Tuesday 15th May 2018
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NZX, New Zealand's securities market operator, plans to raise as much as $40 million via the sale of subordinated notes that mature in June 2033 to repay existing bank debt and for general corporate purposes.
The interest rate is to be set around May 17 and the offer will open on May 28, according to its product disclosure statement (PDS). Brokerage Forsyth Barr is the arranger and joint lead manager and has been appointed as a "facility agent" to operate a "retail liquidity support facility" which will ensure there is enough liquidity in the securities for small investors by allowing them to sell their notes on-market back to NZX.
NZX had to get a waiver from the New Zealand Markets Disciplinary Tribunal's Special Division to give it more flexibility in how it discloses details of purchases made via the facility. That will allow NZX to provide monthly disclosure notices rather than every time there is a transaction. Forsyth Barr will be restricted by the parameters of the facility to ensure buy orders don't exceed 20,000 notes at any time and that net purchases don't exceed 200,000 notes in a month.
The PDS says as well as repaying debt and providing general funding, the offer "will provide NZX with diversification of funding sources and extend the tenor of NZX’s debt." The offer is made up of a priority offer for $5 million to NZX shareholders and a general offer of up to $35 million open to members of the public. The priority offer will close on June 8 and the general offer on June 15. The notes would be quoted on the NZX on June 21.
In his cover letter in the PDS, NZX chair James Miller says the board's number one focus in 2017 was to reset the strategic direction of the company including ensuring NZX had an appropriate balance sheet. The notes offer will ensure it has a more appropriate balance sheet, he said.
NZX had a term loan of $20 million as at Dec. 31 and an undrawn banking facility of $10 million, according to its 2017 annual report.
The other issue was to implement a 'global standard' mutualised default fund to ensure its Clearing House could manage its risks as trading in dairy derivatives grows. Its recent investor roadshow said cash on the balance sheet of $34.9 million as at Dec. 31, 2017, included $20 million of Clearing House risk capital not available for general use.
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