Launch of Capital Notes 2 Offer

Monday, 26 October 2020

Bank of Queensland Limited (ASX: BOQ) (BOQ) today announced its intention to raise $200 million through the offer of Capital Notes 2 with the ability to raise more or less (Offer).

Capital Notes 2 are fully paid, unsecured, non‐cumulative, perpetual, subordinated, convertible notes which will pay, subject to the issue terms and BOQ’s discretion, preferred floating rate quarterly distributions which are expected to be fully franked.

The Australian Prudential Regulation Authority (APRA) has confirmed that Capital Notes 2 are capable of being recognised as Additional Tier 1 Capital of BOQ for the purposes of APRA’s prudential standards. As announced on 7 April 2020, BOQ received APRA’s approval to redeem BOQ’s A$150 million Wholesale Capital Notes which constituted Additional Tier 1 Capital, conditional on BOQ completely replacing the WCNs with a new Additional Tier 1 instrument at the first available opportunity. The Offer will satisfy this condition.

The proceeds of the Offer will be used for BOQ’s general corporate and funding purposes. The Capital Notes 2 have an issue price of $100 each and are expected to be quoted on the Australian Securities Exchange (ASX) and trade under the ASX code “BOQPF”.

Further information

Full details of this investment opportunity and the Capital Note 2 Terms are set out in the Prospectus lodged with the Australian Securities and Investments Commission (ASIC) and ASX today (Prospectus).

The Prospectus will be made available to Australian investors at or by calling the BOQ Offer Information Line below. A replacement Prospectus, containing the Margin and Application Forms, will be made available when the Offer opens, expected to be on 3 November 2020.

There are risks associated with investing in Capital Notes 2. Investors should read and consider the Prospectus and the Capital Note 2 Terms in full before deciding whether to invest in Capital Notes 2. BOQ strongly recommends that investors obtain professional advice which takes into account their particular investment objectives and circumstances before deciding whether to invest in Capital Notes 2. Capital Notes 2 are not guaranteed by, nor are they deposit liabilities of, BOQ.

Applications may only be made using the Application Form (either electronic or paper) that is attached to or accompanies the replacement Prospectus.

Goldman Sachs has been appointed as Arranger to the Offer. ANZ Securities, Morgans and National Australia Bank have been appointed as Joint Lead Managers. JBWere has been appointed as Co‐Manager.

Further information about the Offer

The Offer comprises:

  • an Institutional Offer to certain Institutional Investors;
  • a Broker Firm Offer to Australian resident retail and high net worth clients of Syndicate Brokers; and
  • a Securityholder Offer to Eligible Securityholders1 on the register as at 7:00pm (Sydney time) on 23 October 2020.

Securityholders can access further information through the BOQ Offer Information Line 1800 779 639 (within Australia) or +61 1800 779 639 (from overseas), Monday to Friday from 8:30am to 7:30pm (AEDT) or at

Key Features of Capital Notes 2


  • Preferred, discretionary, non-cumulative, based on a floating rate
  • Distributions are expected to be fully franked2
    • if any Distribution payment is not fully franked, the Distribution will be increased to adjust for any unfranked component of the Distribution, based upon the applicable Franking Rate
  • Scheduled to be paid quarterly in arrears (subject to no Payment Condition existing) on the Distribution Payment Dates
    • Distribution Payment Dates are 15 February, 15 May, 15 August, 15 November each year
    • The first Distribution is scheduled to be paid on 15 February 2021
  • Calculated on a floating rate basis using the 3-month Bank Bill Swap Rate (BBSW) plus the Margin multiplied by (1 – t)3
  • The Margin will be determined by the Bookbuild and is expected to be in the range of 3.80% to 4.00%


  • Perpetual (no fixed maturity date) unless Converted, Redeemed or Resold
  • Optional Conversion, Redemption or Resale (subject to APRA’s prior written approval4, and provided certain conditions are satisfied) on 14 May 20275 at BOQ’s option, or following a Tax Event or a Regulatory Event and Optional Conversion following Potential Acquisition Event
  • Scheduled Mandatory Conversion into Ordinary Shares on 15 May 2029 if Mandatory Conversion Conditions are satisfied, unless Capital Notes 2 are Redeemed or Converted earlier
  • Acquisition Event results in Conversion of Capital Notes 2, if certain conditions are satisfied
  • Loss Absorption Event results in required Conversion of Capital Notes 2 into Ordinary Shares and, if not Converted, Written-Off

Optional Conversion, Redemption and / or Resale

  • Subject to APRA's prior written approval and provided certain conditions are satisfied, BOQ may elect to:
    • Convert, Redeem or Resell all or some Capital Notes 2 on the Optional Conversion/Redemption/Resale Date;
    • Convert, Redeem or Resell all or some Capital Notes 2 following a Regulatory Event or Tax Event; or
    • Convert all (but not some only) Capital Notes 2 following a Potential Acquisition Event

Mandatory Conversion Date

  • The Mandatory Conversion Date will be the Scheduled Mandatory Conversion Date provided that the Mandatory Conversion Conditions are satisfied on that date
  • On a Mandatory Conversion Date, Capital Notes 2 Holders will receive $101.01 worth of Ordinary Shares per Capital Note 2, unless Capital Notes 2 have otherwise been Converted or Redeemed earlier
  • If any of the Mandatory Conversion Conditions are not satisfied on the Scheduled Mandatory Conversion Date, then the Mandatory Conversion Date will be deferred until the next Distribution Payment Date in respect of which all of the Mandatory Conversion Conditions are satisfied

Mandatory Conversion in other circumstances

  • BOQ must also Mandatorily Convert Capital Notes 2 to Ordinary Shares in the following circumstances:
    • If a Common Equity Trigger Event occurs;
    • If a Non-Viability Trigger Event occurs; or
    • If an Acquisition Event occurs (subject to the applicable Mandatory Conversion Conditions)

Quoted on ASX

  • BOQ will apply to the ASX for Capital Notes 2 to be quoted on the ASX and Capital Notes 2 are expected to trade under ASX code "BOQPF"

1 An Eligible Securityholder is a registered holder of Ordinary Shares or Capital Notes 1 (as applicable) as at 7:00pm (Sydney time) on 23 October 2020, shown on the applicable register as having an address in Australia and not in the US or acting as a nominee for, or for the account or benefit of, a US Person, or not otherwise prevented from receiving the invitation to participate in the Offer or receiving Capital Notes 2 under the laws of any jurisdiction.

2 Holders should be aware that the ability of a Holder to use franking credits will depend on their individual position and that the potential value of franking credits does not accrue at the same time as the cash Distribution is received.

3 "t" is the Australian corporate tax rate applicable to the franking account of BOQ at the relevant Distribution Payment Date.

4 Holders should not assume that APRA’s approval will be given.

5 As 15 May 2027 is not a Business Day, this date has been brought forward to the preceding Business Day.


Offer Timetable



Record Date for determining Eligible Securityholders for Securityholder Offer

7:00pm (Sydney time), 23 October 2020

Lodgement of the original Prospectus with ASIC

26 October 2020

Bookbuild (to determine the Margin)

On or before 02 November 2020

Announcement of the Margin

02 November 2020

Lodgement of replacement Prospectus with ASIC

03 November 2020

Opening Date of the Offer

03 November 2020

Closing Date for the Securityholder Offer

5:00pm (Sydney time),
17 November 2020

Closing Date for the Broker Firm Offer

10:00am (Sydney time),
23 November 2020

Issue Date

30 November 2020

Capital Notes 2 commence trading on ASX

01 December 2020

Expected despatch of Holding Statements

01 December 2020



First quarterly Distribution Payment Date

15 February 2021

Optional Conversion / Redemption / Resale Date

14 May 20276

Scheduled Mandatory Conversion Date

15 May 2029

6 As 15 May 2027 is not a Business Day, this date has been brought forward to the preceding Business Day.


Dates may change

These dates are indicative only and are subject to change without notice. References to time are to Sydney time. BOQ, the Arranger and the Joint Lead Managers may agree to vary the timetable, including extending any Closing Date, closing the Offer early without notice or accepting late Applications, whether generally or in particular cases, at their discretion. BOQ may withdraw the Offer at any time before Capital Notes 2 are issued.


Unless otherwise defined, capitalised words used in this announcement have the meaning given to them in the Prospectus.


This announcement does not constitute an offer of any securities (including Capital Notes 2) for sale or issue. No action has been taken to register or qualify Capital Notes 2 or the Offer or to otherwise permit a public offering of Capital Notes 2 outside Australia. In particular, this announcement does not constitute an offer of securities for sale in the United States. Neither the Capital Notes 2 nor the Ordinary Shares have been or will be registered under the United States Securities Act of 1933 or the securities laws of any state of the United States, and they may not be offered or sold in the United States or to, or for the account or benefit of, a US Person.