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Issue of new Convertible Preference Shares 3 and redemption of Bendigo Preference Shares


27/04/2015

Bendigo and Adelaide Bank ("BEN") today announced an offer of new Convertible Preference Shares 3 ("CPS3"), which are expected to be quoted on the Australian Securities Exchange ("ASX") and trade under the ASX code BENPF.

CPS3 Offer

BEN intends to raise approximately $200 million through the offer of CPS3, with the ability to raise more or less (the "Offer"). CPS3 are being issued to support BEN's balance sheet growth and to ensure BEN continues to have strong regulatory capital levels, with the proceeds available to be used to fund the redemption of BEN's Bendigo Preference Shares (ASX ticker code: BENPB) ("BPS") and for general corporate purposes.

CPS3 are fully paid, non-cumulative, perpetual, convertible preference shares and will qualify as Additional Tier 1 Capital under APRA's Basel III capital adequacy framework.1

CPS3 will provide investors with floating rate, semi-annual, discretionary, non-cumulative dividends that are expected to be fully franked. The Margin is expected to be in the range of 4.00 per cent to 4.20 per cent, and will be set by way of Bookbuild to be conducted on or around 1 May 2015. Based on the expected Margin and assuming a 180 day Bank Bill Rate of 2.25 per cent, the Dividend Rate on CPS3 would be equivalent to an unfranked Dividend Rate of between 6.25 per cent and 6.45 per cent per annum.2

If certain conditions are met (including APRA's prior written approval), BEN may elect to redeem, resell or convert CPS3 into Ordinary Shares of BEN on 15 June 2021. Otherwise, CPS3 will mandatorily convert into Ordinary Shares of BEN on 15 June 2023 (subject to certain conditions being satisfied or unless exchanged earlier). CPS3, in accordance with their terms of issue, are subject to automatic conversion into Ordinary Shares of BEN upon the occurrence of a Non-Viability Trigger Event or Capital Trigger Event.

The Offer comprises:

  • a Reinvestment Offer to Eligible BPS Holders - being registered holders of BPS with a registered address in Australia at 7:00pm (Melbourne time) on 20 April 2015 (see further details below);
  • a Securityholder Offer to Eligible Securityholders being registered holders of Ordinary Shares, CPS, CPS2, or Capital Notes with a registered address in Australia at 7:00pm (Melbourne time) on 20 April 2015;
  • a Broker Firm Offer to Broker Firm Applicants including Eligible BPS Holders being Australian resident retail clients of a Syndicate Broker;
  • an Institutional Offer to Institutional Investors being certain Institutional Investors invited by the Joint Lead Managers to participate in the Offer; and
  • a General Offer to members of the general public who are Australian residents.

The Reinvestment Offer, Securityholder Offer, and General Offer are expected to close at 5:00pm (Melbourne time) on 5 June 2015.

The Broker Firm Offer for applications in respect of Reinvested BPS is also expected to close at 5:00pm (Melbourne time) on 5 June 2015 and the Broker Firm Offer for all other applications excluding those in respect of Reinvested BPS is expected to close at 10:00am (Melbourne time) on 12 June 2015.

Redemption of BPS and Reinvestment Offer

BEN today issued a BPS Exchange Notice to redeem the BPS for their face value on the upcoming Reset Date for BPS, being 15 June 2015.

Eligible BPS Holders will have the opportunity to participate in the Offer by electing to have some or all of their BPS redemption proceeds (i.e. $100 per BPS) applied to the Application Payment for CPS3. Under the Reinvestment Offer, Eligible BPS Holders will not be required to make a separate Application Payment to the extent that their BPS redemption proceeds will be reinvested directly in CPS3. Eligible BPS Holders who participate in the Reinvestment Offer are guaranteed an Allocation of one CPS3 for every one BPS they reinvest. Eligible BPS Holders will also have the opportunity to apply for additional CPS3 and an Application Payment would have to be made for those additional CPS3.

All holders of BPS as at the BPS Dividend record date of 22 May 2015 (including BPS holders who elect to participate in the Reinvestment Offer) are expected to receive a final fully franked BPS Dividend of 66.67 cents for each BPS on 15 June 2015.

Acceptance of the Reinvestment Offer is voluntary and BEN intends that all outstanding BPS which have not been reinvested in CPS3 will be redeemed by BEN on 15 June 2015 in accordance with the BPS Exchange Notice.

Full details of the Offer including the Reinvestment Offer are set out in the prospectus lodged with the Australian Securities and Investments Commission and ASX today ("Prospectus"). A replacement Prospectus, containing the final Margin will be made available when the Offer opens, expected to be on 5 May 2015. Investors should read and consider the Prospectus in full and obtain professional advice before deciding whether to acquire CPS3 or participate in the Reinvestment Offer. Applications for CPS3 under the Offer can only be made by completing the Application Form that will be in, or will accompany, the Prospectus. This announcement is not financial product advice and has not taken into account your objectives, financial situation or needs.

Investor information

Investors may request a copy of the Prospectus by calling the CPS3 Information Line on 1300 721 730 (within Australia) or +61 3 9415 4340 (International) between 9:00am and 5:00pm (Melbourne time) on Monday to Friday or by visiting www.BendigoCPS3offer.com.au.

Goldman Sachs Australia Pty Limited is the Arranger and Joint Lead Manager to the Offer. National Australia Bank Limited, Evans and Partners Pty Ltd and J.P. Morgan Australia Limited have also been appointed as Joint Lead Managers to the Offer.

Capitalised terms in this announcement have the meaning given to them in the Prospectus.

Indicative timetable for the Offer

KEY DATES FOR THE OFFERDATE
Date for determining Eligible SecurityholdersMonday, 20 April 2015
Lodgement of this Prospectus with ASICMonday, 27 April 2015
Bookbuild to determine the MarginFriday, 1 May 2015
Announcement of the MarginFriday, 1 May 2015
Lodgement of the replacement Prospectus with ASICTuesday, 5 May 2015
Opening DateTuesday, 5 May 2015
Closing Date for Securityholder Offer and General Offer5:00pm, Friday, 5 June 2015
Closing Date for Broker Firm Offer (excluding applications in respect of Reinvested BPS)10:00am, Friday, 12 June 2015
Issue DateMonday, 15 June 2015
CPS3 commence trading on ASX (deferred settlement basis)Tuesday, 16 June 2015
Holding Statements despatchedFriday, 19 June 2015
CPS3 commence trading on ASX (normal settlement basis)Monday, 22 June 2015

KEY DATES FOR CPS3
 
First Dividend Payment Date3Tuesday, 15 December 2015
Optional Exchange DateTuesday, 15 June 2021
Mandatory Conversion Date4Tuesday, 15 June 2023

KEY DATES FOR BPS HOLDERS
 
Record date for determining Eligible BPS Holders for the Reinvestment OfferMonday, 20 April 2015
Record date for BPS DividendFriday, 22 May 2015
Last day of trading for BPS on ASXTuesday, 2 June 2015
Closing Date for the Reinvestment Offer5:00pm, Friday, 5 June 2015<
Closing Date for the Broker Firm Offer (applications in respect of Reinvested BPS)5:00pm, Friday, 5 June 2015
Redemption date for BPS and payment date for BPS DividendMonday, 15 June 2015

References to times in this Prospectus are to the time in Melbourne, Victoria, Australia, unless otherwise stated. The key dates above are indicative only and may change without notice.


1 Note that CPS3 are not deposit liabilities or protected accounts of BEN under the Banking Act 1959 (Cth), nor are they guaranteed or insured by any government or any other person.

2 Assuming a 180 day Bank Bill Rate of 2.25 per cent and assuming the value of franking credits is taken into account in full. You should be aware that the ability to use franking credits will depend on your individual tax position.

3 Dividends are scheduled to be paid at the end of each semi-annual Dividend Period (on 15 December and 15 June) subject to the Dividend Payment Tests. If any of these scheduled dates are not Business Days, then the Dividend Payment Date will occur on the next Business Day.

4 The Mandatory Conversion Date may be later than 15 June 2023, or may not occur at all, if the Mandatory Conversion Conditions are not satisfied.