67XC Int.fin.27

 
TIDM67XC 
 
 

  MERRILL LYNCH S.A. 

  société anonyme 

  Registered Office: Ballade B2, 4 rue Albert Borschette L-1246 Luxembourg Grand Duchy of Luxembourg 

  (Incorporated under the laws of Luxembourg with registration number RCS Luxembourg B-39046) 

  NOTICE TO NOTEHOLDERS 

  INDEX ADJUSTMENT EVENT AND INDEX DISRUPTION EVENT NOTICE 

  Merrill Lynch S.A. Series 1359: EUR 10,829,000 Non-Interest Bearing, Index Linked Redemption Notes due 7 February, 2013 - (ISIN: XS0344931620) (the "Notes") 

  We refer to our notice to you dated 18 November 2008 (the "First Notice"). 

  In the First Notice, we informed you that an Index Adjustment Event and/or an Index Disruption Event has occurred in relation to the Notes and, in accordance with the terms of the Notes: 

  (1) following the Index Adjustment Event, the Index Sponsor shall determine the value of the relevant Component Fund Unit on the basis of its estimate of the reasonable market value of such Component Fund Unit as of the Business Day immediately following such event (the "Closing Unit Value"), having regard to then prevailing market conditions, the last reported NAV and such other conditions which the Index Sponsor determines relevant on the valuation of such Component Fund Unit, and such Closing Unit Value shall be used as the basis of the calculation of the Component Fund Unit value until the Final Valuation Date; 

  (2) following the Index Disruption Event, the Index Sponsor may either: 

  (i) replace the Affected Fund with: 

  (a) units or shares of a successor fund(s) or index, which in its sole determination, uses a similar selection methodology to that used by the Affected Fund; or 

  (b) an asset, index, financial instrument or a basket of financial instruments, in each case which in its sole determination has a similar market exposure to the Affected Fund; 

  (ii) remove the Affected Fund from the Reference Basket and adjust the weight between the remaining unaffected Component Funds or Component Indices; or 

  (iii) redeem the Notes in accordance with Schedule 2 (Special Conditions) of the Final Terms. 

  We wish to inform you that the Index Sponsor intends to take the course of action in accordance with 2(ii) above in response to the Index Disruption Event. This would entail certain amendments being made to the Final Terms. 

  Amendment 

  The Affected Fund will be removed from the Reference Basket and the Index Sponsor will allocate the weight of the Affected Fund equally among the remaining unaffected Component Funds. 

  Subject to the liquidity of the unaffected Component Funds, the Index Sponsor will adjust the weight of the Aggressive Market Asset Units and the Balanced Market Asset Units based on the following target weights on the Scheduled Adjustment Date: 

 
Weight of the Aggressive Market Asset Units prior to 6 March 2009 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
                            Value Partners Classic Fund  China Alpha Fund II  INVESCO ASEAN Equity Fund  Permal Fixed Income Holdings N.V.  Cash 
                            VLPARAI KY Equity            CNALPHA KY Equity    INVANDA ID Equity          PRMFIHN NT Equity 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
                            24%                          36%                  24%                        36%                                0% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
Target Weight of the Aggressive Market Asset Units 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
Scheduled Adjustment Date   Value Partners Classic Fund  China Alpha Fund II  INVESCO ASEAN Equity Fund  Permal Fixed Income Holdings N.V.  Cash 
                            VLPARAI KY Equity            CNALPHA KY Equity    INVANDA ID Equity          PRMFIHN NT Equity 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
6 March 2009                24%                          36%                  24%                        0%                                 36% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
9 March 2009                24%                          36%                  36%                        0%                                 24% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
11 March 2009               36%                          36%                  36%                        0%                                 12% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
31 March 2009               36%                          48%                  36%                        0%                                 0% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
After 31 March 2009         36%                          48%                  36%                        0%                                 0% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
 
 
Weight of the Balanced Market Asset Units prior to 6 March 2009 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
                            Value Partners Classic Fund  China Alpha Fund II  INVESCO ASEAN Equity Fund  Permal Fixed Income Holdings N.V.  Cash 
                            VLPARAI KY Equity            CNALPHA KY Equity    INVANDA ID Equity          PRMFIHN NT Equity 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
                            20%                          30%                  20%                        30%                                0% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
Target Weight of the Balanced Market Asset Units 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
Scheduled Adjustment Date   Value Partners Classic Fund  China Alpha Fund II  INVESCO ASEAN Equity Fund  Permal Fixed Income Holdings N.V.  Cash 
                            VLPARAI KY Equity            CNALPHA KY Equity    INVANDA ID Equity          PRMFIHN NT Equity 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
6 March 2009                20%                          30%                  20%                        0%                                 30% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
9 March 2009                20%                          30%                  30%                        0%                                 20% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
11 March 2009               30%                          30%                  30%                        0%                                 10% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
31 March 2009               30%                          40%                  30%                        0%                                 0% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
After 31 March 2009         30%                          40%                  30%                        0%                                 0% 
=------------------------------------------------------------------------------------------------------------------------------------------------ 
 
 

  The Index Sponsor will compute the Cash on each Portfolio Component Business Day (t) in accordance with the following formula: 

  Cash (0) = 100 (on 6 March 2009) 

  Cash (t) = Cash (t-1) x [1 + US0001M <Index> (t-2) x ACT (t)] 

  "ACT (t)" means the number of calendar days between the Portfolio Component Business Day (t) and the immediately preceding Portfolio Component Business Day (t-1) divided by 360. 

  The Final Terms relating to the Notes will be amended in due course. 

  Noteholders wishing to sell the Notes 

  As a temporary measure, Noteholders who do not wish to be subject to the amendment described above may request to sell their Notes to the Dealer in the secondary market by giving notice to the Dealer by no later than 5.00 p.m. (Hong Kong time) on 25 February 2009. Such sale requests, if accepted, will be executed on or around the 10 March 2009 based on the net asset value of the Market Asset as of 28 February 2009. 

  If you have any questions with respect to the above, please contact your Merrill Lynch representative. 

  Unless otherwise defined in this letter, terms used herein shall have the same meaning as defined in the First Notice, the Final Terms dated 14 February 2008 (as amended and restated from time to time) and the Base Prospectus dated 2 April 2007 relating to the Notes (as supplemented from time to time). 

  Yours faithfully 

  For and on behalf of 

  Merrill Lynch S.A. 

  (as the Issuer) 

  Dated: 23 February 2009