BOQ Announces Convertible Notes Issue
BOQ today announced it has agreed to issue $150 million of Lower Tier 2 Convertible Notes (“Convertible Notes”) as a private placement.
BOQ Managing Director and CEO, David Liddy reinforced that this placement was an important step for the Bank in ensuring strong capital levels remain while also helping to fund the Bank’s future growth.
“This Convertible Notes issue will assist BOQ to fully capitalise on growth opportunities we anticipate will progressively unfold over the next few years,” Mr Liddy said.
The Convertible Notes, to be issued by BOQ in three tranches of $60 million (“Tranche 1”), $45 million (“Tranche 2”) and $45 million (“Tranche 3”), are cumulative, convertible, subordinated notes due June 2020, and pay, subject to a solvency condition, a monthly coupon equal to the 30 day bank bill rate plus 400 basis points. The Convertible Notes are unlisted.
The Convertible Notes convert into a variable number of BOQ ordinary shares on 10 July 2011 (in the case of Tranche 1), 10 December 2011 (in the case of Tranche 2) and 10 June 2012 (in the case of Tranche 3) or each monthly interest payment date thereafter, at the holders’ option, or earlier following the occurrence of certain events. The variable number of ordinary shares to be issued on any conversion is determined by reference to the average of the daily volume weighted average price of BOQ’s ordinary shares sold on the ASX during the number of trading days prior to conversion determined for the relevant event in accordance with the terms of the Convertible Notes, after applying a 2.5% discount.
Subject to APRA’s prior written approval, BOQ may redeem the Convertible Notes on 10 July 2011 (in the case of Tranche 1), 10 December 2011 (in the case of Tranche 2) and 10 June 2012 (in the case of Tranche 3) or each monthly interest payment date thereafter, or following the occurrence of certain events. The redemption price payable on redemption will be the face value together with all accrued but unpaid interest.
The Convertible Notes constitute Lower Tier 2 Capital for BOQ on a Level 1 and a Level 2 basis.
The Convertible Notes are scheduled for issue on or about 30 June 2010 and the proceeds of the issue of the Convertible Notes will be used by BOQ for its general corporate purposes.
 120 Tranche 1 Convertible Notes, 90 Tranche 2 Convertible Notes and 90 Tranche 3 Convertible Notes each with a face value and issue price of $500,000 each will be issued. Shareholder approval is not required for this issue of Convertible Notes. The issue of Convertible Notes is not an issue to a class of security holders.