In a trading update on Monday, 26 September, Westpac proposed to exit SFIs by putting a vote to holders.
The decision follows changes in Westpac’s strategy to simplify its business and focus on core banking in Australia and New Zealand. The wind-down in Westpac SFIs commenced in November 2020 when the bank ceased issuing new Westpac SFIs and moved to “bid-only” support for Westpac SFI trading.
SFIs are a form of structured investment product that allow investors to buy shares in two payments. The first payment is usually between 40 and 60 per cent of the current price of the underlying shares. By making the first payment, investors are entitled to the full benefits and any share price movements, dividends and franking credits.
SFIs include a limited recourse loan, which is equal to an instalment payment. The loan attracts interest, which is calculated and capitalised daily. This means that the loan amount and, as a result, the instalment payment, will increase each day.
Westpac will offer customers a reduction in their loan amount of 25 per cent to support the exit. There are currently less than $6 million of loans outstanding in respect of Westpac SFIs held by approximately 90 customers.
To exit Westpac SFIs, Westpac is required to put resolutions to a holder vote to enable it to amend the terms of issue to bring forward the completion date for all Westpac SFIs to 17 November 2022.
The key parts of Westpac’s proposal are:
1. Inserting an additional “Extraordinary Event” into the Terms of Issue to allow Westpac to fix an Accelerated Completion Date, bringing this date forward from the currently scheduled Completion Date of 13 June 2024 to 17 November 2022 (indicative).
2. Reducing the Loan Amount outstanding under the Loan Agreement for each Westpac SFI at the date of the Holder meeting by 25 per cent (the Loan Reduction Amount) in the event Westpac fixes an Accelerated Completion Date.
Westpac company secretary, Tim Hartin, said the resolutions are consistent with the ASX operating rules, which allow the terms of issue to be amended with the approval of 75 per cent of votes casted by holders who will vote on the resolutions.
“Holders will be entitled to cast one vote for each Westpac SFI they hold,” Mr Hartin said.
A holder meeting has been scheduled for 2pm (Sydney Time) on Tuesday, 18 October 2022.
Westpac has encouraged any holders requiring additional information to contact their financial adviser.
Westpac currently has 41 SFIs on issue:
AGLSWB AGL Energy Limited
ALLSWB Aristocrat Leisure Limited
ANNSWB Ansell Limited
ANZSWB Australia and New Zealand Banking Group Limited
ASXSWB ASX Limited
BENSWB Bendigo and Adelaide Bank Limited
BHPSWB BHP Group Limited
BOQSWB Bank of Queensland Limited
BXBSWB Brambles Limited
CBASWB Commonwealth Bank of Australia
CGFSWB Challenger Limited
CPUSWB Computershare Limited
CSLSWB CSL Limited
CSLSWC CSL Limited
FLTSWB Flight Centre Travel Group Limited
GMGSWB Goodman Group
IAGSWB Insurance Australia Group Limited
ILCSWB iShares S&P/ASX 20 ETF
IOZSWB iShares Core S&P/ASX 200 ETF
LLCSWB Lendlease Group
MQGSWB Macquarie Group Limited
NABSWB National Australia Bank Limited
NABSWC National Australia Bank Limited
ORGSWB Origin Energy Limited
QANSWB Qantas Airways Limited
QBESWB QBE Insurance Group Limited
QOZSWB BetaShares FTSE Rafi Australia 200 ETF
RHCSWB Ramsay Health Care Limited
RIOSWB Rio Tinto Limited
SHLSWB Sonic Healthcare Limited
STOSWB Santos Limited
STWSWB SPDR S&P/ASX 200 Fund
SUNSWB Suncorp Group Limited
SYISWB SPDR MSCI Australia Select High Dividend Yield Fund
TCLSWB Transurban Group
TLSSWB Telstra Corporation Limited
VASSWB Vanguard Australian Shares Index ETF
WDSSWB Woodside Energy Group Ltd
WDSSWC Woodside Energy Group Ltd
WESSWB Wesfarmers Limited
WOWSWB Woolworths Group Limited
