New Issue: Members Equity Wholesale Capital Notes II

Member Equity Bank Limited today announced the launch of its issue of Members Equity Wholesale Capital Notes II (ISIN: To be confirmed). The offer is seeking to raise $100 million. Proceeds will be used for ratings and regulatory capital purposes and to support the group's organic growth and digitalisation strategies.

These securities are structured as perpetual, unsecured, subordinated and fully paid notes to meet APRA's criteria to qualify as Additional Tier 1 (AT1) capital.  Distributions are floating rate, quarterly, discretionary, non-cumulative and are expected to be fully-franked.  The margin is guided at 3M BBSW +475-500bps and coupon payments are payable quarterly in arrears.

This security has no fixed maturity date but is callable on the 4 December 2023 and each coupon payment date after that date, subject to APRA's prior written approval and meeting the Notes' terms.

This security meets the new capital instrument eligibility criteria under Basel III and also contains the Loss-Absorbing Event term referred to in the Information Memorandum as a Non-Viability Trigger Event.  There is no Capital Trigger Event incorporated into this note, meaning that there is no possible conversion into ordinary shares, only "write-off", after which, should this occur, all holders' rights will be terminated.

Summary details of the transaction are listed in the table below:

Product Type

Capital Note

Last Price

$100.00

Issue Size*

$100,000,000

Accrued

$0.00

Par Value

$100.000

Capital Price

$100.000

Fixed / Floating

Floating

Running Yield**

[6.690 - 6.940%]

Payment Frequency

Quarterly

Yield to Call***

[7.249 - 7.499%]

Current Distribution**

[6.690 - 6.940%]

Trading Margin

[4.750 - 5.000%]

Issue Margin***

[4.750 - 5.000%]

Optional Call Date

4 December 2023

Franking Credits Inclusive

Yes

Legal Final Maturity

Perpetual

ASX Listed

No (ISIN: To be confirmed)

Next Ex-Date

[TBC] February 2019

Convertible

Yes

Next Payment Date

[TBC] February 2019

GICS Sector

Banks

Next Cash Distribution

[TBC]

*Issue size is subject to final demand. **Based on prospective trading margin of 4.75-5.00% plus 90-Day BBSW of 1.940%. ***Based on prospective issue margin of 4.75-5.00% and an interpolated swap rate of 2.499% priced to the optional call date 4 December 2023.

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