Ad hoc: Deutsche Post AG launches convertible bond offering12/04/2012
Ad hoc notification pursuant to § 15 of the German Securities Trading Act (Wertpapierhandelsgesetz)
Not for publication or distribution in the United States, Australia, Canada or Japan.
Deutsche Post DHL plans further funding of pension obligations
- Issuance of up to EUR 2.0 billion via convertible bond and two conventional bonds
- Transaction expected to improve operating cash flow and have a positive impact on earnings
Deutsche Post DHL, the world’s leading mail and logistics group, is taking advantage of the favorable capital-market conditions currently available to companies with a strong credit quality to obtain long-term funding for a further portion of its pension obligations. The Group plans to use an array of financing instruments to secure funds of up to EUR 2.0 billion in total for this purpose. The capital raised will be used to almost double the plan assets available for the pensions paid to German employees. The company expects this step to improve its operating cash flow in coming years because a larger share of pension payments can be made from plan assets as well as from the returns generated by the investment of these funds. Furthermore, the Group expects to see a small positive effect on the Group’s financial result and its net income.
The convertible bond and the conventional bonds are expected to be issued today. The Group is using a combination of those instruments with different terms. Both the volume of the individual issues and the exact conditions will be based on market conditions. The Group launched an offer of an unsubordinated, unsecured convertible bond convertible into ordinary registered shares of Deutsche Post AG. The offering size will be up to EUR 1.0 billion, based on the initial conversion price convertible into c. 48 million ordinary registered shares of Deutsche Post AG.
The convertible bond, which will be offered only to institutional investors outside of the US by way of an accelerated bookbuilding, will have a maturity of seven years and will be issued and redeemed at 100% of their principal amount should it not be converted. The initial conversion price will be set at a conversion premium of 30% above the volume weighted average price of Deutsche Post AG's shares on XETRA during the bookbuilding period with a coupon range between 0.25% and 0.95%. The Group is using an authorization from the Annual General Meeting in 2011 to issue the convertible bond; subscription rights will be excluded. The convertible bond is callable by Deutsche Post AG after the first five years if the XETRA price of Deutsche Post AG's shares (over a certain period) exceeds 130% of the then applicable conversion price. Pricing is expected to be announced later today and settlement is expected to be on 6 December 2012.
In addition to the convertible bond, the company plans to issue two conventional bonds with terms of 8 years and 12 years, respectively. The two conventional bonds are planned to have a total volume of around EUR 1.0 billion.
The company currently has a Moody’s credit rating of Baa1. The outlook on the Moody’s rating was raised to “positive” at the end of September as a result of Deutsche Post DHL’s continued successful business performance and improvement in key credit metrics. In mid-November, Fitch Ratings issued the Group a BBB+ rating with a stable outlook as a result of the company’s financial stability and the exceptional position its four divisions maintain in the global logistics business as well as in the German mail and parcel market.
NOT FOR DISTRIBUTION OR RELEASE IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN, OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW
This ad-hoc announcement is for information purposes only and does not constitute or form part of, and should not be construed as an offer or an invitation to sell, or issue or the solicitation of any offer to buy or subscribe for, any securities. In connection with this transaction there has not been, nor will there be, any public offering of the Convertible Bonds and Euro Bonds (together the “Bonds”). No prospectus will be prepared in connection with the offering of the Bonds. The Bonds may not be offered to the public in any jurisdiction in circumstances which would require the Issuer of the Bonds to prepare or register any prospectus or offering document relating to the Bonds in such jurisdiction.
The distribution of this ad-hoc announcement and the offer and sale of the Bonds in certain jurisdictions may be restricted by law. Any persons reading this ad-hoc announcement should inform themselves of and observe any such restrictions.
This ad-hoc announcement does not constitute an offer to sell or a solicitation of an offer to purchase any securities in the United States. The securities referred to herein (including the Bonds and the shares of Deutsche Post AG to be delivered on conversion) have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or the laws of any state within the U.S., and may not be offered or sold in the United States, except in a transaction not subject to, or pursuant to an applicable exemption from, the registration requirements of the Securities Act or any state securities laws. This ad-hoc announcement and the information contained herein may not be distributed or sent into the United States, or in any other jurisdiction in which offers or sales of the securities described herein would be prohibited by applicable laws and should not be distributed to publications with a general circulation in the United States. The Bonds are being offered and sold outside the United States only in reliance on Regulation S under the Securities Act. No offering of the Bonds is being made in the United States.
In the United Kingdom, this ad-hoc announcement is only being distributed to and is only directed at (i) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and (ii) high net worth entities falling within Article 49(2) of the Order and (iii) persons to whom it would otherwise be lawful to distribute it (all such persons together being referred to as "relevant persons"). The Bonds are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Bonds will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this ad-hoc announcement or any of its contents.