Herbert Smith Freehills has advised the joint lead managers of Westpac Banking Corporation’s (Westpac) offer of new Tier 2 hybrid securities known as Westpac Subordinated Notes II (Notes), which are fully paid, redeemable, subordinated and unsecured debt obligations of Westpac (Offer). The Offer is intended to raise A$750 million, with the ability to raise more or less.
The Notes are being offered at an issue price of $100 each and are expected to be quoted on the ASX.
The Offer includes a reinvestment offer for eligible Westpac stapled preferred securities (SPS) holders (Reinvestment Offer), which will allow eligible SPS holders to sell some or all of their Westpac SPS through an on-market buy-back facility and automatically reinvest the proceeds in Notes.
APRA has confirmed that the Notes will qualify as Tier 2 Capital securities under its new Basel III capital adequacy framework, which commenced on 1 January 2013. The proceeds received by Westpac under the Offer will be used for general business purposes.
Herbert Smith Freehills acted for the arrangers, Westpac Institutional Bank and UBS AG, Australia Branch, and for the six joint lead managers, being Deutsche Bank AG, Sydney Branch, Goldman Sachs Australia Pty Ltd, Macquarie Capital (Australia) Limited, Morgan Stanley Securities Limited, UBS AG, Australia Branch and Westpac Institutional Bank. Bell Potter and JBWere were appointed as co-managers on the transaction.
The Herbert Smith Freehills team was led by joint head of equity capital markets, Philippa Stone and executive counsel Lauren Magraith, supported by senior associates Philip Hart and Lucy Hall and solicitor John Blake.
‘This transaction is the most recent in a succession of transactions involving Australian banks going to market with significant hybrid security and subordinated debt offerings since the release of APRA’s new Basel III prudential standards in 2012’ said Stone. ‘Following our roles on each of the other major bank hybrid offerings, we are very pleased to have acted for the joint lead manager syndicate on this transaction, and to have also advised on various aspects of the Reinvestment Offer.’
Herbert Smith Freehills’ capital markets team has extensive experience acting for both issuers and joint lead managers on hybrid transactions, having also recently acted for Commonwealth Bank of Australia on its $2 billion offer of PERLS VI (and concurrent PERLS IV buy-back and Reinvestment Offer) (the first fully Basel III compliant offering by an Australian bank), for Bendigo and Adelaide Bank on its $269 million issue of Convertible Preference Shares and concurrent Reset Preference Share Reinvestment Offer (the second such fully Basel III compliant offering), for the joint lead managers on ANZ’s $1 billion Capital Notes offer, Macquarie’s $580 million Capital Notes offer, Westpac’s $1.38 billion Capital Notes offer and NAB’s $1.51 billion CPS offer (each of which were Basel III compliant offerings), as well as for the joint lead managers on ANZ’s $1.5 billion offer of ANZ Subordinated Notes, for Colonial on its $1 billion offer of subordinated notes, for the joint lead managers on IAG’s $377 million offer of convertible preference shares, and for AGL Energy Limited on its $900 million entitlement offer and $650 million subordinated notes offer.
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