On 28th February 2017, Challenger Ltd (CGF) announced a new issue namely Challenger Capital Notes 2 (prospective ASX Code: CGFPB). The purpose of this transaction is to provide Regulatory Capital for the group but more specifically, it will be treated as additional Tier 1 capital. The indicative size of the offer is [$350 million] but CGF retain the ability to change the issue size.
The notes will be offered to eligible holders of ordinary shares or Challenger Capital Notes 1 (Securityholder offer), and through a Broker Firm and Institutional offer. These securities are structured as perpetual, unsecured, convertible, transferable, redeemable and subordinated notes. Distributions are expected to be discretionary, fully franked, floating rate, non-cumulative and subject to payment conditions. Interest payments will be paid quarterly in arrears at a rate equal to 90- Day BBSW plus an interest margin determined under bookbuild (guidance range of 4.40-4.60%), multiplied by (1 –Tax Rate). If a distribution is not paid, the issuer is prevented from paying any distributions to ordinary shareholders until a full distribution is paid on a subsequent payment date.
Summary details of the transaction are listed in the table below:
|
Product Types |
Capital Note |
Last Price |
$100.00 |
|
Issue Size* |
[$350,000,000] |
Accrued |
$0 |
|
Par Value |
$100 |
Capital Price |
$100.00 |
|
Fixed / Floating |
Floating |
Running Yield** |
[6.178-6.378%] |
|
Payment Frequency |
Quarterly |
Yield to Maturity*** |
[7.071-7.271%] |
|
Current Distribution** |
[6.178-6.378%] |
Trading Margin* |
[4.400-4.600%] |
|
Issue Margin**** |
[4.400-4.600%] |
Optional Call Date |
22 May 2023 (6Y) |
|
Franking Credits Inclusive |
Yes |
Legal Final Maturity |
22 May 2025 (8Y) |
|
ASX Listed |
Yes (Prospective ASX Code: CGFPB) |
Next Ex-Date |
- |
|
Convertible |
Yes |
Next Payment Date |
22 August 2017 |
|
GICS Sector |
Insurance |
Next Cash Distribution**** |
$1.11 |
*Issue size is expected to be $350 million but is subject to change **Based on prospective issue margin below plus 90-Day BBSW of ~1.778%. ***Based on prospective issue margin of [4.400-4.600%] & interpolated swap rate to the call of ~2.671%. ****Actual cash amount based on $100 face value.
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