The bank plans to raise $750 million in additional tier 1 capital through the offer.
On Tuesday, Westpac announced the offer of a new additional tier 1 capital security to raise approximately $750 million.
Westpac Capital Notes 9 is expected to pay a distribution of between 3.40 per cent and 3.60 per cent p.a. above the three-month bank bill swap rate each quarter.
The bank said the notes may be converted, redeemed or transferred on 22 September 2028, 22 December 2028, 22 March 2029 or 22 June 2029, and are scheduled to convert into ordinary shares on 22 June 2031 subject to meeting scheduled conversion conditions.
In its announcement to the ASX, Westpac drew attention to changes in the eligibility requirements for the capital notes as well as the application process.
“In response to the introduction of new laws known as the product design and distribution obligations (DDO), Westpac has changed the manner in which the offer is conducted compared to previous Westpac Capital Notes offers,” the bank said.
“These changes are important because some investors who have previously participated in Westpac Capital Notes offers may not be eligible to participate in this offer.”
Under the changes, all applications must now be made through a syndicate broker. Applicants must also satisfy new eligibility requirements which will force retail investors to obtain personal advice from a financial adviser or otherwise qualify as a wholesale client.
Additionally, there is no specific offer for Westpac securityholders and no applications can be made directly to Westpac.
Westpac Capital Notes 9 is the first issuance of a capital note by Westpac since the DDO laws came into force in October last year.
Eligible holders of Westpac Capital Notes 2, which are set to be redeemed on 23 September, may apply to reinvest some or all notes into Westpac Capital Notes 9. The bank said it would endeavour to give priority to applications received under the reinvestment offer.
The Westpac Capital Notes 9 offer will open on 29 June and close on 14 July, but the bank noted that it may be closed earlier or extended without notice.
Syndicate brokers appointed to the offer include Westpac Institutional Bank, ANZ Securities, Commonwealth Bank of Australia, Morgans Financial, National Australia Bank, Ord Minnett, Shaw and Partners and UBS AG, Australia Branch, as joint lead managers as well as Bell Potter Securities, Crestone Wealth Management, JBWere, Morgan Stanley Wealth Management Australia and Wilsons Advisory and Stockbroking as co-managers.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
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