By Rebecca Melvin
New York, May 18 – Insurance Australia Group Ltd. priced an upsized NZ$350 million of unsecured subordinated convertible notes due 2043 with margin rate of 2.6%, which equates to a fixed interest rate of 5.15% for the first six years, and then a floating rate that will be set at three-month intervals equal to the margin plus the applicable bank bill rate.
The Regulation S deal was initially expected to be NZ$250 million in size but was increased due to high investor demand. Pricing came at the cheap end of talk for a margin rate of 2.6% to 2.9% per year.
The fixed-to-floating rate notes have a fixed rate until the first optional redemption date on June 15, 2022. The notes may be called from June 15, 2022 to June 15, 2023.
After June 15, 2025, holders may elect to convert their notes into ordinary shares. All or some of the notes will convert if a non-viability event occurs, including severe financial difficulty.
The number of ordinary shares received upon conversion will be based on a volume-weighted average price over a certain period less a 1% discount. The amount will be capped at a maximum number set by reference to the VWAP.
Joint lead managers of the deal are ANZ and Forsyth Barr.
The offering has a greenshoe of up to NZ$100 million in additional notes. Each note will have a face value and issue price of NZ$1.00.
The offer opens on May 19 and closes on June 10. The notes are expected to be quoted on the NZX Debt Market.
The company plans to use the proceeds for general corporate purposes.
Holders of existing bonds issued in 2011 can request those bonds be repurchased and proceeds reinvested, subject to availability.
Insurance Australia is a Sydney, Australia, insurance writer.
| Issuer: | Insurance Australia Group Inc.
|
| Issue: | Convertible fixed-to-floating rate notes
|
| Amount: | NZ$350 million, upsized from NZ$250 million
|
| Greenshoe: | NZ$100 million
|
| Maturity: | June 15, 2043
|
| Bookrunners: | ANZ and Forsyth Barr
|
| Co-managers: | BNA, Deutsche Craigs, Macquarie Capital (New Zealand) Ltd. and Westpac Banking Corp.
|
| Margin rate: | 2.6%
|
| Coupon: | 5.15% for first six years, then resets to margin plus bank bill rate, reset quarterly
|
| Price: | NZ$1.00 par
|
| Calls: | Non-callable until June 15, 2022, then callable through June 15, 2023
|
| Puts: | Holders can convert their notes after June 15, 2025
|
| Distribution: | Regulation S
|
| Price talk: | 2.6%-2.9% margin rate
|
| Pricing date: | May 18
|
| Issue date: | June 10
|
| Ticker code: | Australia: IAGPC
|
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