Kiwibank to raise up to NZ$150 mln in tier 1 preference share capital issue

Kiwibank has announced plans to raise up to NZ$150 million of tier 1 capital through a perpetual callable non-cumulative preference share issue opening in early April. It has not set an interest rate yet. The preference share issue will be similar to tier 1 issues by other major banks in early 2008 when they wanted to raise tier 1 capital to help support lending growth. This avoids Kiwibank's parent NZ Post asking for a pure equity capital injection from the government at a time when the government is very reluctant to spend more. Kiwibank was careful to point out the preference shares did not include voting rights or the ability to convert into full ownership at a later date, which would have been a privatisation through the back-door. Here is the full statement below

A related company of Kiwibank, to be called Kiwi Capital Securities Limited, is considering making an offer of up to NZ$100 million perpetual callable non-cumulative preference shares, to be known as Kiwi Income Securities to the public (with the option to accept oversubscriptions of up to $50 million) and is seeking preliminary indications of interest. The proceeds from the issue of the shares are to be ultimately used to provide tier 1 capital to Kiwibank Limited. The shares are not shares in Kiwibank, but are shares in Kiwi Capital Securities. The shares will not entitle holders any voting rights in relation to Kiwibank, and only limited voting rights in relation to Kiwi Capital Securities. Kiwi Capital Securities’ ultimate parent company is New Zealand Post Limited. The shares will have no maturity date. However, the shares may be called on the fifth and tenth anniversary of their issue date and quarterly thereafter (and in certain other circumstances). The dividend rate applying to the shares will be fixed for the initial five years and then reset for subsequent 5 yearly periods at the margin plus the swap rate applying at the time. Dividends are scheduled to be paid on a quarterly basis. Dividends are non-cumulative. An announcement of the margin and the minimum dividend rate for the shares is expected to be made on or around the opening of the offer which is anticipated to be in early April 2010 with full details of the issue to be contained in an Investment Statement and the Prospectus.