption date.
|
|
|
See "Description of Debt SecuritiesOptional Redemption for Tax Reasons" in the accompanying prospectus.
|
Denominations
|
|
The notes of each series will be issued only in book-entry form, in minimum denominations of $2,000 and integral multiples
of $1,000 in excess thereof.
|
Ranking
|
|
The notes will rank equally in right of payment with all other existing and future senior, unsecured debt obligations of
Novartis Capital Corporation.
|
|
|
The guarantees will rank equally in right of payment with all other existing and future senior, unsecured debt obligations
of Novartis AG.
|
Payment of Additional Amounts
|
|
Subject to certain exceptions, if we are required to withhold or deduct any amount for or on account of any withholding tax
in Switzerland or another Relevant Taxing Jurisdiction from any payment made on the notes, we will pay additional amounts on those payments so that the amount received by noteholders will equal the amount that would have been received if no such
taxes had been applicable.
|
|
|
See "Description of Debt SecuritiesCovenantsPayment of Additional Amounts" in the accompanying prospectus and
"Description of the NotesPayment of Additional Amounts" below.
|
Book-Entry Issuance; Settlement; Clearance
|
|
We will issue the notes as global notes in book-entry form registered in the name of DTC or its nominee. The sale of the
notes will settle in immediately available funds through DTC. Investors may hold interests in a global note through organizations that participate, directly or indirectly, in the DTC system. Those organizations will include Clearstream and Euroclear
in Europe.
|
S-9
Table of Contents
|
|
|
Governing Law
|
|
The notes and the guarantees will be governed by the laws of the State of New York.
|
Further Issuances
|
|
We may from time to time, without the consent of the holders of a series of notes, create and issue further notes of the
same series having the same terms and conditions in all respects as the notes of that series being offered hereby, except for the issue date, the issue price and the first payment of interest thereon. We will not issue any further notes of a series
under the same CUSIP number unless such further notes are fungible with the notes for U.S. federal income tax purposes. Any additional 2025 notes issued in this manner will be consolidated with and will form a single series with the 2025 notes
being offered hereby. Any additional 2027 notes issued in this manner will be consolidated with and will form a single series with the 2027 notes being offered hereby. Any additional 2030 notes issued in this manner will be consolidated with and
will form a single series with the 2030 notes being offered hereby. Any additional 2050 notes issued in this manner will be consolidated with and will form a single series with the 2050 notes being offered hereby.
|
Listing
|
|
The notes will not be listed on any securities exchange or interdealer market quotation system.
|
Use of Proceeds
|
|
We intend to use the net proceeds from the sale of the notes for general corporate purposes outside of Switzerland,
including the refinancing of existing long- and short-term indebtedness.
|
Trustee; Principal Paying Agent; Transfer Agent
|
|
HSBC Bank USA, National Association.
|
Risk Factors
|
|
You should carefully consider all of the information in this prospectus supplement and the accompanying prospectus,
including the documents incorporated by reference herein and therein, which includes Novartis AG's annual report on Form 20-F for the year ended December 31, 2019. In particular, you should evaluate the specific factors identified under
"Risk Factors" beginning on page S-10 of this prospectus supplement and on page 11 of Novartis AG's annual report on Form 20-F for the year ended December 31, 2019.
|
S-10
Table of Contents
RISK FACTORS
Investing in the notes involves risks. You should carefully consider the risks relating to the notes described below, as
well as the other information included in or incorporated by reference into this prospectus supplement and the accompanying prospectus, including Novartis AG's annual report on Form 20-F for
the year ended December 31, 2019 and the extensive risk factors relating to our business described therein beginning on page 11 thereof, before making a decision to invest in the
notes.
Risks Relating to the Notes
The notes will not be listed and may not have active trading markets.
The notes will be a new issue of securities with no established trading market and will not be listed or displayed on any securities exchange or
included in any interdealer market quotation system, and there may be little or no secondary market for your notes. Even if secondary markets for your notes develop, they may not provide significant
liquidity and we expect that transaction costs in any secondary market would be high. As a result, the difference between bid and asked prices for your notes in any secondary market could be
substantial. Underwriters, broker-dealers and agents that participate in the distribution of the notes may make markets in the notes as permitted by applicable laws and regulations but will have no
obligation to do so, and any such market-making activities with respect to the notes may be discontinued at any time without notice. Therefore, there can be no assurance as to the liquidity of any
trading markets for the notes or that active public markets for the notes will develop. See "Underwriting" in this prospectus supplement and "Plan of Distribution" in the accompanying prospectus.
General market conditions and other factors could adversely affect market prices for the notes.
Market prices for the notes can be expected to vary with changes in market and economic conditions, including prevailing interest rates and the
markets for similar securities, our financial condition and prospects, changes in our credit ratings (whether real or anticipated) and other factors that generally influence the market prices of
securities. As a result, the notes could trade at prices that may be lower than the initial offering prices.
Neither Novartis Capital Corporation nor Novartis AG is prohibited from issuing further debt.
There is no restriction on the amount of debt Novartis Capital Corporation may issue or on the amount of debt or guarantees Novartis AG may
issue. The issuance of any such debt or guarantees may reduce the amount recoverable by you in the event of a liquidation or bankruptcy.
In
particular, we may from time to time, without the consent of the holders of a series of notes, create and issue one or more additional series of debt securities or create and issue
further notes of the same series having the same terms and conditions in all respects as the applicable notes being offered hereby, except for the issue date, the issue price and the first payment of
interest thereon. See "Description of the NotesFurther Issuances." In addition, Novartis Capital Corporation may from time to time, without the consent of the holders of a series of
notes, issue additional debt, and Novartis AG may among other things issue or become liable under additional guarantees, including guarantees it has issued pursuant to the Group's aggregate
$9 billion U.S. Commercial Paper Programs.
We may redeem the notes prior the scheduled maturity dates, which may adversely affect the expected return on
the notes.
We may redeem the 2025 notes, the 2027 notes, the 2030 notes and/or the 2050 notes, in whole or in part, at our option at any time and from time
to time. See "Description of the NotesOptional Redemption of the Notes" in this prospectus supplement and "Description of Debt Securities
S-11
Table of Contents
Optional
Redemption for Tax Reasons" in the accompanying prospectus. If we elect to so redeem the notes, you may not be able to reinvest the redemption proceeds in a comparable security at an
effective interest rate as high as the interest rate on the series of notes that are redeemed.
The notes will rank effectively junior to any secured debt of Novartis Capital Corporation and the guarantees
will rank effectively junior to the secured debt of Novartis AG.
The notes will be unsecured senior obligations of Novartis Capital Corporation and will rank equal in right of payment to all other existing and
future unsecured senior indebtedness of Novartis Capital Corporation. The notes will be effectively subordinated to all existing and future secured indebtedness of Novartis Capital Corporation to the
extent of the assets securing that indebtedness. The guarantees by Novartis AG will be effectively subordinated to all existing and future secured indebtedness of Novartis AG to the extent of the
assets securing that indebtedness. As of the date of this prospectus supplement, neither Novartis AG nor Novartis Capital Corporation has any secured indebtedness. If Novartis Capital Corporation or
Novartis AG incurs additional indebtedness
and secures such indebtedness with its assets, your rights to receive payments under the notes and the guarantees will be effectively subordinated to the rights of the holders of such future secured
indebtedness.
Because Novartis AG is a holding company and conducts substantially all of its operations through
subsidiaries, your right to receive payments under the guarantees is structurally subordinated to the liabilities of our subsidiaries.
Novartis AG is organized as a holding company, and substantially all of its operations are carried on through subsidiaries. The ability of
Novartis AG to meet its financial obligations is dependent upon the availability of cash flows from our domestic and foreign subsidiaries and affiliated companies through dividends, intercompany
advances, management fees and other payments.
The
notes are obligations of Novartis Capital Corporation and are guaranteed exclusively by Novartis AG. The subsidiaries of Novartis AG are separate and distinct legal entities, and
have no obligation to pay any amounts due on the guarantees or to provide us with funds for our payment obligations. Our right to receive any assets of any of our subsidiaries, as an equity holder of
such subsidiaries, upon their liquidation or reorganization, and therefore the right of the holders of the notes to participate in those assets through the guarantees, will be effectively subordinated
to the claims of that subsidiary's creditors. The indenture governing the notes will not restrict the ability of our subsidiaries to incur additional indebtedness or other liabilities or to agree to
covenants or enter into arrangements that would limit their ability to make dividends or other payments to us, and any such additional indebtedness and/or restrictions may adversely affect our cash
flows and ability to service our indebtedness, including the guarantees. Even if we were a creditor of any of our subsidiaries, our rights as a creditor would be subordinate to any security interest
in the assets of our subsidiaries and any indebtedness of our subsidiaries senior to that held by us.
Our credit rating may not reflect the potential impact of all risks related to structure and other factors on
any trading market for, or market value of, the notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time in its
sole discretion.
Any rating assigned to us or to the notes may be withdrawn entirely by a credit rating agency, may be suspended or may be lowered, if, in that
credit rating agency's judgment, circumstances relating to the basis of the rating so warrant. Ratings may be impacted by a number of factors that can change over time, including the credit rating
agency's assessment of: our strategy and management's capability; our financial condition and liquidity; competitive, economic, legal and regulatory conditions in our key markets, including those
markets where we have large exposures or on which our operating results, including revenues, are substantially dependent; the level of political
support for the industries in which we operate; and legal and regulatory frameworks affecting our legal structure, business activities and
S-12
Table of Contents
the
rights of our creditors. Moreover, the rating agencies that currently, or may in the future, publish a rating for us or the notes may change the methodologies that they use for analyzing
securities with features similar to the notes.
Any
rating or outlook downgrade could negatively affect any other rating assigned to us or the notes. Real or expected downgrades, suspensions or withdrawals of credit ratings assigned
to us could cause the liquidity or trading prices of the Notes to decline significantly. Additionally, any uncertainty about the extent of any anticipated changes to the credit ratings assigned to us
may adversely affect the market value of the notes.
Pursuing further alliances or acquisitions may require us to obtain additional debt financing, could result
in increased leverage and/or result in a downgrade of our credit ratings.
As part of our strategy, from time to time we acquire products or entire businesses, and enter into strategic alliances and collaborations. For
example, on January 6, 2020, we successfully completed the acquisition of The Medicines Company for cash consideration of approximately $9.7 billion. Pursuing any such further growth
opportunities may require us to obtain additional debt financing, which could result in increased leverage and/or result in a downgrade of our credit ratings.
The right to receive payments under the guarantees of Novartis AG may be adversely affected by Swiss
bankruptcy laws.
Novartis AG is incorporated under the laws of Switzerland. Accordingly, bankruptcy proceedings with respect to Novartis AG are likely to proceed
under, and to be governed primarily by, Swiss bankruptcy law. The procedural and substantive provisions of such bankruptcy laws are, in certain cases, more favorable to secured creditors than
comparable provisions of United States law. These provisions afford debtors and unsecured creditors only limited protection from the claims of secured creditors and it may not be possible for us or
other unsecured creditors to prevent or delay the
secured creditors from enforcing their security to repay the debts due to them under the terms that such security was granted.
Enforcement claims or court judgments against Novartis AG must be converted into Swiss francs.
Enforcement claims, including for court judgments, against Novartis AG under Swiss debt collection or bankruptcy proceedings may only be made in
Swiss francs and any foreign currency amounts must accordingly be converted into Swiss francs. With respect to enforcing creditors, any such foreign currency amounts will be converted at the exchange
rate prevailing on (i) the date of instituting the enforcement proceedings (Betreibungsbegehren), (ii) the date of the filing for the
continuation of the bankruptcy procedure (Fortsetzungsbegehren) or (iii) the date on which any amounts claimed first became due and payable
(Verfallzeit), whichever date is more favorable for the creditors. With respect to non-enforcing creditors, foreign currency amounts will be converted
at the exchange rate prevailing at the time of the adjudication of bankruptcy (Konkurseröffnung).
The tax treatment of the notes with respect to Swiss withholding tax may change due to potential new Swiss
withholding tax legislation.
On June 26, 2019, the Swiss Federal Council announced that it will resume the reform of the withholding tax regime, which had previously
been suspended. A main aspect of the reform will be the exemption of Swiss domiciled legal entities and foreign investors from withholding tax on Swiss domestic interest-based investments. The reform
is expected, among other things, to replace the current debtor-based regime applicable to interest payments with a paying agent-based regime for Swiss withholding tax. This paying agent-based regime
is expected to (i) subject all interest payments made by paying agents in Switzerland to individuals resident in Switzerland to Swiss withholding tax and
S-13
Table of Contents
(ii) exempt
from Swiss withholding tax interest payments to all other persons, including to Swiss domiciled legal entities and foreign investors (other than for indirect interest payments via
foreign and domestic collective investments vehicles). If such a new paying agent-based regime were to be enacted and were to result in the deduction or withholding of Swiss withholding tax by a
paying agent in Switzerland on any interest payments in respect of the notes, the noteholders would not be entitled to receive any additional amounts as a result of such deduction or withholding under
the terms of the notes.
S-14
Table of Contents
USE OF PROCEEDS
We estimate the net proceeds from the sale of the notes to be approximately $ after deducting underwriting
discounts and net
expenses of the offering payable by us. We intend to use the net proceeds from the sale of the notes for general corporate purposes outside of Switzerland, including the refinancing of existing long-
and short-term indebtedness. See also "Capitalization" in this prospectus supplement.
S-15
Table of Contents
CAPITALIZATION
The following table sets forth our consolidated capitalization (including short-term debt and non-controlling interests) as of
December 31, 2019, on an actual basis and on an as adjusted basis to give effect to the sale of the notes (after deducting underwriting discounts and net expenses payable by us), the borrowing
of $7,000,000,000 short-term indebtedness on January 7, 2020 and the proposed repayment of this and certain other short-term indebtedness on or around February 14, 2020.
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2019
|
|
|
|
Actual
|
|
As Adjusted
|
|
|
|
(in $ millions)
|
|
Equity
|
|
|
|
|
|
|
|
Share capital(1)
|
|
|
936
|
|
|
936
|
|
Treasury shares(2)
|
|
|
(80
|
)
|
|
(80
|
)
|
Reserves
|
|
|
54,618
|
|
|
54,618
|
|
|
|
|
|
|
|
|
|
Issued share capital and reserves attributable to shareholders of Novartis AG
|
|
|
55,474
|
|
|
55,474
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
|
77
|
|
|
77
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
55,551
|
|
|
55,551
|
|
|
|
|
|
|
|
|
|
Indebtedness
|
|
|
|
|
|
|
|
Short-term indebtedness:
|
|
|
|
|
|
|
|
Interest bearing accounts of associates
|
|
|
1,836
|
|
|
1,836
|
|
Bank and other financial debt(3)
|
|
|
719
|
|
|
719
|
|
Commercial paper
|
|
|
2,289
|
|
|
2,289
|
|
Current portion of non-current financial debt
|
|
|
2,002
|
|
|
2,002
|
|
Fair value of derivative financial instruments
|
|
|
185
|
|
|
185
|
|
|
|
|
|
|
|
|
|
Total short-term indebtedness
|
|
|
7,031
|
|
|
7,031
|
|
|
|
|
|
|
|
|
|
Long-term indebtedness:
|
|
|
|
|
|
|
|
4.400% $1,000 million notes due 2020 of Novartis Capital Corporation
|
|
|
1,000
|
|
|
1,000
|
|
2.400% $1,500 million notes due 2022 of Novartis Capital Corporation
|
|
|
1,495
|
|
|
1,495
|
|
3.700% $500 million notes due 2042 of Novartis Capital Corporation
|
|
|
489
|
|
|
489
|
|
3.400% $2,150 million notes due 2024 of Novartis Capital Corporation
|
|
|
2,139
|
|
|
2,139
|
|
4.400% $1,850 million notes due 2044 of Novartis Capital Corporation
|
|
|
1,825
|
|
|
1,825
|
|
0.750% EUR 600 million notes due 2021 of Novartis Finance S.A.
|
|
|
670
|
|
|
670
|
|
1.625% EUR 600 million notes due 2026 of Novartis Finance S.A.
|
|
|
670
|
|
|
670
|
|
0.250% CHF 500 million notes due 2025 of Novartis AG
|
|
|
517
|
|
|
517
|
|
0.625% CHF 550 million notes due 2029 of Novartis AG
|
|
|
568
|
|
|
568
|
|
1.050% CHF 325 million notes due 2035 of Novartis AG
|
|
|
336
|
|
|
336
|
|
3.000% $1,750 million notes due 2025 of Novartis Capital Corporation
|
|
|
1,735
|
|
|
1,735
|
|
4.000% $1,250 million notes due 2045 of Novartis Capital Corporation
|
|
|
1,219
|
|
|
1,219
|
|
0.125% EUR 1,250 million notes due 2023 of Novartis Finance S.A.
|
|
|
1,392
|
|
|
1,392
|
|
0.625% EUR 500 million notes due 2028 of Novartis Finance S.A.
|
|
|
553
|
|
|
553
|
|
1.800% $1,000 million notes due 2020 of Novartis Capital Corporation(3)
|
|
|
1,000
|
|
|
|
|
2.400% $1,000 million notes due 2022 of Novartis Capital Corporation
|
|
|
996
|
|
|
996
|
|
3.100% $1,000 million notes due 2027 of Novartis Capital Corporation
|
|
|
990
|
|
|
990
|
|
0.000% EUR 1,250 million notes due 2021 of Novartis Finance S.A.
|
|
|
1,396
|
|
|
1,396
|
|
1.125% EUR 600 million notes due 2027 of Novartis Finance S.A.
|
|
|
670
|
|
|
670
|
|
0.500% EUR 750 million notes due 2023 of Novartis Finance S.A.
|
|
|
837
|
|
|
837
|
|
1.375% EUR 750 million notes due 2030 of Novartis Finance S.A.
|
|
|
838
|
|
|
838
|
|
1.700% EUR 750 million notes due 2038 of Novartis Finance S.A.
|
|
|
832
|
|
|
832
|
|
|
|
|
|
|
|
|
|
Total Straight bonds
|
|
|
22,167
|
|
|
21,167
|
|
Liabilities to banks and other financial institutions
|
|
|
188
|
|
|
188
|
|
|
|
|
|
|
|
|
|
Total including current portion of non-current financial debt
|
|
|
22,355
|
|
|
21,355
|
|
|
|
|
|
|
|
|
|
Less current portion of non-current financial debt
|
|
|
(2,002
|
)
|
|
(2,002
|
)
|
2025 notes offered hereby
|
|
|
|
|
|
|
|
2027 notes offered hereby
|
|
|
|
|
|
|
|
2030 notes offered hereby
|
|
|
|
|
|
|
|
2050 notes offered hereby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term indebtedness
|
|
|
20,353
|
|
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness
|
|
|
27,384
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
82,935
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Share
capital was converted at the exchange rate of CHF 1.378/U.S. dollar applicable on December 31, 1998, the date on which we switched the
presentation currency of our consolidated financial statements from CHF to U.S. dollars. Subsequent changes in share capital were converted at appropriate historical exchange rates.
S-16
Table of Contents
-
(2)
-
Treasury
shares were converted at appropriate historical exchange rates.
-
(3)
-
On
January 7, 2020, we borrowed $7,000,000,000 under a short-term credit agreement we had entered into in December 2019 in connection with the acquisition of
The Medicines Company. The borrowings under such short-term credit agreement have a scheduled maturity date of June 30, 2020 and bear floating interest based on USD LIBOR. The net proceeds from
the offering of the notes will provide us with additional liquidity to facilitate, among other things, the repayment of the borrowings under such short-term credit agreement and the redemption by
Novartis Capital Corporation of its $1,000,000,000 1.800% notes due February 14, 2020, in each case on or around February 14, 2020.
S-17
Table of Contents
DESCRIPTION OF THE NOTES
The following summary of the particular terms of the notes offered by this prospectus supplement adds, and to the extent inconsistent therewith,
replaces information to the description of the general terms and provisions of debt securities under the heading "Description of Debt Securities" of the accompanying prospectus. The following summary
does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all of the provisions of the notes and the indenture, which are incorporated by reference herein.
We will issue the notes pursuant to an indenture, dated as of February 10, 2009, among Novartis Capital Corporation, Novartis Securities
Investment Ltd. and Novartis Finance S.A., as issuers, HSBC Bank USA, National Association, as trustee, and Novartis AG, as guarantor. The 2025 notes, the 2027 notes, the 2030 notes and
the 2050 notes will each be a separate series of our debt securities.
Novartis
Capital Corporation will issue the 2025 notes in an initial aggregate principal amount of $ . The 2025 notes will mature on February , 2025
unless redeemed or purchased prior to such date as described below. Novartis Capital Corporation will issue the 2027 notes in an initial aggregate principal amount of $ . The 2027
notes
will mature on February , 2027 unless redeemed or purchased prior to such date as described below. Novartis Capital Corporation will issue the 2030 notes in an initial aggregate
principal amount of $ . The 2030 notes will mature on August , 2030 unless redeemed or purchased prior to such date as described below. Novartis
Capital Corporation
will issue the 2050 notes in an initial aggregate principal amount of $ . The 2050 notes will mature on August , 2050 unless redeemed or purchased
prior to such date
as described below.
The
notes of each series will be issued only in book-entry form, in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
The
notes will be the unsecured senior indebtedness of Novartis Capital Corporation and will rank equally with all of its other unsecured and unsubordinated indebtedness from time to
time outstanding. The notes will be fully and unconditionally guaranteed by Novartis AG. If, for any reason, Novartis Capital Corporation does not make any required payment in respect of the notes
when due, whether on the normal due date, on acceleration, redemption or otherwise, Novartis AG will cause the payment to be made to or to the order of the trustee. You will be entitled to payment
under the guarantees of Novartis AG without taking any action whatsoever against Novartis Capital Corporation. Novartis AG is a holding company and the guarantees will be structurally subordinated to
any indebtedness and other liabilities (including trade payables) of its subsidiaries.
The notes will each bear interest at the applicable interest rate shown on the cover of this prospectus supplement and will accrue interest from
February , 2020, or from the most recent date to which interest has been paid (or provided for), to but not including the next date upon which interest is required to be paid.
Interest
will be payable on each of the 2025 notes, the 2027 notes, the 2030 notes and the 2050 notes twice per year, on each February and
August , commencing on August , 2020, to the person in whose name a 2025 note, a 2027 note, a 2030 note or a 2050 note, respectively, is registered at the
close of business on the or that precedes the date on which interest will be paid. Interest on the notes
will be paid on the basis of a 360-day year consisting of
twelve 30-day months.
If
an interest payment date or redemption date, or the maturity date, for the 2025 notes, the 2027 notes, the 2030 notes or the 2050 notes, as the case may be, would fall on a day that
is not a business day, then the required payment will be made on the next succeeding business day, but no additional
S-18
Table of Contents
interest
shall accrue and be paid unless we fail to make payment on such next succeeding business day. "Business day" means any day other than a Saturday, a Sunday or a day on which banking
institutions in The City of New York are authorized or obligated by law, regulation or executive order to be closed and on which commercial banks and foreign exchange markets settle payments and are
open for general business (including dealings in foreign exchange and foreign currency deposits) in Zurich, Switzerland.
Subject to certain exceptions, if we are required to withhold or deduct any amount for or on account of any withholding tax in Switzerland or
another Relevant Taxing Jurisdiction from any payment made on the notes, we will pay additional amounts on those payments so that the amount received by noteholders will equal the amount that would
have been received if no such taxes had been applicable. See "Description of Debt SecuritiesCovenantsPayment of Additional Amounts" in the accompanying prospectus and
"Payment of Additional Amounts" below.
As
contemplated by the last paragraph under "Description of Debt SecuritiesDefeasance" of the accompanying prospectus, the satisfaction of certain conditions will permit us
to omit to comply with some or all of our obligations, covenants and agreements under the indenture with respect to the notes. In addition, we may omit to comply with certain covenants through
covenant defeasance. See "Description of Debt SecuritiesDefeasance" in the accompanying prospectus.
Except
as described in the accompanying prospectus, the indenture for the notes does not contain any covenants or other provisions designed to protect holders of the notes against a
reduction in our creditworthiness in the event of a highly leveraged transaction or that would prohibit other transactions that might adversely affect holders of the notes, including, among other
things, through the incurrence of additional indebtedness.
At any time prior to January , 2025 (the date that is one month prior to the scheduled maturity date for the 2025 notes)
(the "2025 par call date") in the case of the 2025 notes, December , 2026 (the date that is two months prior to the scheduled maturity date for the 2027 notes) (the "2027 par call
date") in the case of the 2027 notes, May , 2030 (the date that is three months prior to the scheduled maturity date for the 2030 notes) (the "2030 par call date") in the case of
the 2030 notes and February , 2050 (the date that is six months prior to the scheduled maturity date for the 2050 notes) (the "2050 par call date" and, together with the 2025 par
call date, the 2027 par call date and the 2030 par call date, the "par call dates" and each a "par call date") in the case of the 2050 notes, Novartis Capital Corporation may redeem the notes of the
relevant series, in each case in whole or in part, at its option at any time and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to
be redeemed on that redemption date; and (ii) as determined by the Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and
interest on the notes being redeemed that would be due if the applicable series of notes matured on the applicable par call date (not including any portion of such payments of interest accrued as of
the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate, plus % in the case
of the 2025 notes, % in the case of the 2027 notes, % in the case of the 2030 notes and % in the case of the
2050 notes, plus, in each case, accrued and
unpaid interest thereon to, but excluding, the date of redemption.
At
any time on or after the applicable par call date, Novartis Capital Corporation may redeem the notes of the relevant series, in each case in whole or in part, at its option at any
time and from time to time at a redemption price equal to 100% of the principal amount of the notes to be redeemed on that
S-19
Table of Contents
redemption
date, plus, in each case, accrued and unpaid interest thereon to, but excluding, the date of redemption.
Notwithstanding
the foregoing, installments of interest on notes to be redeemed that are due and payable on interest payment dates falling on or prior to a redemption date will be
payable on the interest payment date to the registered holders as of the close of business on the relevant record date according to the notes and the indenture.
"Comparable
Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term (as measured from the date of
redemption) of the notes to be redeemed (assuming the applicable series of notes matured on the applicable par call date) that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes (assuming the applicable series of notes matured on the
applicable par call date).
"Comparable
Treasury Price" means, with respect to any redemption date, (i) the average of four Reference Treasury Dealer Quotations (as defined below) for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Quotation Agent for the notes obtains fewer than four such Reference Treasury Dealer Quotations,
the average of all such quotations, or (iii) if only one Reference Treasury Dealer Quotation is received, such quotation.
"Quotation
Agent" means any Reference Treasury Dealer appointed by us.
"Reference
Treasury Dealer" means (i) each of Citigroup Global Markets Inc., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, a
Primary Treasury Dealer selected by MUFG Securities Americas Inc., ,
and (or their respective affiliates that are Primary Treasury Dealers) and
their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in New York City (a "Primary Treasury Dealer"), we will
substitute therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by us.
"Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
"Treasury
Rate" means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for
the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date.
Notice
of any redemption will be mailed at least 30 calendar days but not more than 60 calendar days before the redemption date to each registered holder of the notes to be redeemed by
us or by the trustee on our behalf. Notice of redemption will be published in a daily newspaper of general circulation in the United States, and we will give notice of any such redemption to any
exchange on which the notes are listed. On and after any redemption date, interest will cease to accrue on the notes or portions thereof called for redemption. On or before a redemption date, we will
deposit with a paying agent (or the trustee) money sufficient to pay the redemption price of and accrued and unpaid interest on the notes to be redeemed on that date. If less than all of the notes are
to be redeemed, the notes to be redeemed shall be selected by lot by DTC in accordance with their customary procedures, in the case of notes represented by a global security, or by the trustee by such
method as the trustee deems to be fair and appropriate, in the case of notes, if any, that are not represented by a global security.
S-20
Table of Contents
Payment of Additional Amounts
If Novartis AG or Novartis Capital Corporation, as applicable, is required to withhold or deduct any amount on account of Taxes (as defined in
the accompanying prospectus) from any payment made on the notes or any amounts to be paid under the guarantees, as the case may be, Novartis AG or Novartis Capital Corporation, as applicable, may be
required to pay you an additional amount so that the net amount you receive will be the amount specified in the notes to which you are entitled (subject to certain limitations). For more information
on additional amounts and the situations in which Novartis AG or Novartis Capital Corporation must pay additional amounts, see "Description of Debt SecuritiesCovenantsPayment
of Additional Amounts" in the accompanying prospectus. Notwithstanding any of the provisions described above or under "Description of Debt SecuritiesCovenantsPayment of
Additional Amounts" in the accompanying prospectus, no additional amounts will be payable with respect to Taxes for or on account of any withholding or deduction imposed under the U.S. Internal
Revenue Code of 1986, as amended (the "Code"), any U.S. Treasury Regulations or other guidance issued or agreements entered into thereunder, any official written interpretations thereof or any law
implementing an intergovernmental approach thereto.
In the event of changes in withholding taxes applicable to payments of interest on the notes in Switzerland or another Relevant Taxing
Jurisdiction (but excluding, for the purposes of this section, the United States), Novartis Capital Corporation may redeem the 2025 notes, the 2027 notes, the 2030 notes or the 2050 notes, in each
case in whole (but not in part) at any time, at a price equal to 100% of their principal amount plus accrued and unpaid interest to, but excluding, the redemption date. See "Description of Debt
SecuritiesOptional Redemption for Tax Reasons" in the accompanying prospectus.
Events of Default
Instead of the events of default described under "Description of Debt SecuritiesEvents of Default" in the accompanying prospectus,
an event of default with respect to the notes means only any one of the following events:
-
-
default in payment of the principal (or premium, if any) of any notes of that series when due (including as a sinking fund installment), and
the continuance of that default for more than two business days;
-
-
default in payment of interest on, or any additional amounts (as described under "Description of Debt
SecuritiesCovenantsPayment of Additional Amounts" in the accompanying prospectus and under "Payment of Additional Amounts" above) payable in respect of, any
notes of that series when due and payable, and the continuance of that default for 30 calendar days;
-
-
default in performing any other covenant in the indenture with regard to that series for 90 calendar days after the receipt of written
notice from the trustee or from the holders of 25% in principal amount of the notes of that series;
-
-
(i) any indebtedness of, or guaranteed by, Novartis Capital Corporation or Novartis AG is not paid at its stated maturity or (as the case may
be) within any originally applicable grace period; or (ii) any such indebtedness, or guarantee, of Novartis Capital Corporation or Novartis AG (as the case may be) becomes due and payable prior
to its stated maturity by reason of an event of default; provided that (x) the amount of indebtedness referred to in clauses (i) and/or
(ii) above individually or in the aggregate exceeds $350,000,000 (or its equivalent in any other currency or currencies); and (y) there shall not be deemed to be a default
(i) where Novartis Capital Corporation or Novartis AG in good faith claims a right of set-off or otherwise contests its
S-21
Table of Contents
We are initially offering the 2025 notes in the aggregate principal amount of $ , the 2027 notes in the aggregate
principal amount
of $ , the 2030 notes in the aggregate principal amount of $ and the 2050 notes in the aggregate principal
amount of $ . The indenture does not limit the
aggregate principal amount of debt securities that may be issued thereunder and we may from time to time, without the consent of the holders of any series of notes, establish and issue further notes
of the same series having the same terms and conditions in all respects as the applicable notes being offered hereby, except for the issue date, the issue price and the first payment of interest
thereon. We will not issue any further notes under the same CUSIP number unless such further notes are fungible with the notes for U.S. federal income tax purposes. Any additional 2025 notes issued in
this manner
will be consolidated with and will form a single series with the 2025 notes being offered hereby. Any additional 2027 notes issued in this manner will be consolidated with and will
form a single series with the 2027 notes being offered hereby. Any additional 2030 notes issued in this manner will be consolidated with and will form a single series with the 2030 notes
being offered hereby. Any additional
S-22
Table of Contents
2050
notes issued in this manner will be consolidated with and will form a single series with the 2050 notes being offered hereby.
Trustee, Principal Paying Agent and Transfer Agent
HSBC Bank USA, National Association is the trustee under the indenture, and the principal corporate trust office of the trustee in The City of
New York is also designated as the principal paying agent, registrar, transfer agent and calculation agent for the notes. We may at any time designate additional agents or rescind the designation of
any agents or approve a change in the office through which any agent acts.
We will issue the notes of each series in the form of one or more fully registered form, each series of the notes will be represented by one or
more global securities registered in the name of DTC's nominee. Direct and indirect participants in DTC will record beneficial ownership of the notes by individual investors. The transfer of ownership
of beneficial interests in a global security will be effected only through records maintained by DTC or its nominee, or by participants or persons that hold through participants.
Investors
may elect to hold beneficial interests in the global securities through either DTC, Clearstream or Euroclear if they are participants in these systems, or indirectly through
organizations which are participants in these systems. Beneficial interests in the global securities will be held in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
Upon
receipt of any payment in respect of a global security, DTC or its nominee will immediately credit participants' accounts with amounts proportionate to their respective beneficial
interests in the principal amount of the global security as shown in the records of DTC or its nominee. Payments by participants to owners of beneficial interests in a global security held through
participants will be governed by standing instructions and customary practices and will be the responsibility of those participants.
DTC
holds securities of institutions that have accounts with it or its participants. Through its maintenance of an electronic book-entry system, DTC facilitates the clearance and
settlement of securities transactions among its participants and eliminates the need to deliver securities certificates physically. DTC's participants include securities brokers and dealers, including
the underwriters of this offering, banks, trust companies, clearing corporations and other organizations. DTC is partially owned by some of these participants or their representatives. Access to DTC's
book-entry system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or
indirectly. DTC agrees with and represents to its participants that it will administer its book-entry system in accordance with its rules and bylaws and requirements of law. The rules applicable to
DTC and its participants are on file with the SEC.
Clearstream
and Euroclear will hold interests on behalf of their participants through customers' securities accounts in Clearstream's and Euroclear's names on the books of their
respective depositaries, which in turn will hold interests in customers' securities accounts in the depositaries' names on the books of DTC. At the present time, Citibank, N.A. acts as U.S. depositary
for Clearstream and JPMorgan Chase Bank, N.A. acts as U.S. depositary for Euroclear, or, collectively, the "U.S. Depositaries."
Clearstream
holds securities for its participating organizations, or "Clearstream Participants," and facilitates the clearance and settlement of securities transactions between
Clearstream Participants through electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to
Clearstream Participants, among
S-23
Table of Contents
other
things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets
in several countries.
Clearstream
is registered as a bank in Luxembourg and as such is subject to regulation by the Commission de Surveillance du Secteur
Financier and the Banque Centrale du Luxembourg, which supervise and oversee the activities of Luxembourg banks. Clearstream
Participants are worldwide
financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations, and may include the underwriters or their affiliates. Indirect access
to Clearstream is available to other institutions that clear through or maintain a custodial relationship with a Clearstream Participant. Clearstream has established an electronic bridge with
Euroclear as the operator of the Euroclear System, or the "Euroclear Operator," in Brussels to facilitate settlement of trades between Clearstream and the Euroclear Operator.
Distributions
with respect to the notes of a series held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and
procedures, to the extent received by the U.S. Depositary for Clearstream.
Euroclear
holds securities and book-entry interests in securities for participating organizations, or "Euroclear Participants" and facilitates the clearance and settlement of securities
transactions between Euroclear Participants, and between Euroclear Participants and participants of certain other securities intermediaries through electronic book-entry changes in accounts of such
participants or other securities intermediaries. Euroclear provides Euroclear Participants with, among other things, safekeeping, administration, clearance and settlement, securities lending and
borrowing, and related services.
Euroclear
Participants are investment banks, securities brokers and dealers, banks, central banks, supranationals, custodians, investment managers, corporations, trust companies and
certain other organizations and may include the underwriters or their affiliates. Non-participants in Euroclear may hold and transfer beneficial interests in a global security through accounts with a
Euroclear Participant or any other securities intermediary that holds a book-entry interest in a global security through one or more securities intermediaries standing between such other securities
intermediary and Euroclear.
Distributions
with respect to notes of a series held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Terms and
Conditions, to the extent received by the U.S. Depositary for Euroclear.
Transfers
between Euroclear Participants and Clearstream Participants will be effected in the ordinary way in accordance with their respective rules and operating procedures.
Cross-market
transfers between DTC's participating organizations, or the "DTC Participants," on the one hand, and Euroclear Participants or Clearstream Participants, on the other hand,
will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its U.S. Depositary; however, such cross-market transactions will require
delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (European
time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its U.S. Depositary to take action to effect
final settlement on its behalf by delivering or receiving interests in the global security in DTC, and making or receiving payment in
accordance with normal procedures for same-day fund settlement applicable to DTC. Euroclear Participants and Clearstream Participants may not deliver instructions directly to their respective U.S.
Depositaries.
Due
to time zone differences, the securities accounts of a Euroclear Participant or Clearstream Participant purchasing an interest in a global security from a DTC Participant in DTC will
be credited,
S-24
Table of Contents
and
any such crediting will be reported to the relevant Euroclear Participant or Clearstream Participant during the securities settlement processing day (which must be a business day for Euroclear or
Clearstream) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream as a result of sales of interests in a global security by or through a Euroclear Participant or
Clearstream Participant to a DTC Participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the
business day for Euroclear or Clearstream following DTC's settlement date.
The
information in this section concerning DTC, Euroclear and Clearstream and their book-entry systems has been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy of that information.
None
of us, any of the underwriters and the trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants of their respective
obligations under the rules and procedures governing their operations.
Although
DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of securities among participants of DTC, Clearstream and Euroclear, they
are under no obligation to perform or continue to perform such procedures and they may discontinue the procedures at any time.
Initial settlement for the notes will be made in immediately available funds. Secondary market trading between DTC participants will occur in
the ordinary way in accordance with DTC rules and will be settled in immediately available funds using DTC's Same-Day Funds Settlement System.
S-25
Table of Contents
TAX CONSIDERATIONS
The following summary of material considerations relating to U.S. federal income tax, Swiss tax and the European Union Savings Directive is
based upon laws, regulations, decrees, rulings, administrative practice and judicial decisions in effect at the date of this prospectus supplement. Legislative, judicial or administrative changes or
interpretations may, however, be forthcoming. Any such changes or interpretations could affect the tax consequences to holders of the notes, possibly on a retroactive basis, and could alter or modify
the statements and conclusions set forth herein. This summary does not purport to be a legal opinion or to address all tax aspects that may be relevant to a holder of the notes. Prospective purchasers
of the notes are advised to consult their own tax advisors as to the tax consequences, under the tax laws of the country of which they are resident, of a purchase of notes including, without
limitation, the consequences of the receipt of interest and (if applicable) any premium on, and of the sale or redemption of, the notes or any interest therein.
The
summary in respect of Swiss tax considerations does not deal with the position of certain classes of noteholders, such as dealers, and relates only to those persons who are the
absolute beneficial owners of the notes and who hold the notes as an investment.
The following discussion summarizes the material U.S. federal income tax consequences associated with the purchase, ownership and disposition of
the notes. This discussion is limited to notes purchased in the initial offering at their "issue price," which is generally the first price at which a substantial amount of the notes is sold to the
public, and held as capital assets within the meaning of section 1221 of the Code. The following discussion is not exhaustive of all possible tax considerations. This summary is based upon the
Code, regulations promulgated under the Code by the U.S. Treasury Department ("Treasury") (including proposed and temporary regulations), rulings, current administrative interpretations and official
pronouncements of the Internal Revenue Service (the "IRS"), and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with
retroactive effect. It does not address considerations that may be relevant to an investor that is subject to special tax rules, such as certain financial institutions (e.g., a bank or thrift),
a real estate investment trust, a regulated investment company, an insurance company, a pass-through entity (including an entity that is treated as a partnership for U.S. federal income tax purposes),
a dealer in securities or currencies, trader in securities or commodities that elects mark-to-market treatment, a person that will hold notes as a hedge against currency risk or as a position in a
"straddle" or conversion transaction, a tax-exempt organization, certain former citizens or long-term residents of the United States, or a person whose "functional currency" is not the U.S. dollar.
This discussion does not address the U.S. federal income tax considerations applicable to any holder of our existing indebtedness that may be refinanced with the net proceeds of this offering. In
addition, this discussion does not address any estate, gift, foreign, state or local tax consequences; the special tax accounting rules under section 451(b) of the Code; or the alternative
minimum tax.
You
are a "U.S. holder" for the purposes of this discussion if you are a beneficial owner of notes who, for U.S. federal income tax purposes, is treated
as:
-
-
an individual who is a citizen or resident of the United States;
-
-
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States 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
S-26
Table of Contents
-
-
a trust that (i) is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons (within the meaning
of the Code) or (ii) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.
You
are a "non-U.S. holder" for the purposes of this discussion if you are a beneficial owner of notes who, for U.S. federal income tax purposes, is treated
as:
-
-
a nonresident alien individual;
-
-
a foreign corporation;
-
-
an estate that is not subject to U.S. federal income tax on a net income basis; or
-
-
a trust if (i) no U.S. court can exercise primary supervision over the trust's administration or no U.S. person and no group of such
persons is authorized to control all substantial decisions of the trust, and (ii) the trust has no election to be treated as a U.S. person in effect.
If
a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds or is the beneficial owner of the notes, the tax treatment of a partner
in such partnership generally will depend on the status of the partner and the activities of the partnership. A beneficial owner of a note that is a partnership, and partners in such a partnership
should consult their tax advisors as to the tax consequences of an investment in the notes.
No
rulings from the IRS have or will be sought with respect to the matters discussed below. There can be no assurance that the IRS will not take a different position concerning the tax
consequences of the purchase, ownership or disposition of the notes or that any such position would not be sustained by a court of competent jurisdiction. You should consult your tax advisor regarding
the tax consequences of holding notes, including the relevance to your particular situation of the considerations discussed below, as well as the relevance to your particular situation of state,
local, non-U.S., or other tax laws.
U.S. Holders
Payments or accruals of interest on a note will be taxable to you as ordinary interest income at the time that you receive or accrue such
amounts (in accordance with your regular method of accounting for U.S. federal income tax purposes). Interest income on the notes will be treated as U.S. source income for U.S. federal income tax
purposes, which may be relevant in calculating a U.S. holder's foreign tax credit limitation.
Sale, Exchange or Other Taxable Disposition of Notes
Upon the sale, exchange or other taxable disposition of a note, you generally will recognize gain or loss equal to the difference between the
amount realized on the disposition (less any accrued interest, which will be taxable as ordinary income, as described above) and your tax basis in such note (generally, its cost less any principal
payments previously received). Any such gain or loss generally will be U.S.-source capital gain or loss and will be long-term capital gain or loss if you have held the note for more than one year.
Long-term capital gains recognized by non-corporate taxpayers are taxed at rates lower than those applicable to ordinary income. The deductibility of capital losses is subject to limitations.
A U.S. holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will
be subject to a 3.8% tax on the lesser of (i) the U.S. holder's "net investment income" in the case of individuals, and the "undistributed net investment income" in
S-27
Table of Contents
the
case of estates and trusts for the relevant taxable year and (ii) the excess of the U.S. holder's modified adjusted gross income for the taxable year over a certain threshold (which in the
case of individuals will be between $125,000 and $250,000, depending on the individual's circumstances) (the "Medicare tax"). A holder's net investment income generally will include its interest
income and its net gains from the disposition of debt securities, unless such interest income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade
or business that consists of certain passive or trading activities). If you are a U.S. holder that is an individual, estate, or trust, you are urged to consult your own tax advisors regarding the
applicability of the Medicare tax to your income and gains in respect of your investment in the notes.
A paying agent must file information returns with the IRS in connection with payments on the notes made within the United States, or through
certain U.S.-relevant financial intermediaries, to certain United States persons. If you are a United States person, you generally will not be subject to U.S. backup withholding tax on such payments
if you provide your taxpayer identification number to the paying agent. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against the U.S. holder's U.S.
federal income tax liability and may entitle the U.S. holder to a refund, provided that the required information is timely furnished to the IRS. You also may be subject to information reporting and
backup withholding tax requirements with respect to the proceeds from a sale of the notes. If you are not a United States person, you may have to comply with certification procedures to establish that
you are not a United States person in order to avoid information reporting and backup withholding tax requirements.
Non-U.S. Holders
Except as described below and under "FATCA Withholding", under current U.S. federal income tax law:
-
(a)
-
payments
on a note to a non-U.S. holder will not be subject to U.S. federal income or withholding tax, provided that, with respect to payments of interest,
(i) the non-U.S. holder does not actually or constructively own 10% or more of the combined voting power of all classes of our stock, (ii) the non-U.S. holder is not a controlled foreign
corporation related to us, actually or constructively through stock ownership, (iii) the non-U.S. holder is not a bank extending credit to us in the ordinary course of its trade or business,
(iv) interest paid on the note is not effectively connected with the non-U.S. holder's conduct of a trade or business in the United States and (v) the beneficial owner certifies on a
properly executed applicable IRS Form W-8BEN, or IRS Form W-8BEN-E, as applicable, under penalties of perjury, that it is not a United States person; and
-
(b)
-
a
non-U.S. holder will not be subject to U.S. federal income tax on gain realized on the sale, exchange or redemption of a note, unless (i) such gain is
effectively connected with the conduct by the holder of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent
establishment) or (ii) in the case of gain realized by an individual holder, the holder is present in the United States for 183 days or more in the taxable year of the sale and certain
other conditions are satisfied.
Interest
on a note that is not exempt from United States withholding tax as described above and is not effectively connected with a United States trade or business generally will be
subject to United States withholding tax at a rate of 30% (or, if applicable, a lower treaty rate). We may be required to report annually to the IRS and to you the amount of interest paid to, and any
tax withheld with respect to, you.
S-28
Table of Contents
If
you are engaged in a trade or business in the United States and interest on a note is effectively connected with the conduct of that trade or business and, if required by an
applicable income tax treaty, is attributable to a United States permanent establishment or fixed base, then you (although exempt from the 30% withholding tax) generally will be subject to United
States federal income tax on that interest on a net income basis in the same manner as if you were a United States person as defined under the Code. In addition, if you are a foreign corporation, you
may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with
your conduct of a trade or business in the United States.
Payments
on a note owned by a non-U.S. holder will not be subject to information reporting requirements or backup withholding tax if the certification described in clause (a)
above is duly provided to the paying agent.
Payment
on a note by the U.S. office of a custodian, nominee or other agent of the beneficial owner of such note will be subject to information reporting requirements and will be subject
to backup withholding tax unless the beneficial owner timely certifies its non-U.S. status under penalties of perjury or otherwise establishes an exemption.
Information
reporting requirements and backup withholding tax will not apply to any payment of the proceeds of the sale of a note effected outside the United States by a foreign office
of a foreign "broker" (as defined in applicable U.S. Treasury regulations), provided that such broker (i) derives less than 50% of its gross income for certain periods from the conduct of a
trade or business in the United States, (ii) is not a controlled foreign corporation for U.S. federal income tax purposes and (iii) is not a foreign partnership that, at any time during
its taxable year, is more than 50% (by income or capital interest) owned by U.S. persons or is engaged in the conduct of a U.S. trade or business. Payment of the proceeds of the sale of a note
effected outside the United States by a foreign office of any other broker will not be subject to backup withholding tax, but will be subject to information reporting requirements unless such broker
has documentary evidence in its records that the beneficial owner is a non-U.S. holder and certain other conditions are met, or the beneficial owner otherwise establishes an exemption. Payment of the
proceeds of a sale of a note by the U.S. office of a broker will be subject to
information reporting requirements and backup withholding tax unless the beneficial owner certifies its non-U.S. status under penalties of perjury or otherwise establishes an exemption.
FATCA Withholding
Provisions of the Code commonly referred to as "FATCA" impose a 30% U.S. federal withholding tax on payments of (i) interest and
(ii) gross proceeds from sales, exchanges or other taxable dispositions of interest-bearing obligations occurring after December 31, 2018, in each case, to certain "foreign financial
institutions" and "nonfinancial foreign entities, "as defined in the Code, if certain disclosure or certification requirements related to U.S. accounts or ownership are not satisfied. Treasury
regulations were published in proposed form that eliminate FATCA withholding on payments of gross proceeds from sales, exchanges or other taxable dispositions of instruments such as the notes.
Pursuant to the proposed regulations, taxpayers may rely on this change to FATCA withholding until final regulations are issued. In addition, an intergovernmental agreement between the United States
and the jurisdictions of a foreign financial institution may modify these rules. As noted above, none of Novartis Capital Corporation, any paying agent nor any other person will be obligated to pay
any additional amounts to "gross up" payments to the noteholders or beneficial owners of the notes for or on account of any withholding or deduction imposed under the Code, as amended, any U.S.
Treasury Regulations or other guidance issued or agreements entered into thereunder, any official written interpretations thereof or any law implementing an intergovernmental approach thereto.
S-29
Table of Contents
Noteholders
are urged to consult their own tax advisors regarding the application of FATCA with respect to an investment in the notes.
Swiss Withholding Tax
According to the present practice of the Swiss Federal Tax Administration, payments of principal and interest (and discount or premium, if any)
or gains in respect of the notes by Novartis Capital Corporation or the Guarantor are not subject to Swiss withholding tax currently levied at the rate of thirty-five (35) per cent
(Verrechnungssteuer), if the proceeds from the notes are neither directly nor indirectly used in Switzerland by any kind of intragroup financing which
would constitute a harmful "use of proceeds in Switzerland" as interpreted by the Swiss Federal Tax Administration for purposes of Swiss withholding tax.
Proposed Amendment of the Swiss Federal Withholding Tax Act
Proposed amendments of the Swiss Federal Withholding Tax Act foresee a replacement of the current debtor-based regime applicable to interest
payments with a paying agent-based regime for Swiss withholding tax. Under such a paying agent-based regime, if introduced, a Swiss paying agent would need to levy and pay Swiss withholding tax on
interest payments and suchlike on the notes, provided that the beneficiary is an individual resident in Switzerland.
If
any such a new paying agent-based regime were to be enacted and were to result in the deduction or withholding of Swiss withholding tax by a paying agent in Switzerland on any
interest payments in respect of the notes, none of Novartis Capital Corporation, nor the principal paying agent, nor any other paying agent or person would, pursuant to the terms of the notes, be
obliged to pay additional amounts with respect to the notes as a result of the deduction or imposition of such withholding tax. However, the exact scope of the proposal and the date of implementation
of the amendments are not yet known.
Swiss Federal Stamp Duty
The issue of the notes to their initial holders will not be subject to Swiss federal stamp duty on the dealing in securities
("Umsatzabgabe") (primary market). A transfer of the notes in a secondary market transaction where a bank or another securities dealer in Switzerland or
Liechtenstein (as defined in the Swiss Federal Stamp Tax Act) acts as an intermediary or is a party to the transaction
may be subject to Swiss securities transfer tax at an aggregate rate of up to 0.3% of the consideration paid for such notes.
Income Taxation on Principal or Interest
A noteholder who is not a tax resident in Switzerland and who during the taxation year has not engaged in a trade or business carried on through
a permanent establishment or fixed place of business in Switzerland will, in respect of payments of interest on, and repayment of principal of, the notes, and gain realized on the sale or redemption
of notes, not be subject to income tax in Switzerland. See "Swiss Withholding Tax" above for the deduction of Swiss federal withholding tax on payments of interest on the notes.
An individual who resides in Switzerland and holds the notes as private assets is required to include all payments of interest received on such
notes in his or her personal income tax return for the
S-30
Table of Contents
relevant
tax period and will be taxed on the net taxable income (including the payments of interest on the notes) for such tax period at the then prevailing tax rates.
Swiss
resident individuals who sell or otherwise dispose of privately held notes realize either a tax-free private capital gain or a non-tax-deductible capital loss. See "Notes held as
Swiss business assets" below for a summary on the tax treatment of individuals classified as "professional securities dealers."
Swiss resident corporate taxpayers, corporate taxpayers residing abroad holding notes as part of a permanent establishment or fixed place of
business situated in Switzerland, and individuals who hold notes as part of a permanent establishment or a business situated in Switzerland are required to recognize payments of interest on, and any
capital gain or loss realized on the sale or other disposal of, such notes in their income statement for the relevant tax period and will be taxed on any net taxable earnings for such tax period at
the then prevailing tax rates. The same taxation treatment also applies to Swiss resident individuals who, for Swiss income tax purposes, are classified as "professional securities dealers" for
reasons of, inter alia, frequent dealings or leveraged transactions in securities.
Automatic Exchange of Information
Switzerland signed the Multilateral Competent Authority Agreement (the "MCAA") regarding the automatic exchange of information in tax matters
(the "AEOI") which is based on OECD/Council of Europe administrative assistance convention. The Swiss Federal Act on the International Automatic Exchange of Information in Tax Matters entered into
force on January 1, 2017. The AEOI is being introduced in Switzerland through bilateral agreements or multilateral agreements. On this basis, Switzerland began to collect data in respect of
financial assets, including, as the case may be, notes, held in, and income derived thereon and credited to, accounts or deposits with a paying agent in Switzerland for the benefit of individuals
resident in a EU member state or in a treaty state from 2017 on and has been exchanging it since 2018, in each case depending on the effectiveness of the relevant agreement. Switzerland has signed and
intends to sign further AEOI agreements with further countries. An up-to-date list of the AEOI agreements of Switzerland in effect or signed and becoming effective and the dates of information
exchange can be found on the website of the State Secretariat for International Financial Matters.
S-31
Table of Contents
UNDERWRITING
The terms and conditions set forth in the terms agreement, which incorporates by reference the provisions of an underwriting agreement, govern
the sale and purchase of the notes. The terms agreement and the underwriting agreement are referred to collectively as the underwriting agreement. Under the terms and subject to the conditions
contained in an underwriting agreement dated February , 2020, we have agreed to sell to the underwriters named below, for whom Citigroup Global Markets Inc.,
HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, MUFG Securities Americas Inc. are acting as representatives, the following respective principal amounts
of the notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriter
|
|
Principal amount
of
2025 Notes
|
|
Principal amount
of
2027 Notes
|
|
Principal amount
of
2030 Notes
|
|
Principal amount
of
2050 Notes
|
|
Citigroup Global Markets Inc.
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
HSBC Securities (USA) Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morgan Stanley & Co. LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MUFG Securities Americas Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
underwriting agreement provides that the underwriters are obligated to purchase all of the notes if any are purchased. The underwriting agreement also provides that if an underwriter
defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering of notes may be terminated. The offering of the notes by the underwriters is subject to receipt and
acceptance and subject to the underwriters' right to reject any order in whole or in part.
The
underwriters propose to offer each series of notes initially at the respective price to public listed on the cover page of this prospectus supplement and to other broker-dealers at
the applicable price to public less a selling concession of % of the principal amount per 2025 note, % of the principal amount per 2027 note,
% of the
principal amount per 2030 note and % of the principal amount per 2050 note. The underwriters and the other broker-dealers may allow a discount of % of the
principal amount
per 2025 note % of the principal amount per 2027 note, % of the principal amount per 2030 note and % of the
principal amount per 2050 note to other
broker-dealers. After the initial public offering, the underwriters may change the price to public and concession and discount to broker-dealers.
The
following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering (expressed as a percentage of the principal
amount of the notes).
|
|
|
|
|
|
|
Paid by Us
|
|
Per 2025 Note
|
|
|
|
%
|
Per 2027 Note
|
|
|
|
%
|
Per 2030 Note
|
|
|
|
%
|
Per 2050 Note
|
|
|
|
%
|
We
estimate that our expenses (which consist of, among other fees, SEC registration fees, rating agency fees and expenses, legal fees and expenses, accounting fees and expenses and
printing expenses) for this offering, excluding underwriting discounts, will be approximately $ .
The
notes are new issues of securities with no established trading markets. The notes will not be listed on any securities exchange or interdealer market quotation system.
Representatives of the
S-32
Table of Contents
underwriters
have informed us that one or more of the underwriters intend to make a secondary market for each series of notes. However, they are not obligated to do so and may discontinue making a
secondary market for either series of notes at any time without notice. No assurance can be given as to how liquid or sustainable the trading markets, if any, for the notes will be.
Each
underwriter has agreed that it will not offer or sell, directly or indirectly, any of the notes in any jurisdiction where such offer or sale is not permitted.
We
have agreed to indemnify the several underwriters against liabilities under the Securities Act of 1933, as amended (the "Securities Act"), or contribute to payments that the
underwriters may be required to make in that respect.
The
underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment
banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to
time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. As described
under "Capitalization" in this prospectus supplement, the net proceeds from the offering of the notes will provide us with additional liquidity to facilitate, among other things, the proposed
repayment, on or around the issue date of the notes, of $7,000,000,000 in borrowings under a short-term credit agreement we entered into in December 2019 with certain of the underwriters or their
affiliates.
In
addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively
trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time
hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. Certain of the underwriters or their affiliates
have a lending relationship with us and routinely hedge their credit exposure to us consistent with their customary risk management policies. Typically, such underwriters and their affiliates would
hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the notes
offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the notes offered hereby. The underwriters and their affiliates may also make
investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long
and/or short positions in such securities and instruments.
In
connection with the offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with
Regulation M under the Exchange Act.
-
-
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.
-
-
Over-allotment involves sales by the underwriters of notes in excess of the principal amount of notes the underwriters are obligated to
purchase, which creates a syndicate short position.
-
-
Syndicate covering transactions involve purchases of notes in the open market after the distribution has been completed in order to cover
syndicate short positions.
-
-
Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the notes originally sold by such syndicate
member are purchased in a stabilizing or a syndicate covering transaction to cover syndicate short positions.
S-33
Table of Contents
In
connection with the offering of the notes, the underwriters (or persons acting on their behalf) may over-allot notes or effect transactions with a view to supporting the market prices
of the notes at a level higher than that which might otherwise prevail. However, stabilization might not necessarily occur. Any stabilization action may begin on or after the date on which adequate
public disclosure of the terms of the offer of the relevant notes is made and, if begun, may cease at any time, but it must end no later than 30 calendar days after the issue date of the relevant
notes and 60 calendar days after the date of allotment of the relevant notes, whichever is the earlier.
We
expect that delivery of the notes will be made against payment therefor on or about February , 2020, which is the third business day after the date hereof. Under
Rule 15c6-1 of the Securities Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade expressly agree otherwise.
Accordingly, purchasers who wish to trade the notes on the date hereof or the next business days will be required, by virtue of the fact that the notes initially will not settle in T+2, to specify an
alternative settlement cycle at the time of any such trade to prevent a failed settlement and should consult their own advisor.
S-34
Table of Contents
SELLING RESTRICTIONS
European Economic Area
This prospectus supplement has been prepared on the basis that any offer of notes in the EEA will be only made to a person or legal entity
qualifying as a qualified investor (as defined in the Prospectus Regulation). Accordingly any person making or intending to make an offer in the EEA of notes which are the subject of the offering
contemplated in this prospectus supplement may only do so to one or more qualified investors as defined in the Prospectus Regulation. Neither we
nor the underwriters have authorized, nor do we or they authorize, the making of any offer of notes to any person or legal entity other than a qualified investor as defined in the Prospectus
Regulation. Neither we nor the underwriters have authorized, nor do we or they authorize, the making of any offer of notes through any financial intermediary, other than offers made by the
underwriters, which constitute the final placement of the notes contemplated in this prospectus supplement.
Each
underwriter has agreed that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any notes to any retail investor in the EEA.
For these purposes, the expression "retail investor" means a person who is one (or more) of the following: (i) a retail client as defined in point (11) of Article 4(1) of MiFID
II, (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client as defined in point (10) of
Article 4(1) of MiFID II or (iii) not a qualified investor as defined in the Prospectus Regulation and the expression "offer" includes the communication in any form and by any means of
sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe the notes.
United Kingdom
This document is for distribution in the United Kingdom only to persons who (i) have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii) are persons
falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc") of the Financial Promotion Order or (iii) are persons to whom an invitation or
inducement to engage in investment activity (within the meaning of section 21 of the FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or
caused to be communicated (all such persons together being referred to as "relevant persons"). In the United Kingdom, this document is directed only at relevant persons and must not be acted on or
relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available in the United Kingdom only to relevant persons and will be engaged
in only with relevant persons.
Each
underwriter has agreed that:
(a) it
has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity
(within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of the notes in circumstances in which section 21(1) of the FSMA does not apply to
Novartis Capital Corporation or Novartis AG; and
(b) it
has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving
the United Kingdom.
Switzerland
The offering of the notes in Switzerland is exempt from the requirement to prepare and publish a prospectus under the Swiss Financial Services
Act ("FinSA") because such offering is made to
S-35
Table of Contents
professional
clients within the meaning of the FinSA only and the notes will not be admitted to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. This prospectus
supplement does not constitute a prospectus pursuant to the FinSA, and no such prospectus has been or will be prepared for or in connection with the offering of the notes.
Canada
The notes may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as
defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National
Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not
subject to, the prospectus requirements of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement and the accompanying
prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the
securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for
particulars of these rights or consult with a legal advisor.
Pursuant
to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure
requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Hong Kong
No notes may be offered or sold in Hong Kong, by means of any document, other than (a) to "professional investors" as defined in the
Securities and Futures Ordinance (Cap. 571) of Hong Kong (the "SFO") and any rules made thereunder; or (b) in other circumstances which do not result in the document being a "prospectus" as
defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance.
No
advertisement, invitation or document relating to the notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if
permitted to do so under the securities laws of Hong Kong) has been or will be issued other than with respect to the notes which are or are intended to be disposed of only to persons outside Hong Kong
or only to "professional investors" as defined in the SFO and any rules made thereunder.
Japan
The notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan, or the FIEL, and the notes will
not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or
other entity organized under the laws of Japan), or to others for reoffering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to any exemption from the
registration requirements of, and otherwise in compliance with, the FIEL and any other applicable laws, regulations and ministerial guidelines of Japan.
Singapore
This prospectus supplement and the accompanying prospectus have not been registered as a prospectus with the Monetary Authority of Singapore.
Accordingly, this prospectus supplement, the
S-36
Table of Contents
accompanying
prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may
the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person
under Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any
other applicable provision of the SFA.
Where
the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined
in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor;
or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,
Securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (however described) in that trust shall not be transferred within
6 months after that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except: (1) to an institutional investor or to a
relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (2) where no
consideration is or will be given for the transfer; (3) when the transfer is by operation of law; (4) as specified in Section 276(7) of the SFA; or (5) as specified in
Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.
Singapore
Securities and Futures Act Product ClassificationSolely for the purposes of its obligations pursuant to Sections 309B(1)(a) and 309B(1)(c) of the Securities
and Futures Act (Chapter 289 of Singapore) (the "SFA"), we have determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the notes are
"prescribed capital markets products" (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA
04-N12: Notice on the Sale of Investment Products) and MAS Notice FAA-N16: Notice on Recommendations on Investment Products.
Cayman Islands
No invitation, whether direct or indirect, may be made to a member of the public in the Cayman Islands to purchase the notes. Accordingly, no
such invitation is made by this prospectus supplement.
Taiwan
The notes have not been and will not be registered with the Financial Supervisory Commission of Taiwan, the Republic of China ("Taiwan"),
pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in any manner which would constitute an offer within the meaning of the
Securities and Exchange Act of Taiwan or would otherwise require registration with or the approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized
to offer or sell the notes in Taiwan.
S-37
Table of Contents
LEGAL MATTERS
Certain matters of U.S. law will be passed upon for us by Mayer Brown International LLP and for the underwriters by Morrison &
Foerster LLP. Morrison & Foerster LLP has performed and from time to time performs legal services for us and our subsidiaries and affiliates.
EXPERTS
The financial statements and management's assessment of the effectiveness of internal control over financial reporting (which is included in the
Report of Novartis Management on Internal Control Over Financial Reporting) incorporated in this prospectus supplement by reference to the Annual Report on Form 20-F for the year ended
December 31, 2019 have been so incorporated in reliance on the report of PricewaterhouseCoopers AG, Switzerland, an independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting. PricewaterhouseCoopers AG is a member of EXPERTsuisseSwiss Expert Association for Audit, Tax and Fiduciary.
S-38
Table of Contents
PROSPECTUS
Novartis Capital Corporation
Debt Securities
Fully and Unconditionally Guaranteed by
Novartis AG
We
may offer debt securities from time to time in one or more series through this prospectus. The debt securities will be issued by Novartis Capital Corporation, one of Novartis AG's
finance subsidiaries, and will be fully and unconditionally guaranteed by Novartis AG.
We
will provide the specific terms of the debt securities we offer in one or more supplements to this prospectus. You should read this prospectus and any related prospectus supplement
carefully before you invest in our debt securities. Our debt securities may be denominated in U.S. dollars or in any other currencies, currency units or composite currencies as we may designate.
We
may offer these debt securities through underwriters, agents or dealers or directly to institutional purchasers. The accompanying prospectus supplement will set forth the names of any
underwriters or agents and any applicable commissions or discounts. The prospectus supplement will also set forth the proceeds we will receive from any sale of debt securities and the intended use
thereof.
Investing in our debt securities involves certain risks. See "Risk Factors" on page 2 to read about certain factors you should consider
before investing in our debt securities.
Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has
approved or disapproved of these securities or determined if this prospectus or any accompanying prospectus supplement is truthful or complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is January 30, 2020.
Table of Contents
Table of Contents
You
should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. Neither we nor any underwriters or agents have authorized
anyone else to provide you with different or additional information. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than
the date on the front cover of these documents. We are not making an offer of these securities in any state or other jurisdiction where the offer or sale is not permitted.
i
Table of Contents
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the "SEC") using a "shelf"
registration process. Under this shelf registration process, we may sell any combination of the debt securities described in this prospectus in one or more offerings.
This
prospectus provides you with a general description of the debt securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering and the offered debt securities. Those terms may vary from the terms described in this prospectus. As a result, the summary description of the
debt securities in this prospectus is subject to, and qualified by reference to, the descriptions of the particular terms of any debt securities contained in any related prospectus supplement. The
prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any related prospectus supplement together with the additional
information described under the
headings "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference." If there are any inconsistencies between the information contained in this prospectus and the
information contained in any prospectus supplement, the information in the prospectus supplement will prevail.
This
prospectus does not include all of the information contained in the registration statement of which it is a part. We refer you to the registration statement and the related exhibits
for a more complete understanding of our debt securities and the shelf registration process.
Any
debt securities issued by Novartis Capital Corporation will be fully and unconditionally guaranteed by Novartis AG, a stock corporation
(Aktiengesellschaft) incorporated under the laws of Switzerland. The term "guarantor" refers to Novartis AG. Unless the context requires otherwise, the
terms "we," "our", "us", "Novartis", "Group", and similar words or phrases in this prospectus refer to Novartis AG and its consolidated affiliates. However, each Group company is legally separate from
all other Group companies and manages its business independently through its respective board of directors or similar supervisory body or other top local management body, if applicable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports with and furnish other reports and information to the SEC. You may read and copy any document we file with or furnish to
the SEC on the SEC's website at www.sec.gov. The address of the SEC's website is provided solely for the information of prospective investors and is not intended to be an active link. Reports and
other information concerning our business may also be inspected at the offices of the New York Stock Exchange at 11 Wall Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with or furnish to the SEC, which means that we can disclose important
information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we later file with or furnish to the SEC
and that is incorporated by reference will automatically update and supersede information in this prospectus and information previously incorporated by reference herein.
Each
document incorporated by reference is current only as of the date of such document, and the incorporation by reference of such documents is not intended to create any implication
that there has been no change in our affairs since the date of the relevant document or that the information contained in such document is current as of any time subsequent to its date. Any statement
contained in such incorporated documents is deemed to be modified or superseded for the purpose of this
1
Table of Contents
prospectus
to the extent that a subsequent statement contained in another document we incorporate by reference at a later date modifies or supersedes that statement. Any such statement so modified or
superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We
hereby incorporate by reference into this prospectus the documents listed below. Unless otherwise noted, all of the documents listed below have the SEC file
number 001-15024:
-
-
Annual Report on Form 20-F for the year ended December 31, 2019; and
-
-
Each of the following documents that we file with or furnish to the SEC after the date of this prospectus from now until we terminate the
offering of securities under this prospectus and the registration statement:
-
-
Reports filed under Section 13(a), 13(c) or 15(d) of the Securities Exchange Act of 1934, as amended, and
-
-
Reports filed or furnished on Form 6-K that indicate that they are incorporated by reference in this prospectus.
You
may obtain copies of these documents in the manner described above. You may also request copies of these documents at no cost by contacting us as follows:
|
|
|
Novartis International AG
Investor Relations
P.O. Box
CH-4002 Basel
Switzerland
Tel: +41 61 324 79 44
Fax: +41 61 324 84 44
E-mail: investor.relations@novartis.com
|
|
Novartis Services, Inc.
Investor Relations
One Health Plaza
East Hanover, NJ 07936
USA
Tel: + 1 862 778 5052
E-mail: investor.relations@novartis.com
|
PRESENTATION OF FINANCIAL INFORMATION
We present our consolidated financial statements in U.S. dollars and in accordance with International Financial Reporting Standards ("IFRS") as
issued by the International Accounting Standards Board. When we refer to "$," we mean U.S. dollars. Except where noted, all financial information is presented in accordance with IFRS.
RISK FACTORS
Investing in our debt securities involves certain risks. You should read "Risk Factors" on pages 11 - 22 of our annual
report on Form 20-F for the year ended December 31, 2019, which is incorporated by reference in this prospectus, or similar sections in subsequent filings incorporated by reference in
this prospectus, for a discussion of certain factors you should consider before investing in our debt securities. You should also read any risks described in any prospectus supplement related to a
specific offering of our debt securities.
2
Table of Contents
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in this prospectus contain certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the United States Private Securities Litigation Reform Act
of 1995, as amended. Other written materials filed with or furnished to the SEC by Novartis, as well as other written and oral statements made to the public, may also contain forward-looking
statements. Forward-looking statements can be identified by words such as "potential," "expected," "will," "planned," "pipeline," "outlook," "may," "could," "would," "anticipate," "seek," or similar
terms, or by express or implied discussions regarding potential new products, potential new indications for existing products, or regarding potential future revenues from any such products; or
regarding the potential outcome, or financial or other impact on Novartis, of the acquisition of The Medicines Company, the proposed divestiture of certain portions of our Sandoz Division business in
the US, and other transactions described; or regarding the potential impact of our share buybacks; or regarding potential future sales or earnings of the Group or any of its divisions or potential
shareholder returns; or regarding potential future credit ratings of the Group; or by discussions of strategy, plans, expectations or intentions. Such forward-looking statements are based on the
current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth or implied in the forward-looking statements. You should not place undue reliance
on forward-looking statements.
In
particular, our expectations could be affected by, among other things:
-
-
Global trends toward healthcare cost containment, including ongoing government, payer and general public pricing and reimbursement pressures
and requirements for increased pricing transparency;
-
-
Uncertainties regarding potential significant breaches of information security or disruptions of our information technology systems;
-
-
Uncertainties regarding the success of key products and commercial priorities;
-
-
Our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the
loss of patent protection and exclusivity on key products that commenced in prior years and is expected to continue this year;
-
-
Uncertainties in the research and development of new healthcare products, including clinical trial results and additional analysis of existing
clinical data;
-
-
Regulatory actions or delays or government regulation generally, including potential regulatory actions or delays with respect to the proposed
transactions or the development of the products described in this Annual Report;
-
-
Uncertainties regarding actual or potential legal proceedings, including, among others, litigation and other legal disputes with respect to the
proposed transactions, product liability litigation, litigation and investigations regarding sales and marketing practices, intellectual property disputes and government investigations generally;
-
-
Our reliance on outsourcing key business functions to third parties;
-
-
Our ability to comply with data privacy laws and regulations, and uncertainties regarding potential significant breaches of data privacy;
-
-
Safety, quality, data integrity or manufacturing issues;
3
Table of Contents
-
-
Uncertainties in the development or adoption of potentially transformational technologies and business models;
-
-
The potential that the strategic benefits, synergies or opportunities expected from our recent and proposed future transactions may not be
realized or may take longer to realize than expected;
-
-
Uncertainties involved in predicting shareholder returns;
-
-
Our performance on environmental, social and governance measures;
-
-
Political, economic and trade conditions, including uncertainties regarding the effects of ongoing instability in various parts of the world;
-
-
Uncertainties regarding the effects of recent and anticipated future changes in tax laws and their application to us;
-
-
Uncertainties regarding future global exchange rates; and
-
-
Uncertainties regarding future demand for our products.
Some
of these and other risks and factors are discussed in more detail in Novartis AG's current Form 20-F on file with the SEC, including under "Item 3. Key
InformationItem 3.D. Risk factors," "Item 4. Information on the Company," and "Item 5. Operating and Financial Review and Prospects." Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this prospectus or in the documents incorporated herein
by reference as anticipated, believed, estimated or expected. We provide the information in this prospectus, any applicable prospectus supplement and any document incorporated herein by reference as
of the relevant filing date. We do not intend, and do not assume any obligation, to update any information or forward-looking statements set out in any such documents as a result of new information,
future events or otherwise.
4
Table of Contents
USE OF PROCEEDS
Unless we tell you otherwise in a prospectus supplement, we will use the net proceeds from the sale of the debt securities described in this
prospectus for our general corporate purposes outside of Switzerland, which may include the refinancing of existing short- and long-term
indebtedness or investing the net proceeds in marketable securities as part of our liquidity management process.
5
Table of Contents
NOVARTIS AG
Novartis AG was incorporated on February 29, 1996 under the laws of Switzerland as a stock corporation
(Aktiengesellschaft) with an indefinite duration. On December 20, 1996, our predecessor companies, Ciba-Geigy AG and Sandoz AG, merged into this
new entity, creating Novartis. Novartis AG is domiciled in and governed by the laws of Switzerland. Its registered office is located at Novartis AG, Lichtstrasse 35, CH-4056 Basel, Switzerland, and
its telephone number is +41 61 324 1111.
Novartis
is a multinational group of companies specializing in the research, development, manufacturing and marketing of a broad range of healthcare products, led by innovative
pharmaceuticals and also including high-quality generic pharmaceuticals. The Group is headquartered in Basel, Switzerland. Novartis AG, our Swiss holding company, owns, directly or indirectly, all of
our significant operating companies.
Our
purpose is to reimagine medicine to improve and extend people's lives. We use innovative science and technology to address some of society's most challenging healthcare issues. We
discover and develop breakthrough treatments and find new ways to deliver them to as many people as possible. We also aim to reward those who invest their money, time and ideas in our company. Our
vision is to be a trusted leader in changing the practice of medicine. Our strategy is to build a leading, focused medicines company powered by advanced therapy platforms and data science. As we
implement our strategy, we have five priorities to shape our future and help us continue to create value for our company, our shareholders and society: unleash the power of our people; deliver
transformative innovation; embrace operational excellence; go big on data and digital; and build trust with society.
In
2019, Novartis achieved net sales from continuing operations of USD 47.4 billion, while net income from continuing operations amounted to USD 7.1 billion
and net income to USD 11.7 billion. Headquartered in Basel, Switzerland, our Group companies employed 104 000 full-time equivalent associates as of December 31, 2019.
Our products are sold in approximately 155 countries around the world.
The
Group comprises two global operating divisions:
-
-
Innovative Medicines: innovative patent-protected prescription medicines
-
-
Sandoz: generic pharmaceuticals and biosimilars
Our
Innovative Medicines Division researches, develops, manufactures, distributes and sells patented prescription medicines to enhance health outcomes for patients and healthcare
providers. Innovative Medicines is organized into two global business units: Novartis Oncology and Novartis Pharmaceuticals. Novartis Pharmaceuticals consists of the following global business
franchises: Ophthalmology; Neuroscience; Immunology, Hepatology and Dermatology; Respiratory; Cardiovascular, Renal and Metabolism; and Established Medicines.
Our
Sandoz Division develops, manufactures, distributes and sells prescription medicines as well as pharmaceutical active substances that are not protected by valid and enforceable
third-party patents. Sandoz is organized globally into three franchises: Retail Generics; Anti-Infectives and Biopharmaceuticals. In Retail Generics, Sandoz develops, manufactures and markets active
ingredients and finished dosage forms of small molecule pharmaceuticals to third parties across a broad range of therapeutic areas, as well as finished dosage form anti-infectives sold to third
parties. In Anti-Infectives,
Sandoz manufactures and supplies active pharmaceutical ingredients and intermediatesmainly antibioticsfor internal use by Retail Generics and for sale to third-party
customers. In Biopharmaceuticals, Sandoz develops, manufactures and markets protein- or other biotechnology-based products, including biosimilars, and provides biotechnology manufacturing services to
other companies.
In
April 2019, we completed the previously announced spin-off of Alcon into a separately traded standalone company. In Novartis AG's annual report for the year ended December 31,
2019, to comply
6
Table of Contents
with
IFRS, we have separated the Group's reported financial data for 2019 and prior years into "continuing" and "discontinued" operations. Discontinued operations include the Alcon eye care devices
business and certain Corporate activities attributable to the Alcon business prior to the spin-off, the gain on distribution of Alcon to Novartis AG shareholders and certain other expenses related to
the spin-off.
Our
divisions are supported by the following organizational units: the Novartis Institutes for BioMedical Research, Global Drug Development, Novartis Technical Operations and Novartis
Business Services. The financial results of these organizational units are included in the results of the divisions for which their work is performed. The Novartis Institutes for BioMedical Research
(NIBR) is the innovation engine of Novartis, which conducts drug discovery research and early clinical development trials for our Innovative Medicines Division. Approximately 5,600 full time
equivalent scientists, physicians and business professionals at NIBR are working to discover new medicines for various diseases at sites located in the US, Switzerland and China.
Our
Global Drug Development (GDD) organization oversees drug development activities for our Innovative Medicines Division and collaborates with our Sandoz Division on development of its
biosimilars portfolio. GDD works collaboratively with NIBR and with the Innovative Medicines and Sandoz Divisions to execute our overall pipeline strategy. The GDD organization includes centralized
global functions such as Regulatory Affairs and Global Development Operations, as well as Global Development units aligned with our business franchises. GDD includes approximately 11 000
full-time equivalent associates worldwide.
Novartis
Technical Operations (NTO) manages manufacturing operations, supply chain, and quality across our Innovative Medicines and Sandoz Divisions. As the Novartis portfolio evolves,
we continue to transform our operations to help ensure we can deliver the innovation and expertise needed to enable the production of new medical technologies, while increasing effciency. NTO is
expected to enhance capacity planning and adherence to quality standards, and to lower costs through simplification, standardization and external spend optimization. NTO includes approximately 25,100
full-time equivalent associates and 60 manufacturing sites across our Innovative Medicines and Sandoz Divisions.
Novartis
Business Services (NBS), our shared services organization, delivers integrated solutions to all Novartis divisions and units worldwide. NBS seeks to drive effciency and
effectiveness across Novartis by simplifying and standardizing services across six service domains: human resources, real estate and facility services, procurement, information technology, commercial
and medical support activities, and financial reporting and accounting operations. NBS has approximately 10,000 full-time equivalent associates in more than 30 countries. NBS works to leverage the
full scale of Novartis to create value across the Company and to free up resources to invest in innovation and our product pipeline. NBS continues to transfer the delivery of selected services to its
five Global Service Centers in Dublin, Ireland; Hyderabad, India; Kuala Lumpur, Malaysia; Mexico City, Mexico; and Prague, Czech Republic.
Our
shares are listed on the SIX Swiss Exchange under the symbol "NOVN" and on the New York Stock Exchange (NYSE) in the form of American Deposityary Receipts (ADRs) representing
American Depositary Shares(ADSs) under the symbol "NVS".
7
Table of Contents
NOVARTIS CAPITAL CORPORATION
Novartis Capital Corporation is a finance subsidiary indirectly owned 100% by Novartis AG and was incorporated as a corporation under the laws
of Delaware on July 23, 2008. It exists for the purpose of issuing debt securities, the proceeds of which will be invested by it in marketable securities or advanced to, or otherwise invested
in, subsidiaries or affiliates of Novartis AG. The principal office of Novartis Capital Corporation is located at 1 Health Plaza, East Hanover, New Jersey 07936, USA, and its telephone number
is + 1 (202) 887 1585.
8
Table of Contents
LEGAL OWNERSHIP OF DEBT SECURITIES
"Street Name" and Other Indirect Holders
We generally will not recognize investors who hold debt securities in accounts at banks or brokers as legal holders of those debt securities.
Holding securities in accounts at banks or brokers is called holding in "street name." If an investor holds debt securities in street name, we recognize only the bank or broker or the financial
institution the bank or broker uses to hold the debt securities. These intermediary banks, brokers and other financial institutions pass along principal, interest and other payments on the debt
securities, either because they agree to do so in their customer agreements or because they are legally required to do so. If you hold debt securities in street name, you should check with your own
institution to find out:
-
-
how it handles payments and notices with respect to securities;
-
-
whether it imposes fees or charges;
-
-
how it would handle voting if ever required;
-
-
how and when you should notify it to exercise on your behalf any rights or options that may exist under the debt securities;
-
-
whether and how you can instruct it to send you securities registered in your own name so you can be a direct holder as described below; and
-
-
how it would pursue rights under the debt securities if there were a default or other event triggering the need for holders to act to protect
their interests.
Registered Holders
Our obligations, as well as the obligations of the trustee and those of any third parties employed by us or the trustee, extend only to persons
who are registered as holders of debt securities. As noted above, we do not have obligations directly to you if you hold in street name or through other indirect means, either because you choose to
hold debt securities in that manner or because the debt securities are issued in the form of global securities as described below. For example, once we make payment to the registered holder, we have
no further responsibility for the payment even if that holder is legally required to pass the payment along to you but does not do so.
Global Securities
A global security is a special type of indirectly held security. If we choose to issue debt securities in the form of global securities, the
ultimate beneficial owners of the debt securities will be indirect holders. We do this by requiring that the global security be registered in the name of a financial institution we select and by
requiring that the debt securities represented by the global security not be registered in the name of any other holder except in the special situations described below. The financial institution that
acts as the sole registered holder of the global security is called the depositary. Any person wishing to own a debt security may do so indirectly through an account with a broker, bank or other
financial institution that in turn has an account with the depositary. The applicable prospectus supplement will indicate whether your series of debt securities will be issued only as global
securities.
Transfers
of debt securities represented by the global security will be made only on the records of the depositary or its nominee by transferring such debt securities from the account of
one broker, bank or financial institution to the account of another broker, bank or financial institution. These transfers are made electronically only and are also known as book-entry transfers.
Securities in global form are sometimes also referred to as being in book-entry form.
9
Table of Contents
As
an indirect holder, your rights relating to a global security will be governed by the account rules of your broker, bank or financial institution and of the depositary, as well as
general laws relating to securities transfers. We will not recognize you as a holder of debt securities and instead will deal only with the depositary that holds the global security.
You
should be aware that if debt securities are issued only in the form of a global security:
-
-
except in very limited circumstances described below, you will not have any right to have debt securities registered in your own name;
-
-
you cannot receive physical certificates for your interest in the debt securities;
-
-
you will be a street name holder and must look to your own broker, bank or financial institution for payments on the debt securities and
protection of your legal rights relating to the debt securities;
-
-
you may not be able to sell interests in the debt securities to some insurance companies and other institutions that are required by law to own
securities in the form of physical certificates;
-
-
the depositary's policies will govern payments, transfers, exchanges and other matters relating to your indirect interest in the global
security. We and the trustee will have no responsibility for any aspect of the depositary's actions or for its records of ownership interests in the global security. We and the trustee also will not
supervise the depositary in any way; and
-
-
the depositary will require that indirect interests in the global security be purchased or sold within its system using same-day funds for
settlement.
In
a few special circumstances described below, the global security will terminate and the indirect interests in it will be exchanged for registered debt securities represented by
physical certificates. After that exchange, the choice of whether to hold debt securities in registered form or in street name will be up to you. You must consult your broker, bank or financial
institution to find out how to have your interests in debt securities transferred to your name, so that you will be a registered holder.
Unless
we specify otherwise in the applicable prospectus supplement, the special circumstances for termination of a global security are:
-
-
when the depositary notifies us that it is unwilling or unable to continue as depositary and we do not or cannot appoint a successor depositary
within 90 days;
-
-
the depositary ceases to be a clearing agency registered under the Exchange Act and we do not appoint a successor depositary within
90 days;
-
-
an event of default has occurred and is continuing and beneficial owners representing a majority in principal amount of the applicable series
of debt securities have advised the depositary to cease acting as the depositary; or
-
-
we decide we do not want to have the debt securities of that series represented by a global security.
The
prospectus supplement may also list additional circumstances for terminating a global security that would apply only to the particular series of debt securities covered by the
applicable prospectus supplement. When a global security terminates, the depositary (and not us or the trustee) is responsible for deciding the names of the institutions that will be the initial
registered holders.
The Term "Holder" as Used in this Prospectus and Elsewhere
In the descriptions of the debt securities included in this prospectus and any prospectus supplement, when we refer to the "holder" of a given
debt security as being entitled to certain rights or
10
Table of Contents
payments,
or being permitted to take certain actions, we are in all cases referring to the registered holder of the debt security.
While
you would be the registered holder if you held a certificated security registered in your name, it is likely that the holder will actually be either the broker, bank or other
financial institution where you have your street name account, or, in the case of a global security, the depositary. If you are an indirect holder, you will need to coordinate with the institution
through which you hold your interest in a debt security in order to determine how the provisions involving holders described in this prospectus and any prospectus supplement will actually apply to
you. For example, if the debt security in which you hold a beneficial interest in street name can be repaid at the option of the holder, you cannot exercise the option yourself by following the
procedures described in the applicable prospectus supplement. Instead, you would need to cause the institution through which you hold your interest to take those actions on your behalf. Your
institution may have procedures and deadlines different from or additional to those described in the applicable prospectus supplement relating to the debt security.
11
Table of Contents
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms that will apply to any debt securities that we may offer pursuant to this prospectus. The specific
terms of any offered debt securities, and the extent to which the general terms described in this section apply to those debt securities, will be described in the related prospectus supplement at the
time of the offer.
General
As used in this prospectus, "debt securities" means the debentures, notes, bonds, guarantees and other evidences of indebtedness that Novartis
Capital Corporation issues, Novartis AG
fully and unconditionally guarantees and the trustee authenticates and delivers under the indenture. The debt securities will be direct unsecured obligations of Novartis Capital Corporation and will
rank equally and ratably without preference among themselves and at least equally with all of the other unsecured and unsubordinated indebtedness of Novartis Capital Corporation. The guarantees will
be direct unsecured obligations of Novartis AG and will rank equally and ratably without preference among themselves and at least equally with all other unsecured and unsubordinated guarantees and
indebtedness of Novartis AG.
The
debt securities will be issued in one or more series under an indenture dated February 10, 2009 among Novartis Capital Corporation, Novartis Securities Investment Ltd
and Novartis Finance S.A., as issuers, HSBC Bank USA, National Association, as trustee, and Novartis AG, as guarantor. The indenture is qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
This
prospectus briefly outlines the provisions of the indenture and the description included herein is qualified in its entirety by reference to the indenture. The terms of the
indenture include both those stated in the indenture and those made part of the indenture by the Trust Indenture Act. The indenture has been filed as an exhibit to the registration statement of which
this prospectus forms a part, and you should read the indenture for provisions that may be important to you.
The
indenture does not contain any covenants or other provisions designed to protect holders of the debt securities against a reduction in the creditworthiness of Novartis AG or Novartis
Capital Corporation in the event of a highly leveraged transaction or that would prohibit other transactions that might adversely affect holders of the debt securities.
Issuances in Series
The indenture does not limit the amount of debt securities that may be issued. The debt securities may be issued in one or more series with the
same or various maturities, at a price of 100% of their principal amount or at a premium or a discount. Not all debt securities of any one series need be issued at the same time, and, unless otherwise
provided, any series may be reopened, without the consents of the holders of debt securities of that series, for issuances of additional debt securities of that series. Except in the limited
circumstances described below under "CovenantsLimitation on Liens," the debt securities will not be secured by any property or assets of Novartis AG or Novartis Capital
Corporation.
The
terms of any authorized series of debt securities will be described in a prospectus supplement. These terms will include some or all of the
following:
-
-
the title, aggregate principal amount and denominations of the debt securities;
-
-
the date or dates on which principal will be payable;
-
-
the percentage of the principal amount at which the debt securities will be issued and whether the debt securities will be "original issue
discount" securities for U.S. federal income tax
12
Table of Contents
purposes.
If original issue discount debt securities are issued (generally, securities that are issued at a substantial discount below their principal amount), the special U.S. federal income tax and
other considerations of a purchase of original issue discount debt securities will be described;
-
-
the rate or rates, which may be fixed or variable, at which the debt securities will bear interest;
-
-
the interest payment dates;
-
-
any optional or mandatory redemption terms;
-
-
whether any sinking fund is required;
-
-
the currency in which the debt securities will be denominated or principal, premium or interest will be payable, if other than U.S. dollars;
-
-
whether the debt securities are to be issued as individual certificates to each holder or in the form of global certificates held by a
depositary on behalf of beneficial owners;
-
-
information describing any book-entry features;
-
-
the names and duties of any co-trustees, depositaries, authenticating agents, paying agents, transfer agents or registrars for any series;
-
-
the applicability of the defeasance and covenant defeasance provisions described in this prospectus, or any modifications of those provisions;
-
-
any deletions from, modifications of or additions to the events of default or covenants with respect to the debt securities; and
-
-
any other terms, conditions, rights or preferences of the debt securities.
The
prospectus supplement relating to any series of debt securities may add to or change statements contained in this prospectus. The applicable prospectus supplement may also include,
if applicable, a discussion of certain U.S. federal income tax and Swiss income tax considerations.
Novartis AG Guarantees
Debt securities issued by Novartis Capital Corporation will be fully and unconditionally guaranteed by Novartis AG. If for any reason Novartis
Capital Corporation does not make any required payment in respect of its debt securities when due, whether on the normal due date, on acceleration, redemption or otherwise, Novartis AG will cause the
payment to be made to or to the order of the trustee. The holder of a guaranteed debt security will be entitled to payment under the applicable guarantee of Novartis AG without taking any action
whatsoever against Novartis Capital Corporation.
Payment and Transfer
The debt securities will be issued only as registered securities, which means that the name of the holder will be entered in a register that
will be kept by the trustee or another agent appointed by us. Unless stated otherwise in a prospectus supplement, and except as described under "Book-Entry System" below, payments of
principal, interest and additional amounts (as described below under "CovenantsPayment of Additional Amounts"), if any, will be made at the office of the paying agent or
agents named in the applicable prospectus supplement or by check mailed to registered holders at the address appearing in the register.
Unless
other procedures are described in a prospectus supplement and except as described under "Book-Entry System" below, you will be able to transfer registered debt
securities at the office of the transfer agent or agents named in the applicable prospectus supplement. You may also exchange registered debt securities at the office of the transfer agent for an
equal aggregate principal amount of
13
Table of Contents
registered
debt securities of the same series having the same maturity date, interest rate and other terms as long as the debt securities are issued in authorized denominations.
Neither
we nor the trustee will impose any service charge for any transfer or exchange of a debt security; however, we may ask you to pay any taxes or other governmental charges in
connection with a transfer or exchange of debt securities.
Consolidation, Merger, Sale, Lease or Conveyance
Novartis AG and Novartis Capital Corporation have agreed in the indenture not to consolidate with or merge with or into any other person or
sell, lease, convey or otherwise dispose of all or substantially all of their respective properties and assets to any person (except that Novartis Capital Corporation may merge with or into Novartis
AG and Novartis AG may merge with or into Novartis Capital Corporation), unless:
-
-
Novartis AG or Novartis Capital Corporation, as the case may be, is the continuing person, or the successor expressly assumes by supplemental
indenture their respective obligations under the indenture;
-
-
the continuing person is organized and validly existing under the laws of (i) if the continuing person is a successor to Novartis
Capital Corporation, Delaware or Switzerland, (ii) if the continuing person is a successor to Novartis AG, the United States or Switzerland or (iii) in any case, a jurisdiction that is a
member country of the Organization for Economic Cooperation and Development (or any successor) and, if it is not organized and validly existing under the laws of (x) in the case of Novartis
Capital Corporation, Delaware, (y) in the case of Novartis AG, the United States or (z) in any case, Switzerland, the continuing person agrees by supplemental indenture to be bound by a
covenant comparable to that described below under "CovenantsPayment of Additional Amounts" with respect to taxes imposed in the continuing person's jurisdiction of
organization (in which case the continuing person will benefit from a redemption option comparable to that described below under "Optional Redemption for Tax Reasons" in the event of
changes in taxes in that jurisdiction after the date of the consolidation, merger or sale);
-
-
immediately after the transaction, no default or event of default under the debt securities has occurred and is continuing; and
-
-
Novartis AG or Novartis Capital Corporation, as applicable, delivers to the trustee an officer's certificate and, if neither Novartis AG nor
Novartis Capital Corporation, as applicable, is the continuing person, an opinion of counsel, in each case stating, among other things, that the transaction and the supplemental indenture, if
required, comply with these provisions and the indenture.
Covenants
Payments made by us under or with respect to the debt securities will be free and clear of and without withholding or deduction for or on
account of any and all present or future taxes, duties, assessments or governmental charges of any nature imposed, levied, collected, withheld or assessed by or on behalf of (i) the government
of Switzerland or of any political subdivision of
Switzerland or by any authority or agency therein or thereof having the power to tax, (ii) the government of the jurisdiction of organization of Novartis Capital Corporation or any political
subdivision or territory or possession of such jurisdiction or by any authority or agency therein or thereof having the power to tax or (iii) the government of any jurisdiction from or through
which a payment on the debt securities or the guarantee is made or any political subdivision or territory or possession of such jurisdiction or by
14
Table of Contents
any
authority or agency therein or thereof having power to tax (each of clauses (i), (ii) and (iii), a "Relevant Taxing Jurisdiction"), which we refer to collectively as "Taxes," unless
we are required to withhold or deduct Taxes by law.
If
we are required to withhold or deduct any amount for or on account of Taxes from any payment made with respect to the debt securities, we will pay such additional amounts as may be
necessary so that the net amount received by each holder (including additional amounts) after such withholding or deduction will not be less than the amount the holder would have received if the Taxes
had not been withheld or deducted; provided that no additional amounts will be payable with respect to Taxes:
-
-
that would not have been imposed but for the existence of any present or former connection between such holder or beneficial owner of the debt
securities (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such holder or beneficial owner, if such holder or beneficial owner is an estate,
trust, partnership or corporation) and a Relevant Taxing Jurisdiction, including, without limitation, such holder or beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or treated as a resident thereof or domiciled thereof or a national thereof or being or having been present or engaged in trade or
business therein or having or having had a permanent establishment therein;
-
-
that are estate, inheritance, gift, sales, transfer, personal property, wealth or similar taxes, duties, assessments or other governmental
charges;
-
-
payable other than by withholding from payments of principal of or interest on the debt securities;
-
-
that would not have been imposed but for the failure of the applicable recipient of such payment to make a declaration of non-residence or
other similar claim for exemption to the relevant tax authority or comply with any certification, identification, information, documentation or other reporting requirement to the extent such
compliance is required by applicable law or administrative practice or an applicable treaty as a precondition to exemption from, or reduction in, the rate of deduction or withholding of such Taxes;
-
-
that would not have been imposed but for the presentation of a debt security (where presentation is required) for payment on a date more than
30 days after the date on which such payment first became due and payable or the date on which payment thereof was duly provided for, whichever occurred later;
-
-
to the extent the amount of Tax could have be reduced by presentation for payment of the relevant debt securities to a paying agent other than
the paying agent to which the presentation was made; or
-
-
any combination of the foregoing items;
nor
shall additional amounts be paid with respect to any payment of the principal of or interest on any debt security to any such holder who is a fiduciary or a partnership or a beneficial owner who
is other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been
entitled to such additional amounts had it been the holder of the debt security.
Novartis Capital Corporation and Novartis AG have agreed in the indenture, for so long as any debt securities are outstanding, not to create or
have outstanding any lien upon the whole or any part of its assets, present or future (including any uncalled capital), in order to secure any existing or future relevant indebtedness (as this term is
defined below) or to secure any guarantee or indemnity in
15
Table of Contents
respect
thereof without in any such case at the same time securing the debt securities equally and ratably with such relevant indebtedness (or any guarantee or indemnity in respect thereof) or
creating such other security approved by Novartis Capital Corporation and/or Novartis AG (as the case may be) and the holders of a majority in principal amount of all affected series of debt
securities, voting as one class.
The
restrictions on liens will not apply to:
-
-
liens arising by operation of law; and
-
-
liens on the assets of any person existing at the time such person is merged with or into or consolidated with Novartis AG.
For
purposes of the limitation on liens covenant, the term "relevant indebtedness" means any loan or other indebtedness in the form of, or represented or evidenced by, bonds, debentures,
notes or other securities that are or are capable of being quoted, listed or traded on any stock exchange or in any securities market or over-the-counter market. For purposes of the limitation on
liens covenant, "assets" refers to assets of Novartis Capital Corporation and Novartis AG, respectively, and does not include the assets of their respective subsidiaries.
We may be subject to additional covenants, including restrictive covenants in respect of a particular series of debt securities. Such additional
covenants will be set forth in the applicable prospectus supplement and, to the extent necessary, in the supplemental indenture or board resolution relating to that series of debt securities.
Optional Redemption for Tax Reasons
Novartis Capital Corporation may redeem any series of debt securities in whole but not in part at any time, on giving not less than 30 nor more
than 60 days' notice of such redemption, at a redemption price equal to the principal amount plus accrued and unpaid interest, if any, to the date fixed for redemption (except in the case of
discounted debt securities, which may be redeemed at the redemption price specified by the terms of each series of such debt securities), if:
-
-
Novartis Capital Corporation determines that, as a result of any change in or amendment to the laws or any regulations or rulings promulgated
thereunder of a Relevant Taxing Jurisdiction, or any change in the application or official interpretation of such laws, regulations or rulings, or any change in the application or official
interpretation of, or any execution of or amendment to, any treaty or treaties affecting taxation to which any such jurisdiction is a party, which change, execution or amendment becomes effective on
or after the issue date or such other date specified in the debt securities of that series:
-
-
Novartis Capital Corporation would be required to pay additional amounts (as described under
"CovenantsPayment of Additional Amounts" above) with respect to that series of debt securities on the next succeeding interest payment date and the payment of such additional
amounts cannot be avoided by the use of reasonable measures available to Novartis Capital Corporation or Novartis AG; or
-
-
withholding tax has been or would be required to be withheld with respect to interest income received or receivable by Novartis
Capital Corporation directly from Novartis AG (or any affiliate) and such withholding tax obligation cannot be avoided by the use of reasonable measures available to Novartis Capital Corporation or
Novartis AG (or any affiliate); or
16
Table of Contents
-
-
Novartis Capital Corporation determines, based upon an opinion of independent counsel selected by Novartis Capital Corporation that, as a
result of any action taken by any legislative body of, taxing authority of, or any action brought in a court of competent jurisdiction in, a Relevant Taxing Jurisdiction (whether or not such action
was taken or brought with respect to Novartis AG or Novartis Capital Corporation, as the case may be), which action is taken or brought on or after the issue date or such other date specified in the
debt securities of that series, there is a substantial probability that the circumstances described above would exist; provided, however, that no such
notice of redemption may be given earlier than 90 days prior to the earliest date on which Novartis Capital Corporation
would be obligated to pay such additional amounts.
We
will also pay to each holder, or make available for payment to each such holder, on the redemption date any additional amounts resulting from the payment of such redemption price,
subject to the conditions described under "CovenantsPayment of Additional Amounts" above. Prior to the publication of any notice of redemption, Novartis Capital Corporation
or Novartis AG will deliver to the trustee an officer's certificate stating that Novartis Capital Corporation is entitled to effect a redemption and setting forth a statement of facts showing that the
conditions precedent of the right so to redeem have occurred. Any notice of redemption will be irrevocable once Novartis Capital Corporation delivers the officer's certificate to the trustee.
Events of Default
Unless otherwise specified in a prospectus supplement, an event of default with respect to a series of debt securities means any one of the
following events:
-
-
default in payment of the principal (or premium, if any) of any debt security of that series when due (including as a sinking fund
installment), and the continuance of that default for more than two business days;
-
-
default in payment of interest on, or any additional amounts (as described under "CovenantsPayment of Additional
Amounts" above) payable in respect of, any debt security of that series when due and payable, and the continuance of that default for 30 days;
-
-
default or breach of any other covenant or agreement in the indenture with regard to that series for 90 days after the receipt of
written notice from the trustee or from the holders of 25% in principal amount of the debt securities of that series;
-
-
(i) any indebtedness of, or guaranteed by, Novartis Capital Corporation or Novartis AG is not paid at its stated maturity or (as the case may
be) within any originally applicable grace period; or (ii) any such indebtedness, or guarantee, of Novartis Capital Corporation or Novartis AG (as the case may be) becomes due and payable prior
to its stated maturity by reason of an event of default; provided that (x) the amount of indebtedness referred to in clauses (i) and/or
(ii) above individually or in the aggregate exceeds $150,000,000 (or its equivalent in any other currency or currencies); and (y) there shall not be deemed to be a default
(i) where Novartis Capital Corporation or Novartis AG in good faith claims a right of set-off or otherwise contests its obligations to pay or (ii) if such acceleration is annulled or
such payment or repayment is made within 10 days after the receipt of written notice from the trustee or from the holders of 25% in principal amount of the debt securities of that series;
-
-
an encumbrancer or a receiver or a person with similar functions appointed for execution (in Switzerland a Sachwalter or
Konkursverwalter) taking possession of the whole or any substantial part of the assets or
undertaking of Novartis Capital Corporation or Novartis AG or a distress, execution or other process being levied or enforced upon or sued out against a substantial part
17
Table of Contents
For
purposes of the definition of "event of default," the term "indebtedness" means any indebtedness for monies borrowed or raised including, without limitation, any debenture, note,
bond or like security.
Any
additional or different events of default applicable to a particular series of debt securities will be described in the applicable prospectus supplement relating to such series.
An
event of default with respect to a particular series of debt securities will not necessarily constitute an event of default with respect to any other series of debt securities.
The
trustee may withhold notice to the holders of debt securities of any default (except in the payment of principal, premium or interest) if it, in good faith, considers such
withholding of notice to be in the best interests of the holders. A default is any event which is an event of default described above or would be an event of default but for the giving of notice or
the passage of time.
If
an event of default occurs and continues, the trustee or the holders of the aggregate principal amount of the debt securities specified below may require us to repay immediately, or
accelerate:
-
-
the entire principal of the debt securities of such series; or
-
-
if the debt securities are original issue discount securities, such portion of the principal as may be described in the applicable prospectus
supplement.
If
the event of default occurs because of a default in a payment of principal or interest on the debt securities of any series, then the trustee or the holders of at least 25% of the
aggregate principal amount of debt securities of that series can accelerate that series of debt securities. If the event of default occurs because of a failure to perform any other covenant in the
indenture or any covenant for the benefit of one or more, but not all, of the series of debt securities, then the trustee or the holders
18
Table of Contents
of
at least 25% of the aggregate principal amount of debt securities of all series affected, voting as one class, can accelerate all of the affected series of debt securities. If the event of default
occurs because of bankruptcy proceedings, then all of the debt securities under the indenture will be accelerated automatically. Therefore, except in the case of a default on a payment of principal or
interest on the debt securities of your series or a default due to our bankruptcy or insolvency, it is possible that you may not be able to accelerate the debt securities of your series because of the
failure of holders of other series to take action.
The
holders of a majority of the aggregate principal amount of the debt securities of all affected series, voting as one class, can rescind this accelerated payment requirement or waive
any past default or event of default or allow noncompliance with any provision of the indenture. However, they cannot waive a default in payment of principal of, premium, if any, or interest on any of
the debt securities when due otherwise than as a result of acceleration.
After
an event of default, the trustee must exercise the same degree of care a prudent person would exercise under the circumstances in the conduct of her or his own affairs. Subject to
these requirements, the trustee is not obligated to exercise any of its rights or powers under the indenture at the request, order or direction of any holders, unless the holders offer the trustee
reasonable indemnity. If they provide this reasonable indemnity, the holders of a majority in principal amount of all affected series of debt securities, voting as one class, may direct the time,
method and place of conducting any proceeding for any remedy available to the trustee, or exercising any power conferred upon the trustee, for any series of debt securities. However, the trustee may
refuse to follow any direction that conflicts with law or the indenture or is unduly prejudicial to the rights of other holders.
No
holder will be entitled to pursue any remedy with respect to the indenture unless the trustee fails to act for 60 days after it is
given:
-
-
notice of default by that holder;
-
-
a written request to enforce the indenture by the holders of not less than 25% in principal amount of all outstanding debt securities of any
affected series; and
-
-
an indemnity to the trustee, satisfactory to the trustee;
and
during this 60-day period the holders of a majority in principal amount of all outstanding debt securities of such affected series do not give a direction to the trustee that is inconsistent with
the enforcement request. These provisions will not prevent any holder of debt securities from enforcing payment of the principal of (and premium, if any) and interest on the debt securities at the
relevant due dates.
If
an event of default with respect to a series of debt securities occurs and is continuing, the trustee will mail to the holders of those debt securities a notice of the event of
default within 90 days after it occurs. However, except in the case of a default in any payment in respect of a series of debt securities, the trustee shall be protected in withholding notice
of an event of default if it determines in good faith that this is in the interests of the holders of the relevant debt securities.
Modification of the Indenture
In general, we may modify our rights and obligations and those of the holders under the indenture if the holders of a majority in aggregate
principal amount of the outstanding debt securities of each series affected by the modification consent to such modification. However, the indenture provides that, unless each affected holder agrees,
an amendment cannot:
-
-
make any adverse change to any payment term of a debt security such as extending the maturity date, extending the date on which we have to pay
interest or make a sinking fund payment, reducing the interest rate, reducing the amount of principal or additional amounts payable,
19
Table of Contents
changing
the currency in which we have to make any payment of principal, premium or interest, modifying any redemption or repurchase right, or right to convert or exchange any debt security, to the
detriment of the holder and impairing any right of a holder to bring suit for payment; · waive any payment
default;
-
-
reduce the percentage of the aggregate principal amount of debt securities needed to make any amendment to the indenture or to waive any
covenant or default; or
-
-
make any other change to the amendment provisions of the indenture, except to increase any percentage or to provide that certain other
provisions of the indenture cannot be modified or waived without the consent of the holders of each outstanding debt security affected thereby.
However,
if Novartis Capital Corporation, Novartis AG and the trustee agree, the indenture may be amended without notifying any holders or seeking their consent for any of the following
purposes:
-
-
to cure any ambiguity, defect or inconsistency in the indenture; provided that such amendment or supplement shall not materially and adversely
affect the interests of the holders;
-
-
to comply with sections of the indenture governing when Novartis AG or Novartis Capital Corporation may merge or consolidate or sell, lease,
convey or otherwise dispose of all or substantially all of its properties and assets;
-
-
to comply with any requirements of the SEC in connection with the qualification of the indenture under the Trust Indenture Act;
-
-
to evidence and provide for the acceptance by a successor trustee of appointment under the indenture with respect to the debt securities of any
or all series;
-
-
to establish the form or forms or terms of the debt securities of any series or of the coupons appertaining to such debt securities as
permitted under the indenture;
-
-
to provide for uncertificated debt securities and to make all appropriate changes for such purpose;
-
-
to provide for a further guarantee from a third party on outstanding debt securities of any series and the debt securities of any series that
may be issued under the indenture;
-
-
to change or eliminate any provision of the indenture; provided that any such change or
elimination will become effective only when there are no outstanding debt securities of any series created prior to the execution of such supplemental indenture that is entitled to the benefit of such
provision;
-
-
to supplement any of the provisions of the indenture to such extent as will be necessary to permit or facilitate the defeasance and discharge
of any series of debt securities pursuant to the indenture; provided that any such action will not adversely affect the interests of the holders of such
or any other series of debt securities in any material respect; or
-
-
to make any change that does not materially and adversely affect the rights of any holder of the debt securities.
Defeasance
The term defeasance means discharge from some or all of the obligations under the indenture. Subject to the requirements of the indenture, if we
deposit with the trustee sufficient cash or
20
Table of Contents
government
securities to pay the principal, interest, any premium and any other sums due to the stated maturity date or a redemption date of the debt securities of a particular series, then at our
option:
-
-
we will be discharged from our respective obligations with respect to the debt securities of such series; or
-
-
we will no longer be under any obligation to comply with the restrictive covenants, if any, contained in the indenture and any supplemental
indenture or board resolution with respect to the debt securities of such series, and the events of default relating to failures to comply with covenants will no longer apply to us.
If
this happens, the holders of the debt securities of the affected series will not be entitled to the benefits of the indenture except for registration of transfer and exchange of debt
securities and replacement of lost, stolen or mutilated debt securities. Instead, the holders will only be able to rely on the deposited funds or obligations for payment.
Novartis
Capital Corporation must deliver to the trustee an opinion of counsel to the effect that the deposit and related defeasance would not cause the holders of the debt securities to
recognize income, gain or loss for U.S. federal income tax purposes. Novartis Capital Corporation may, in lieu of an opinion of counsel, deliver a ruling to such effect received from or published by
the U.S. Internal Revenue Service.
Book-Entry System
Debt securities may be issued under a book-entry system in the form of one or more global securities. The global securities will be registered
in the name of a depositary or its nominee and deposited with that depositary or its custodian. Unless stated otherwise in the applicable prospectus supplement, The Depository Trust Company, New York,
New York, or DTC, will be the depositary if a depositary is used.
DTC
has advised us as follows:
-
-
DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act;
-
-
DTC was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions, such as
through transfers and pledges, among its participants in such securities through electronic book-entry changes to accounts of its participants, thereby eliminating the need for physical movement of
securities certificates;
-
-
DTC's participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some
of whom (and/or their representatives) own DTC;
-
-
access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or indirectly; and
-
-
the DTC rules applicable to its participants are on file with the SEC.
According
to DTC, the foregoing information with respect to DTC has been provided to the financial community for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
21
Table of Contents
Following
the issuance of a global security in registered form, the depositary will credit the accounts of its participants with the debt securities upon our instructions. Only persons
who hold directly or indirectly through financial institutions that are participants in the depositary can hold beneficial interests in the global securities. Since the laws of some jurisdictions
require certain types of purchasers to take physical delivery of such securities in definitive form, you may encounter difficulties in your ability to own, transfer or pledge beneficial interests in a
global security.
So
long as the depositary or its nominee is the registered owner of a global security, we and the trustee will treat the depositary as the sole owner or holder of the debt securities for
purposes of the indenture. Therefore, except as set forth below, you will not be entitled to have debt securities registered in your name or to receive physical delivery of certificates representing
the debt securities. Accordingly, you will have to rely on the procedures of the depositary and the participant in the depositary through whom you hold your beneficial interest in order to exercise
any rights of a holder under the indenture. We understand that under existing practices, the depositary would act upon the instructions of a participant or authorize that participant to take any
action that a holder is entitled to take.
We
will make all payments of principal, interest and additional amounts (as described under "CovenantsPayment of Additional Amounts" above), if any, on the debt
securities to the depositary. It is expected that the depositary will then credit participants' accounts proportionately with these payments on the payment date and that the participants will in turn
credit their customers' accounts in accordance with their customary practices. Neither we nor the trustee will be responsible for making any payments to participants or customers of participants or
for maintaining any records relating to the holdings of or payments to participants and their customers, and you will have to rely on the procedures of the depositary and its participants.
Global
securities are generally not transferable. Physical certificates will be issued to beneficial owners in lieu of a global security only in the special circumstances described in
the sixth paragraph under the heading "Legal Ownership of Debt SecuritiesGlobal Securities."
Information Concerning the Trustee
HSBC Bank USA, National Association is the trustee under the indenture. The trustee will be required to perform only those duties that are
specifically set forth in the indenture, except when a default has occurred and is continuing with respect to the debt securities. After a default, the trustee must exercise the same degree of care
that a prudent person would exercise under the circumstances in the conduct of her or his own affairs. Subject to these requirements, the trustee will be under no obligation to exercise any of the
powers vested in it by the indenture at the request of any holder of debt securities unless the holder offers the trustee indemnity satisfactory to it against the costs, expenses and liabilities that
might be incurred by exercising those powers.
Governing Law
The debt securities, the related guarantees and the indenture will be governed by and construed in accordance with the laws of the State of New
York.
22
Table of Contents
TAX CONSIDERATIONS
The applicable prospectus supplement will describe certain tax considerations in connection with the acquisition, ownership and disposal of the
particular series of debt securities being offered thereby.
23
Table of Contents
PLAN OF DISTRIBUTION
We may sell the debt securities through agents, underwriters, dealers or directly to purchasers, through any combination of the foregoing
methods or through any other method permitted by applicable law.
Our
agents may solicit offers to purchase the debt securities.
-
-
We will name any agent involved in offering or selling the debt securities, and any commissions that we will pay to the agent, in the
applicable prospectus supplement.
-
-
Unless we indicate otherwise in the relevant prospectus supplement, our agents will act on a best efforts basis for the period of their
appointment.
-
-
Our agents may be deemed to be underwriters under the Securities Act of any of our debt securities that they offer or sell.
We
may use an underwriter or underwriters in the offer or sale of the debt securities.
-
-
If we use an underwriter or underwriters, we will execute an underwriting agreement with the underwriter or underwriters at the time that we
reach an agreement for the sale of the debt securities.
-
-
We will include the names of the specific managing underwriter or underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers will receive, in the relevant prospectus supplement.
-
-
The underwriters will use the relevant prospectus supplement to sell the debt securities.
-
-
If we use an underwriter or underwriters, the underwriter or underwriters will acquire the debt securities for their own account and may resell
the debt securities in one or more transactions, including negotiated transactions. These sales will be made at a fixed price or at varying prices determined at the time of the sale.
We
may use one or more dealers to sell the debt securities.
-
-
If we use a dealer, we, as principal, will sell the debt securities to the dealer.
-
-
The dealer will then sell the debt securities to the public at varying prices that the dealer will determine at the time it sells the debt
securities.
-
-
We will include the name of the dealer and the terms of our transactions with the dealer in the relevant prospectus supplement.
We
may solicit directly offers to purchase the debt securities, and we may directly sell the debt securities to institutional or other investors. We will describe the terms of our direct
sales in the relevant prospectus supplement.
We
may indemnify agents, underwriters and dealers against certain liabilities, including liabilities under the Securities Act. Our agents, underwriters and dealers, or their affiliates,
may be customers of, engage in transactions with or perform services for, us or our subsidiaries and affiliates in the ordinary course of business.
We
may authorize our agents and underwriters to solicit offers by certain institutions to purchase the relevant securities at the public offering price under delayed delivery contracts.
-
-
If we use delayed delivery contracts, we will disclose that we are using them in the relevant prospectus supplement and will tell you when we
will demand payment and delivery of the debt securities under the delayed delivery contracts.
-
-
These delayed delivery contracts will be subject only to the conditions that we set forth in the relevant prospectus supplement.
-
-
We will indicate in the relevant prospectus supplement the commission that underwriters and agents soliciting purchases of the debt securities
under delayed delivery contracts will be entitled to receive.
24
Table of Contents
LEGAL MATTERS
Certain matters of U.S. law will be passed upon for us by Mayer Brown International LLP and for the agents or underwriters by
Morrison & Foerster LLP. Morrison & Foerster LLP has performed and from time to time performs legal services for us and our subsidiaries and affiliates.
EXPERTS
The financial statements and management's assessment of the effectiveness of internal control over financial reporting (which is included in the
Report of Novartis Management on Internal Control Over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 20-F for the year ended December 31,
2019 have been so incorporated in reliance on the report of PricewaterhouseCoopers AG, Switzerland, an independent registered public accounting firm, given on the authority of said firm as experts in
auditing and accounting. PricewaterhouseCoopers AG is a member of EXPERTsuisseSwiss Expert Association for Audit, Tax and Fiduciary.
25
Table of Contents
LIMITATIONS ON ENFORCEMENT OF U.S. LAWS
Because Novartis AG is a Swiss company headquartered in Switzerland, many of our directors and executive officers (as well as certain directors,
managers and executive officers of Novartis Capital Corporation), and certain experts named in this prospectus, reside outside the United States, and all or a substantial portion of our assets and the
assets of such persons are located outside the United States. As a result, it may be difficult for you to serve legal process on us or our directors and executive officers (as well as certain
directors, managers and executive officers of Novartis Capital Corporation) or have any of them appear in a U.S. court. In addition, U.S. investors may find it difficult in a lawsuit based on the
civil liability provisions of the U.S. federal securities laws to enforce
in U.S. courts or outside the U.S. judgments obtained against those persons in U.S. courts, to enforce in U.S. courts judgments obtained against those persons in courts in jurisdictions outside the
U.S., or to enforce against those persons in Switzerland, whether in original actions or in actions for the enforcement of judgments of U.S. courts, civil liabilities based solely upon the U.S.
federal securities laws. In addition, awards for punitive damages in actions brought in the United States or elsewhere may be unenforceable in Switzerland.
26
Table of Contents
Novartis Ag Basel Namen ... (PK) (USOTC:NVSEF)
過去 株価チャート
から 5 2024 まで 6 2024
Novartis Ag Basel Namen ... (PK) (USOTC:NVSEF)
過去 株価チャート
から 6 2023 まで 6 2024