On 26 October 2015 AMP Limited (AMP) announced a new transaction, AMP Capital Notes (Prospective ASX Code: AMPPA). The purpose of the transaction is to fund the purchase of additional tier 1 instruments issued by one or more of the regulated subsidiaries of the AMP group. AMP is the nonoperating holding company (NOHC) of all companies within the AMP Group but is a subordinated creditor to its operating subsidiaries, hence the AMP is arguably a higher risk issuer than its subsidiaries. The size of the offer is indicated at $200 million but will change based on demand.
The capital notes are structured as perpetual, unsecured, convertible, transferable, redeemable and subordinated notes. Distributions will be discretionary, partially franked (variable but currently 85%), floating rate, non-cumulative and subject to payment conditions. They will be paid on a quarterly basis based on 90-Day BBSW plus a margin. This margin will be set at bookbuild and current guidance is [5.10 to 5.30%]. This security has no fixed maturity date but is scheduled for mandatory conversion into AMP ordinary shares on 22 December 2023, subject to the conversion conditions being satisfied. AMP also has the right (but not the obligation) to convert, redeem or resell (subject to APRA approval) the notes on the optional exchange date (22 December 2021). This security contains terms known as a Non-Viability Trigger Event.
Upon the occurrence of this event the security will be automatically converted into ordinary shares without the protection of conversion conditions. The holder will receive the lesser of the conversion number and maximum conversion number as outlined in section 2 and 8 of the prospectus. If a situation arises where conversion is not possible for any reason, holder’s rights will be terminated and the notes will lose all value.
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Joint Lead Managers
- ANZ
- Morgans
- NAB
- UBS
Source: ASX and AMP Limited
