Bloomberg News

Woolworths Seeks to Raise A$500 Million From Hybrid Notes

October 17, 2011

(Updates with quote from statement in third paragraph.)

Oct. 18 (Bloomberg) -- Woolworths Ltd., Australia’s biggest retailer, is seeking to raise A$500 million ($509 million) in a sale of hybrid securities.

The unsecured subordinated notes due November 2036 will pay investors between 325 basis points and 350 basis points more than the bank bill swap rate, according to a stock exchange filing today. Standard & Poor’s is expected to treat some of the proceeds as equity until 2016, helping Sydney-based Woolworths to maintain its A- credit rating, according to the statement.

The sale “further optimizes our capital structure,” said Woolworths Finance Director Tom Pockett in the statement. “Woolworths is a solid cash flow generating business with a conservative balance sheet.”

Woolworths can choose to redeem the notes from November 2016, and will pay an additional 100 basis-point margin to investors from that date if it keeps the securities on issue, it said in the statement.

The retailer can only repay investors if it has sold shares or other securities that offer equity credit in the previous 12 months, according to the statement.

Hybrid notes blend debt and equity characteristics. National Australia Bank Ltd., JPMorgan Chase & Co. and UBS AG are managing the Woolworths sale.

--Editors: Edward Johnson, Malcolm Scott

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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