MeDirect Bank (Malta) plc - Details of New Bond Issue
On 9 October 2019, MeDirect Bank (Malta) plc published a formal notice in relation to the issuance of €35 million 4.00% subordinated unsecured bonds maturing between 2024 and 2029 but which may also be redeemed earlier subject to the prior approval of the ‘Joint Supervisory Team’ (“JST”). The salient details of the new bond issue in both EUR and GBP are as follows:
Coupon:
4.00%
Amount Offered:
€35 million (nominal)
Issue Price:
100% (par)
Interest Payment Date/s:
Annually on 5 November (with the first interest payment date being 5 November 2020)
Redemption Date:
5 November 2029
Early Redemption Dates (subject to the prior approval of the JST):
Any interest payment date falling in the years 2024 to 2028, and/or any date following a ‘regulatory change event’. The latter will be deemed to have occurred if, in terms of the ‘Capital Requirements Regulation’ (“CRR”), aspects of the CRR relating to the regulatory classification of the bonds are replaced or materially amended in respect of credit institutions by new capital regulations, the result of which is or would be likely to result in the bonds, in whole or in part, being excluded from own funds or otherwise reclassified as a lower quality form of own funds of the Bank. Nonetheless, a ‘regulatory change event’ will only be deemed to have occurred if the JST considers such a change in the regulatory classification of the bonds to be sufficiently certain; and if the Bank demonstrates to the satisfaction of the JST that the regulatory reclassification of the bonds was not reasonably foreseeable at the issue date.
Status:
The bonds are unsecured and subordinated. ‘Subordination’ means that the rights and claims of bondholders in respect of the payment of capital and interest on the bonds will, in the event of dissolution and winding up of the Bank, rank after the claims of all unsubordinated debt and will not be repaid until all other unsubordinated debt outstanding at the time has been settled.
The bonds constitute the general, direct, unconditional, subordinated and unsecured obligations of the Bank and will, at all times, rank equally and rateably without any priority or preference among themselves and with other subordinated unsecured debt. The bonds will rank subsequent to any other outstanding, unsubordinated and unsecured obligations of the Bank, present and future. The Bank may incur further borrowings or indebtedness and may create or permit to subsist other security interests upon the whole or any part of its present or future, undertaking, assets or revenues (including uncalled capital).
The bonds will also rank subsequent to any prior ranking security interest created for the purpose of securing the Bank’s secured interbank funding lines and repurchase agreements. Such interbank funding lines and repurchase agreements are used to finance the Bank’s investment portfolio.
Allocation Policy:
An aggregate amount of €25 million in the new bonds is available for subscription by bondholders of the existing 6% subordinated unsecured bonds 2019/24 in both EUR and GBP as at close of trading on 9 October 2019 (the “Existing Bondholders”) who may apply to transfer their existing bonds in exchange for the new bonds (the “Exchangeable Bond Transfer”) and may also apply for additional bonds. In the event that subscriptions by Existing Bondholders are less than €25 million, any amount of bonds not subscribed for will be available for subscription by virtue of an ‘Intermediaries’ Offer’.
An aggregate amount of €10 million in the new bonds is available for subscription through an ‘Intermediaries’ Offer’. In the event that subscriptions through the ‘Intermediaries’ Offer’ are less than €10 million, any amount of the new bonds not subscribed for will be available for subscription by the Existing Bondholders but limitedly insofar as the application for the excess amount only is concerned.
In the event that applications from the Existing Bondholders and those made through the ‘Intermediaries’ Offer’ exceed the total amount available for subscription (i.e. €35 million), the applications will be scaled down (subject to the minimum allocations of €25,000 or GBP20,000) in accordance with the allocation policy.
Use of Proceeds:
The net proceeds from the bonds, estimated at approximately €34.5 million after issuance costs, will be used by the Issuer as follows:
(i) €25 million to finance the early redemption of the existing 6% EUR and GBP subordinated unsecured bonds 2019/24 through an ‘exchangeable bond transfer’;
(ii) The remaining funds are earmarked to part-finance the redemption of the 7.5% subordinated bonds 2019 and/or for the general corporate funding purposes of the Group.
In the event that less than €25 million is raised, the ‘exchangeable bond transfer’ will not take place, and any funds received will be returned to the respective applicants. On the other hand, if subscribed for in full, the new bonds will result in a reduction of the Bank’s total outstanding debt whilst still respecting its Tier 2 regulatory capital requirements.
Offer Period:
Between 12:00 hours (noon) on 14 October 2019 and 12:00 hours (noon) on 23 October 2019, both days included.
Minimum Application:
€25,000 / GBP20,000, and in multiples of €1,000 / GBP1,000 thereafter.
Transferability:
€1,000 / GBP1,000, subject to the retention of a minimum holding of €25,000 / £20,000 throughout the entire duration of the bonds. The obligation to hold a minimum amount might give rise to the possibility that a bondholder would have to dispose of his/her entire holding in the bonds in order to liquidate some of his/her investment.
Listing:
Official List of the Malta Stock Exchange
Disclaimer:
The value of investments may increase as well as decrease and past performance is not an indication of future performance. Prospective investors are urged to read the Prospectus issued by MeDirect Bank (Malta) plc dated 7 October 2019 including the ‘Risk Factors’ which are found in Section 3 of the Registration Document on pages 9 to 18, and in Section 3 of the Securities Note on pages 9 to 12. Prospective investors are urged to consult an independent financial advisor for advice prior to investing in the bonds. Furthermore, the new bonds are complex instruments in view of their subordinated nature, the callability features and also since they are subject to the ‘Bank Recovery and Resolution Directive’ (“BRRD”). Accordingly, the bonds are only appropriate/suitable for those investors who have the necessary knowledge and experience to understand the risks attached to them.
Downloads:
MeDirect Bank (Malta) plc – Prospectus dated 7 October 2019
MeDirect Bank (Malta) plc – €35 million 4.00% Subordinated Unsecured Bonds 2024-2029 Fact Sheet
This webpage has been prepared based on the Prospectus dated 7 October 2019 issued by MeDirect Bank (Malta) plc and no representations or guarantees are made by Rizzo, Farrugia & Co. (Stockbrokers) Ltd with respect to the accuracy of the data. This webpage is for information purposes only. It is NOT intended to be and should NOT be construed as an offer or solicitation to acquire or dispose of any of the securities or issues mentioned herein. Rizzo, Farrugia & Co. (Stockbrokers) Ltd accepts NO responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this webpage.