On 11 February 2020, Macquarie Bank Limited (MBL) launched an offer for Macquarie Bank Capital Notes 2 (BCN2, ASX Code: MBLPB), to raise $400 million, with the ability to raise more or less, accompanied by a Reinvestment Offer for holders of the existing BCN (ASX Code: MBLPA). These securities are perpetual, unsecured, convertible, unsecured, subordinated notes. The purpose of the transaction is to raise regulatory capital (Additional Tier 1) for MBL and the net proceeds of the Offer will be used for general corporate purposes. The margin is guided at 2.90% to 3.10% p.a. above 90-day BBSW and distributions are expected to be partially franked, floating rate, discretionary, non-cumulative, subject to Payment Conditions and paid on a quarterly basis in arrears.
This security has no fixed maturity date but is scheduled for mandatory conversion into Macquarie Group (MGL) ordinary shares on 21 December 2028, or later when conversion conditions are satisfied. At the Issuer’s discretion, and subject to approval by APRA, the Notes may be redeemed on 21 December 2025, 21 June 2026 or 21 December 2026. The Notes may also be redeemed if a Tax or Regulatory Event occurs, provided certain conditions are met. As this security meets the new capital instrument eligibility criteria under Basel III, it also contains loss absorbing terms and conditions known in the documentation as a Common Equity Tier 1 Trigger Event and a Non-Viability Event. Upon the occurrence of either of these, this security will be converted into MGL ordinary shares without the protection of conversion conditions.
Conversion calculation ratios are set based on Issue Date VWAP and will be updated once known. If conversion cannot occur for any reason the Notes will be written off and all holders' rights terminated.
* Subject to change, expected to be $400 million, with the ability to raise more or less.
** Based on issue margin range of 2.90 to 3.10% plus a 90-Day BBSW rate of 0.91%.
*** Based on issue margin range, an interpolated swap rate to call of 0.9185% and an expected call date of 21 December 2025.
All pricing as of close 10 February 2020.
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