Herbert Smith Freehills is pleased to be advising Commonwealth Bank of Australia (CBA) on its issue of CommBank PERLS VII Capital Notes and concurrent PERLS V Reinvestment Offer to raise approximately A$2 billion (with the ability to raise more or less) (Offer) announced on 18 August 2014.
CBA is one of Australia’s leading providers of integrated financial services including retail banking, premium banking, business banking, institutional banking, funds management, superannuation, insurance and investment and share broking products and services.
CommBank PERLS VII Capital Notes are subordinated, unsecured notes. The proceeds from the issue will raise Tier 1 Capital to satisfy CBA’s regulatory capital requirements and maintain the diversity of CBA’s sources and types of funding. The net proceeds of the Offer will be used to fund CBA’s business.
Herbert Smith Freehills’ capital markets team was led by partners Philippa Stone, Philip Hart, Patrick Lowden and executive counsel Lauren Magraith, with assistance from lawyers Lucy Hall, Thomas Cooper, Ben Robinson, Adrian Amer and Rowan Kellam.
Herbert Smith Freehills is working closely with CBA’s team, including Group Treasurer Paolo Tonucci, Head of Capital and Regulatory Strategy Tricia Ho-Hudson, Executive Manager of Capital and Regulatory Strategy Michael Davis and Head of Advisory and M&A Legal Mark Alexander.
Greenwoods & Freehills are advising CBA in relation to taxation.
The arrangers for the Offer are Commonwealth Bank of Australia (Capital Markets Division) (CBA Markets) and Morgan Stanley Australia Securities Limited (Morgan Stanley). The joint lead managers are CBA Markets, Morgan Stanley, Goldman Sachs Australia Pty Ltd, J.P. Morgan Australia Limited, Morgans Financial Limited, UBS AG, Australia Branch and Westpac Institutional Bank. The joint lead managers were advised by Ashurst.
Ms Stone said “We are delighted to be acting for our long-standing client, Commonwealth Bank of Australia, on its issue of CommBank PERLS VII Capital Notes. The Offer is expected to be the largest hybrid transaction undertaken this year and once again utilises the on-market buy-back structure pioneered by Herbert Smith Freehills for CBA’s PERLS IV 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 the joint lead managers on Westpac’s $1.31 billion offer of Capital Notes 2, Westpac’s $925 million Subordinated Notes II and $1.38 billion Capital Notes offers, 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) and for Colonial on its $1 billion offer of subordinated notes, for the joint lead managers on ANZ’s $1.3 billion Capital Notes 2 and $1.12 billion Capital Notes offers, Macquarie’s $580 million Capital Notes offer and NAB’s $1.51 billion CPS offer (each of which were Basel III compliant offerings), ANZ’s $1.5 billion offer of ANZ Subordinated Notes, AMP’s $325 million Subordinated Notes offer, 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.
