International Bonds Bible (2024)

424B2
424B2 1 y34496b2e424b2.htm PROSPECTUS SUPPLEMENT DATED MAY 8, 2007
http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (1 of 230)5/17/2007 7:27:19 AM

424B2
Table of Contents

Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-130074

Prospectus Supplement to the Prospectus dated December 5, 2006.
1,750,000 Normal APEX
Goldman Sachs Capital II

5.793% Fixed-to-Floating Rate Normal APEX
(with a liquidation amount of $1,000 per security)
fully and unconditionally guaranteed, to the extent described herein, by

The Goldman Sachs Group, Inc.

We, The Goldman Sachs Group, Inc., will own all of the outstanding Trust Common Securities of the Goldman Sachs Capital II, a
Delaware statutory trust and will fully and unconditionally guarantee, on a junior subordinated basis, payment of amounts due on
5.793% Fixed-to-Floating Rate Normal Automatic Preferred Enhanced Capital Securities to the extent described in this prospectus
supplement. The Normal APEX are beneficial interests in the Trust. Your financial entitlements as a holder of Normal APEX generally
will correspond to the Trust's financial entitlements as a holder of the corresponding assets. The corresponding assets for each Normal
APEX, with a $1,000 liquidation amount, initially will be $1,000 principal amount of our Remarketable 5.593% Junior Subordinated
Notes due 2043, and a 1/100th, or $1,000, interest in a stock purchase contract between us and the Trust. Under the Contracts, the
Trust agrees to purchase, and we agree to sell, on the stock purchase date, one share of our perpetual Non-Cumulative Preferred
Stock, Series E, with a liquidation preference of $100,000 per share for $100,000 and we agree to make contract payments to the Trust.
The Trust will pass through to you amounts that it receives on the corresponding assets for the Normal APEX as distributions on, or the
redemption price of, Normal APEX.
The Trust will pledge the Notes and their proceeds to secure its obligation to pay the purchase price under the Contracts. We expect the
stock purchase date to be June 1, 2012 but in certain circ*mstances it may occur on an earlier date or as late as June 1, 2013. From
and after the stock purchase date, the corresponding asset for each Normal APEX will be a 1/100th, or $1,000, interest in one share of
Preferred.
Assuming that we do not elect to defer contract payments or interest payments on the Notes or to pay partial dividends or to skip
dividends on the Preferred, holders of Normal APEX will receive distributions on the $1,000 liquidation amount per Normal APEX:

· from May 15, 2007 through the later of June 1, 2012 and the stock purchase date, at a rate per annum of 5.793%, payable
semi-annually on each June 1 and December 1 (and on the stock purchase date, if not a June 1 or December 1), commencing
December 1, 2007 (or, if any such day is not a business day, on the next business day), and

· thereafter at a rate per annum equal to the greater of (x) three-month LIBOR for the related distribution period plus 0.7675%
and (y) 4.000%, payable quarterly on each March 1, June 1, September 1 and December 1 (or if any such date is not a
business day, on the next business day).
Distributions on the Normal APEX will be cumulative through the stock purchase date and non-cumulative thereafter.
The Normal APEX are perpetual and the Trust will redeem them only to the extent we redeem the Preferred or, prior to the stock
purchase date, if we redeem the Notes upon the occurrence of certain special events. The Preferred by its terms is redeemable by us at
our option on any date on or after the later of June 1, 2012 and the stock purchase date. Any redemption is subject to the prior approval
of the Securities and Exchange Commission, as well as to our commitments in the Replacement Capital Covenant described in this
prospectus supplement. Unless the SEC agrees otherwise in writing, we will redeem the Preferred only if it is replaced with other
"allowable capital" within the meaning of the SEC's rules applicable to consolidated supervised entities -- for example, other common
stock or another series of perpetual non-cumulative preferred stock. For a further discussion on redemption, see "Description of the
Series E Preferred Stock -- Redemption" on page S-93.
Holders may exchange Normal APEX and U.S. treasury securities having a $1,000 principal amount per Normal APEX for like amounts
of Stripped APEX and Capital APEX, which are also beneficial interests in the Trust. Each Stripped APEX corresponds to a
1/100th interest in a Contract and $1,000 principal amount of U.S. treasury securities, and each Capital APEX corresponds to $1,000
principal amount of Notes.
Repayment of the Normal APEX and the Notes is not protected by any Federal agency or by the Securities Investor Protection
Corporation.

http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (2 of 230)5/17/2007 7:27:19 AM

424B2
Application will be made to list the Normal APEX on the New York Stock Exchange under the symbol "GS/PE." Trading of the Normal
APEX on the Exchange is expected to commence within a 30-day period after the initial delivery of the Normal APEX.
Your investment in the Normal APEX involves risks. You should read "Risk Factors Specific to Your APEX" beginning on page S-25
before buying the Normal APEX, so that you may better understand those risks.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these
securities or passed on the accuracy or adequacy of this prospectus supplement. Any representation to the contrary is a
criminal offense.

Per Normal

APEX Total (1)(2)

Wachovia Securities
Prospectus Supplement dated May 8, 2007.
http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (3 of 230)5/17/2007 7:27:19 AM

424B2
Table of Contents

SUMMARY INFORMATION
This summary highlights information contained elsewhere in this prospectus supplement and in the
accompanying prospectus. This summary is not complete and does not contain all the information
that you should consider before investing in the APEX. You should carefully read this entire
prospectus supplement and the accompanying prospectus, especially the risks of investing in the
APEX discussed in this prospectus supplement and the accompany prospectus.
References to "Goldman Sachs" or the "Firm" in this prospectus supplement mean The Goldman
Sachs Group, Inc., together with its consolidated subsidiaries and affiliates; references to "GS
Group," "we," "our" or similar terms mean The Goldman Sachs Group, Inc.; and references to the
"Trust" mean Goldman Sachs Capital II. Unless indicated otherwise, as used in this prospectus
supplement, "APEX" will include all three series of the APEX: Normal APEX, Stripped APEX and
Capital APEX. The series of APEX sold in this offering are the 5.793% Fixed-to-Floating Rate
Normal Automatic Preferred Enhanced Capital Securities, or "Normal APEX." Also, references to
"holders" of the APEX mean The Depository Trust Company or its nominee and not indirect owners
who own beneficial interests in APEX through participants in The Depository Trust Company or
other entities unless otherwise stated. Please review the special considerations that apply to indirect
owners in this prospectus supplement under "Book-Entry System" on page S-101 and in the
accompanying prospectus under "Legal Ownership and Book-Entry Issuance."
The terms described here supplement those described in the accompanying prospectus, and if the
terms described here are inconsistent with those described there, the terms described in this
prospectus supplement are controlling.

The Trust
Goldman Sachs Capital II, or the "Trust," is a Delaware statutory trust organized under Delaware law
by the trustees and us. The Trust will be used solely for the following purposes:

· issuing the Automatic Preferred Enhanced Capital Securities, or "APEX" and common
securities issued concurrently by the Trust to us, or "Trust Common Securities," and
together with the APEX, the "Trust securities," representing beneficial interests in the Trust;

· investing the gross proceeds of the APEX and the Trust Common Securities in
Remarketable 5.593% Junior Subordinated Notes due 2043, or "Notes";

· entering into and holding the contracts, or "Contracts," for the Trust to purchase shares of
our perpetual Non-Cumulative Preferred Stock, Series E, with a liquidation preference of
$100,000 per share, or "Preferred," from us on a date, or "Stock Purchase Date," that we
expect to be June 1, 2012 but may in certain circ*mstances be an earlier date or be
deferred for quarterly periods until as late as June 1, 2013;

· holding Notes and certain U.S. treasury securities, and pledging them to secure the Trust's
obligations under the Contracts;

http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (4 of 230)5/17/2007 7:27:19 AM

424B2

· purchasing shares of the Preferred pursuant to the Contracts on the Stock Purchase Date
and holding it thereafter;

· selling Notes in a Remarketing or an Early Remarketing; and

· engaging in other activities that are directly related to the activities described above.
The Trust's business and affairs will be conducted by its trustees, each appointed by us as sponsor
of the Trust. The trustees will be The Bank of New York, as the "Property Trustee," The Bank of New
York (Delaware), as the "Delaware Trustee," and two or more individual trustees, or "administrative
trustees," who are employees or officers of or affiliated with us.
S-1
http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (5 of 230)5/17/2007 7:27:19 AM

424B2
Table of Contents
The principal executive office of the Trust is c/o The Goldman Sachs Group, Inc., 85 Broad Street,
New York, New York 10004, and the Trust's telephone number is (212) 902-1000.

Questions and Answers
This summary includes questions and answers that highlight selected information from this
prospectus supplement to help you understand the APEX, the Notes and the Preferred.
What are the APEX?
APEX and the Trust Common Securities represent beneficial interests in the Trust. The Trust's
assets consist solely of:

· Notes issued by us to the Trust;

· Contracts;

· certain U.S. treasury securities:

° to the extent holders exchange Normal APEX and U.S. treasury securities for Stripped
APEX and Capital APEX, as described under "What are Stripped APEX and Capital
APEX, and how can I Exchange Normal APEX for Stripped APEX and Capital APEX?"
on page S-7; or

° after a successful Remarketing of the Notes; and

· after the Stock Purchase Date, shares of the Preferred.
Each holder of APEX will have a beneficial interest in the Trust but will not own any specific Note,
Contract, U.S. treasury security or share of the Preferred. However, the Trust Agreement under
which the Trust operates defines the financial entitlements of each series of APEX that represents a
beneficial interest in the Trust in a manner that causes those financial entitlements to correspond to
the financial entitlements of the Trust in the assets of the Trust that are the "corresponding assets "
for such series.
The Trust will issue the APEX in three series that will correspond to different assets of the Trust:
Normal APEX, Stripped APEX and Capital APEX. Each series of APEX will have a liquidation
amount of $1,000. At completion of this offering, the only beneficial interests in the Trust that will be
outstanding are the Normal APEX and the Trust Common Securities. The two other series of APEX
that the Trust may issue, "Stripped APEX " and "Capital APEX," may be issued only in connection
with an exchange for Normal APEX as described under "What are Stripped APEX and Capital
APEX, and how can I Exchange Normal APEX for Stripped APEX and Capital APEX?" on page S-7.
The series of APEX sold in this offering are the Normal APEX and each Normal APEX represents a
beneficial interest in the Trust initially corresponding to the following Trust assets:

· a 1/100th interest in a Contract under which the Trust agrees to purchase, and we agree to
sell, for $100,000, a share of the Preferred on the Stock Purchase Date, and

http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (6 of 230)5/17/2007 7:27:19 AM

424B2

· a Note with a principal amount of $1,000, which the Trust will pledge to us to secure its
obligations under the Contract.
After the Stock Purchase Date, each Normal APEX will correspond to 1/100th of a share of Preferred
held by the Trust.
S-2
http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (7 of 230)5/17/2007 7:27:19 AM

424B2
Table of Contents
The following diagram shows the transactions that will happen on the day that the Trust issues the
Normal APEX in this offering:

1) Investors purchase Normal APEX, each with a $1,000 liquidation amount, from the Trust, which
corresponds to $1,000 principal amount of Notes and a 1/100th interest in a Contract having a
stated amount of $100,000.

2) The Trust purchases Notes from GS Group and enters into the Contracts with GS Group. The
Trust pledges the Notes to GS Group to secure its obligation to purchase Preferred on the Stock
Purchase Date.
After the offering, you will have the right to exchange your Normal APEX and certain U.S. treasury
securities for Stripped APEX and Capital APEX by substituting pledged U.S. treasury securities for
the pledged Notes. You will be able to exercise this right on any business day until the Stock
Purchase Date, other than on a day in the fifteen-calendar-day period leading up to and including a
March 1, June 1, September 1 or December 1 or from 3:00 P.M., New York City time, on the second
business day before the beginning of any Remarketing Period and until the business day after the
end of that Remarketing Period. You will also not be able to exercise this right at any time after a
successful Remarketing. We refer to periods during which exchanges are permitted as "Exchange
Periods " and we explain how Remarketing works and when it may occur under "What is a
Remarketing?" on page S-14.
A "business day " means any day other than a Saturday, Sunday or any other day on which banking
institutions and trust companies in New York, New York are permitted or required by any applicable
law to close.
Each Stripped APEX will be a beneficial interest in the Trust corresponding to a 1/100th interest in a
Contract and the substituted U.S. treasury securities, and each Capital APEX will be a beneficial
interest in the Trust corresponding to a Note with a $1,000 principal amount. We describe the
exchange process for the Stripped APEX and Capital APEX in more detail under "What are Stripped
http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (8 of 230)5/17/2007 7:27:19 AM

424B2
APEX and Capital APEX, and how can I Exchange Normal APEX for Stripped APEX and Capital
APEX?" on page S-7.
What are the Stock Purchase Contracts?
Each Contract consists of an obligation of the Trust to purchase, and of us to sell, a share of our
Preferred on the Stock Purchase Date for $100,000, as well as our obligation to pay periodic
contract payments, or "Contract Payments," to the Trust as described below. To secure its obligation
under each Contract to purchase a share of Preferred from us on the Stock Purchase Date, the
Trust will
S-3
http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (9 of 230)5/17/2007 7:27:19 AM

424B2
Table of Contents
pledge either Notes (which after the Remarketing Settlement Date will be replaced by certain U.
S. treasury securities) or Qualifying Treasury Securities with an aggregate principal amount equal to
the stated amount of $100,000 of the corresponding Contract.
We will make Contract Payments on each Regular Distribution Date through the Stock Purchase
Date at a rate equal to 0.200% per annum of the stated amount of $100,000 per Contract. We
explain what the Regular Distribution Dates are under "What distributions or payments will be made
to holders of the Normal APEX, Stripped APEX and Capital APEX?" on page S-9. The Trust will
distribute these Contract Payments when received to each holder of Normal APEX and Stripped
APEX in an amount equal to 1/100th of each Contract Payment received on a Contract for each
Normal APEX or Stripped APEX. We may defer the Contract Payments. If we defer any of these
payments, we will accrue interest on the deferred amounts at the initial rate equal to 5.593% per
annum applicable to the Notes. We will pay the deferred amounts on the Stock Purchase Date to the
Trust in the form of junior subordinated notes ("Additional Notes"), as described under "When can
the Trust defer or skip distributions on the APEX?" on page S-11. The Trust will in turn distribute
each payment of interest on, or principal of, these Additional Notes to the holders of Normal APEX
and Stripped APEX, as received.
What are the basic terms of the Junior Subordinated Notes?
Maturity and Redemption. The maturity date of the Notes will be June 1, 2043 or on such earlier
date on or after June 1, 2016 as we may elect in connection with the Remarketing. We may from
time to time redeem Notes, in whole or in part, at any date on or after June 1, 2016, at a redemption
price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, including
deferred interest (if any), to the date of redemption. In connection with a Remarketing, we may
change the date after which we may redeem Notes to a later date or change the redemption price;
provided that no redemption price may be less than the principal plus accrued and unpaid interest
(including additional interest) on the Notes.
We may also redeem all, but not less than all, of the Notes prior to June 1, 2016 upon the
occurrence of certain special events. The redemption price of the Notes in the case of a redemption
in connection with a rating agency event or tax event will be equal to the greater of 100% of their
principal amount and a make-whole redemption price plus accrued and unpaid interest through the
date of redemption. The redemption price of the Notes in the case of a redemption in connection
with a capital treatment or investment company event will be equal to 100% of their principal amount
plus accrued and unpaid interest through the date of redemption. If we redeem the Notes prior to the
Stock Purchase Date, the Contracts will terminate automatically and the Trust will redeem the
APEX. Holders of Normal APEX and Capital APEX will receive an amount in cash equal to the
redemption price of the Notes that are corresponding assets of their APEX and holders of Stripped
APEX will receive the Qualifying Treasury Securities that are corresponding assets of their Stripped
APEX. Holders of Normal APEX and Stripped APEX will also receive accrued and unpaid Contract
Payments through the date of redemption with respect to their beneficial interests in Contracts that
are corresponding assets of the applicable series of APEX.
Subordination. Our obligations to pay interest and premium (if any) on, and principal of, the Notes
are subordinate and junior in right of payment and upon liquidation to all our senior and subordinated
indebtedness, including all of our indebtedness for money borrowed, including junior subordinated
debt securities underlying our trust preferred securities currently outstanding, indebtedness
evidenced by bonds, debentures, notes or similar instruments, whether existing now or in the future,
http://www.sec.gov/Archives/edgar/data/886982/000095012307007225/y34496b2e424b2.htm (10 of 230)5/17/2007 7:27:19 AM

sec.gov
- #1">424B2