On 11 November 2019, Suncorp Group Limited (“SUN”) launched an offer for Capital Notes 3 (expected ASX Code: SUNPH), to raise $250 million, with the ability to raise more or less, accompanied by a Suncorp Convertible Preference Shares 3 (CPS3) reinvestment offer for holders of the existing CPS3 (ASX Code: SUNPE). These securities are structured as perpetual, subordinated, unsecured, and convertible. 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 securities are expected to be issued on the 17 December 2019 and the purpose of this transaction is to partially repay the $400 million SUNPE through the reinvestment offer, with the rest potentially redeemed at the discretion of SUN, on 17 June 2020, to fund the capital needs of one or more Regulated Entities within the Suncorp Group and for general corporate purposes. The margin on this security is expected to be set between 3.00% - 3.20% p.a. above 90-Day BBSW.
This security has no fixed maturity date but is scheduled for mandatory conversion into SUN ordinary shares on 17 June 2028, or later, when conversion conditions have been satisfied. At the issuer’s discretion, and subject to approval by APRA, the notes may be redeemed/transferred or converted on 17 June 2026. As this security meets the new capital instrument eligibility criteria under Basel III it also contains the loss absorbing terms and conditions known in the documentation as a Non-Viability Trigger Event. The security therefore qualifies as Additional Tier 1 capital. Upon the occurrence of this event, this security will be automatically converted into ordinary shares or written off 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.
Summary details of the transaction are listed in the table below:
|
Product Type |
Capital Note |
Last Price |
$100.00 |
|
Issue Size* |
$250,000,000 |
Accrued |
$0.00 |
|
Par Value |
$100.00 |
Capital Price |
$100.00 |
|
Fixed / Floating |
Floating |
Running Yield** |
3.94% - 4.14% |
|
Payment Frequency |
Quarterly |
Yield to Maturity** |
4.26% - 4.46% |
|
Current Distribution** |
3.94% - 4.14% |
Trading Margin** |
3.00% - 3.20% |
|
Issue Margin / Coupon** |
3.00% - 3.20% |
Optional Call Date |
17 June 2026 |
|
Franking Credits Inclusive |
Yes |
Legal Final Maturity |
|
|
ASX Listed |
Yes (ASX Code: SUNPH) |
Next Ex-Date |
25 February 2020 |
|
Convertible |
Yes |
Next Payment Date |
17 March 2020 |
|
GICS Sector |
Insurance |
Next Cash Distribution |
TBC |
* Subject to change, offer size is $250 million, with the ability to raise more or less.
** Based on issue margin range of 3.00 to 3.20% plus either a 90-Day BBSW rate of 0.9345% and/or an interpolated swap rate to call of 1.2564% and an expected call date of 17 June 2026.
All pricing as of close 8 November 2019.
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