New Issue: Bank of Queensland Capital Notes 2

On 26 October 2020, Bank of Queensland Limited (ASX: BOQ) launched an offer for Bank of Queensland Capital Notes 2 (ASX: BOQPF), to raise $200 million, with the ability to raise more or less. These securities are structured as unsecured, subordinated, perpetual convertible notes. Distributions are expected to be discretionary, non-cumulative, floating rate, fully franked, and paid on a quarterly basis in arrears until converted or redeemed. The margin is guided at 3.80% to 4.00% p.a. above 90-day BBSW. The purpose of the transaction is to raise regulatory capital (Additional Tier 1) for BOQ with the proceeds intended for corporate and funding purposes. This security is essentially a replacement for BOQ’s Wholesale Capital Notes that were redeemed in May 2020 on the condition that a replacement AT1 instrument would be issued at the first available opportunity.

This security has no fixed maturity date but is scheduled for mandatory conversion into BOQ ordinary shares on 15 May 2029, or later, when conversion conditions have been satisfied. At the Issuer’s discretion, and subject to approval by APRA, BOQ can redeem or resell the Notes for cash at face value or convert the Notes into BOQ ordinary shares on 14 May 2027. The Notes may also be redeemed or resold if a Tax or Regulatory Event occurs. The Notes will convert into BOQ ordinary shares following an Acquisition Event, subject to conversion conditions. As this security meets capital instrument eligibility criteria under Basel III, it also contains the loss absorbing terms and conditions known in the documentation as Common Equity Trigger or Non-Viability Trigger Events. The security therefore qualifies as Additional Tier 1 capital. Upon the occurrence of either of these events this security will be automatically converted into BOQ ordinary shares or written off without the protection of conversion conditions. If conversion cannot occur for any reason, the Notes will be written off and all Holders' rights terminated.

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Prospectuspdf | 2 MB