Tender Offer

RNS Number : 9258T

Coventry Building Society

25 March 2019

 

NOT FOR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS), ANY STATE OF THE UNITED STATES OF AMERICA OR THE DISTRICT OF COLUMBIA (THE UNITED STATES) OR IN OR INTO ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS DOCUMENT.

Coventry Building Society announces Tender Offer in respect of its £400m Perpetual Contingent Convertible Additional Tier 1 Capital Securities (ISIN: XS1079786239) and proposed issue of new perpetual contingent convertible additional tier 1 capital securities

25 March 2019. Coventry Building Society (the Society) announces today an invitation to eligible holders of its outstanding £400,000,000 Perpetual Contingent Convertible Additional Tier 1 Capital Securities (ISIN: XS1079786239) (the Capital Securities) to tender any or all of their Capital Securities for purchase by the Society for cash, subject to satisfaction of the New Financing Condition (as defined below) (the Offer).

The Offer is being made on the terms and subject to the conditions contained in a tender offer memorandum dated 25 March 2019 (the Tender Offer Memorandum) prepared by the Society, and is subject to the offer restrictions set out below and as more fully described in the Tender Offer Memorandum.

Copies of the Tender Offer Memorandum are (subject to distribution restrictions) available from the Tender and Information Agent as set out below. Capitalised terms used in this announcement but not defined herein have the meanings given to them in the Tender Offer Memorandum.

Summary of the Offer

Description of the Capital Securities	ISIN / Common Code / Swiss Security No.	Outstanding Principal Amount*	Purchase Price	Amount subject to the Offer
Perpetual Contingent Convertible Additional Tier 1 Capital Securities	XS1079786239 / 107978623 / 24.732.035	£400,000,000	102.250 per cent.	Any and all

* The Offer has been considered by a Securityholder which has represented to the Society that it beneficially holds £235,896,000 in aggregate principal amount of the outstanding Capital Securities. Such Securityholder has committed to tender its entire holding of Capital Securities in the Offer on the terms set out in the Tender Offer Memorandum and to subscribe for at least 25 per cent. of the aggregate principal amount of New Capital Securities (as defined herein) to be issued, with a minimum allocation of not less than 25 per cent. of the aggregate principal amount of New Capital Securities.

Rationale for the Offer

The purpose of the Offer is to provide liquidity for investors in the Capital Securities and to manage the refinancing of the Society's additional tier 1 capital in conjunction with an issue of New Capital Securities (as defined below). The Society intends to consider future optional redemption rights in respect of the Capital Securities on an economic basis, considering current and future regulatory value, relative funding cost, rating agency considerations, regulatory developments and having regard to the prevailing circumstances at the relevant time.

Capital Securities purchased by the Society pursuant to the Offer are expected to be cancelled and will not be re-issued or re-sold.

Purchase Price and Accrued Interest

The Society will pay, for Capital Securities accepted for purchase pursuant to the Offer (and subject to satisfaction or waiver of the New Financing Condition), a cash purchase price equal to 102.250 per cent. of the principal amount of the relevant Capital Securities (the Purchase Price).

The Society will also pay an Accrued Interest Payment in respect of Capital Securities accepted for purchase pursuant to the Offer.

New Financing Condition

The Society announced on 25 March 2019 its intention to issue new sterling-denominated Perpetual Contingent Convertible Additional Tier 1 Capital Securities (the New Capital Securities). Whether the Society will accept for purchase any Capital Securities validly tendered in the Offer and complete the Offer is subject, without limitation, to the successful completion (in the sole determination of the Society) of the issue of the New Capital Securities (the New Financing Condition).

Allocation of the New Capital Securities

When considering allocation of the New Capital Securities, the Society may give preference to those Securityholders who, prior to such allocation, have validly tendered (or, if the New Issue Pricing Time occurs prior to the Expiration Deadline, have given a firm intention to the Society or any Dealer Manager that they intend to tender) their Capital Securities pursuant to the Offer. Therefore, a Securityholder who wishes to subscribe for New Capital Securities in addition to tendering its Capital Securities for purchase pursuant to the Offer may be eligible to receive, at the sole and absolute discretion of the Society, priority in the allocation of the New Capital Securities, subject to the issue of the New Capital Securities and such Securityholder making a separate application for the purchase of such New Capital Securities to a Dealer Manager (in its capacity as a joint lead manager of the issue of the New Capital Securities) or to any other joint lead manager of the issue of the New Capital Securities in accordance with the standard new issue procedures of such manager. However, the Society is not obliged to allocate the New Capital Securities to a Securityholder who has validly tendered or indicated a firm intention to tender the Capital Securities pursuant to the Offer and, if New Capital Securities are allocated, the nominal amount thereof may be less or more than the nominal amount of Capital Securities tendered by such holder and accepted by the Society pursuant to the Offer. Any such allocation will also, among other factors, take into account the minimum denomination of the New Capital Securities (being £200,000).

The Offer has been considered by a Securityholder (the Significant Investor) which has represented to the Society that it beneficially holds £235,896,000 in aggregate principal amount of the outstanding Capital Securities. The Significant Investor has committed to tender its entire holding of Capital Securities in the Offer on the terms set out in the Tender Offer Memorandum and to subscribe for at least 25 per cent. of the aggregate principal amount of New Capital Securities (as defined herein) to be issued, with a minimum allocation of not less than 25 per cent. of the aggregate principal amount of New Capital Securities.

The Society expects to allocate at least 25 per cent. of the aggregate principal amount of New Capital Securities to the Significant Investor. All other allocations of the New Capital Securities (including any further allocations above 25 per cent. to the Significant Investor, if any), while being considered by the Society as set out above, will be made in accordance with customary new issue allocation processes and procedures. In the event that a Securityholder validly tenders Capital Securities pursuant to the Offer, such Capital Securities will remain subject to such tender and the conditions of the Offer as set out in this announcement and the Tender Offer Memorandum irrespective of whether that Securityholder receives all, part or none of any allocation of New Capital Securities for which it has applied.

Tender Instructions

In order to participate in, and be eligible to receive the Purchase Price and the Accrued Interest Payment pursuant to, the Offer, Securityholders must validly tender their Capital Securities for purchase by delivering, or arranging to have delivered on their behalf, a valid Tender Instruction that is received by the Tender and Information Agent by 4.00 p.m. (London time) on 1 April 2019 (unless extended, re-opened, amended and/or terminated as provided in the Tender Offer Memorandum) (the Expiration Deadline). 

Tender Instructions will be irrevocable except in the limited circumstances described in "Amendment and Termination" in the Tender Offer Memorandum.

Tender Instructions must be submitted in respect of a minimum principal amount of Capital Securities of no less than £200,000, being the minimum denomination of the Capital Securities, and may be submitted in integral multiples of £1,000 thereafter.

Indicative timetable for the Offer

The following sets out the expected times and dates of the key events relating to the Offer. The times and dates below are indicative only and subject to change.

Events	Times and Dates (All times are London time)
Commencement of the Offer Announcement of Offer. Tender Offer Memorandum available from the Tender and Information Agent. Commencement of the tender offer period.	25 March 2019
Expiration Deadline* Final deadline for receipt of valid Tender Instructions by the Tender and Information Agent in order for Securityholders to be able to participate in the Offer.	4.00 p.m. on 1 April 2019
Announcement of Results Announcement of whether the Society will accept (subject to satisfaction or waiver of the New Financing Condition on or prior to the Settlement Date) valid tenders of Capital Securities for purchase pursuant to the Offer and, if so accepted, the aggregate principal amount of the Capital Securities accepted for purchase.	At or around 10.00 a.m. on 2 April 2019
Settlement Date Subject to satisfaction or waiver of the New Financing Condition on or prior to such date, expected Settlement Date for the Offer.	5 April 2019

____

* Securityholders should note that the New Issue Pricing Time may fall prior to or after the Expiration Deadline.

The Society may, in its sole discretion, extend, re-open, amend, waive any condition of or terminate the Offer at any time (subject to applicable law and as provided in the Tender Offer Memorandum) and the above times and dates are subject to the right of the Society to so extend, re-open, amend and/or terminate the Offer.

Securityholders are advised to check with any bank, securities broker or other intermediary through which they hold Capital Securities when such intermediary would need to receive instructions from a Securityholder in order for that Securityholder to be able to participate in, or (in the limited circumstances in which revocation is permitted) revoke their instruction to participate in, the Offer before the deadlines specified in this announcement and the Tender Offer Memorandum.  The deadlines set by any such intermediary and each Clearing System for the submission of Tender Instructions will be earlier than the relevant deadlines specified above. 

Announcements 

Unless stated otherwise, announcements in connection with the Offer will be made by the Society by (i) publication through RNS; (ii) the delivery of notices to the Clearing Systems for communication to Direct Participants; and (iii) the delivery of notices and announcements to SIX Swiss Exchange. Such announcements may also be made (a) on the relevant Reuters Insider Screen and/or (b) by the issue of a press release to a Notifying News Service. Copies of all such announcements, press releases and notices can also be obtained upon request from the Tender and Information Agent, the contact details for which are set out below.  Significant delays may be experienced where notices are delivered to the Clearing Systems and Securityholders are urged to contact the Tender and Information Agent for the relevant announcements during the course of the Offer.  In addition, Securityholders may contact the Dealer Managers for information using the contact details below.

Securityholders are advised to read carefully the Tender Offer Memorandum for full details of, and information on the procedures for, participating in the Offer.

Further information

Questions and requests for assistance in connection with (i) the Offer may be directed to the Dealer Managers, and (ii) the delivery of Tender Instructions may be directed to the Tender and Information Agent, the contact details for which are set out below:

DEALER MANAGERS Barclays Bank PLC 5 The North Colonnade Canary Wharf London E14 4BB United Kingdom Telephone: [phone] Attention:  Liability Management Group Email: [e-mail] HSBC Bank plc 8 Canada Square London E14 5HQ United Kingdom Telephone: [phone] Attention: Liability Management Group Email: [e-mail] Merrill Lynch International 2 King Edward Street London EC1A 1HQ United Kingdom Telephone: [phone] Attention: Liability Management Group Email: [e-mail] NatWest Markets Plc 250 Bishopsgate London EC2M 4AA United Kingdom Telephone: [phone] Attention: Liability Management Email: [e-mail]

TENDER AND INFORMATION AGENT

Lucid Issuer Services Limited Tankerton Works 12 Argyle Walk London WC1H 8HA United Kingdom Telephone: [phone] Attention: Arlind Bytyqi Email: [e-mail]

MARKET ABUSE REGULATION

This announcement is released by Coventry Building Society and contains information that qualified or may have qualified as inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), encompassing information relating to the Offer and proposed new issue of capital securities described above. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Michele Faull, Chief Financial Officer of Coventry Building Society.

DISCLAIMER This announcement must be read in conjunction with the Tender Offer Memorandum. This announcement and the Tender Offer Memorandum contain important information which should be read carefully before any decision is made with respect to the Offer.  If any Securityholder is in any doubt as to the contents of the Tender Offer Memorandum or the action it should take, it is recommended to seek its own financial and legal advice, including in respect of any tax consequences, from its broker, bank manager, solicitor, accountant or other independent financial, tax or legal adviser. Any individual or company whose Capital Securities are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee must contact such entity if it wishes to tender such Capital Securities pursuant to the Offer. None of the Society, the Dealer Managers or the Tender and Information Agent or any of their respective directors, employees or affiliates has made or will make any assessment of the merits and risks of the Offer or of the impact of the Offer on the interests of Securityholders either as a class or individuals, and none of them makes any recommendation whether Securityholders should tender Capital Securities pursuant to the Offer. None of the Society, the Dealer Managers or the Tender and Information Agent (or any of their respective directors, officers, employees, agents, advisers or affiliates) is providing Securityholders with any legal, business, tax, financial, investment, accounting or other advice in this announcement and/or the Tender Offer Memorandum and/or in connection with the Offer. Securityholders should consult with their own advisers as they consider appropriate to assist them in taking decisions with respect to the Offer, including to determine whether they are legally permitted to tender Capital Securities pursuant to the Offer. 

OFFER AND DISTRIBUTION RESTRICTIONS

This announcement and the Tender Offer Memorandum do not constitute an invitation to participate in the Offer in any jurisdiction in which, or to any person to or from whom, it is unlawful to make such invitation or for there to be such participation under applicable securities laws. The distribution of this announcement and the Tender Offer Memorandum in certain jurisdictions may be restricted by law.  Persons into whose possession this announcement and the Tender Offer Memorandum comes are required by each of the Society, the Dealer Managers and the Tender and Information Agent to inform themselves about, and to observe, any such restrictions.

United States: The Offer is not being made, and will not be made, directly or indirectly in or into, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of, or of any facilities of a national securities exchange of, the United States.  This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone, the internet and other forms of electronic communication. The Capital Securities may not be tendered in the Offer by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States. Accordingly, copies of this announcement and the Tender Offer Memorandum and any other documents or materials relating to the Offer are not being, and must not be, directly or indirectly mailed or otherwise transmitted, distributed or forwarded (including, without limitation, by custodians, nominees or trustees) in or into the United States or to any persons located or resident in the United States. Any purported tender of Capital Securities in the Offer resulting directly or indirectly from a violation of these restrictions will be invalid and any purported tender of Capital Securities made by, or by any person acting for the account or benefit of, a person located in the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal giving instructions from within the United States will be invalid and will not be accepted.

Neither this announcement nor the Tender Offer Memorandum is an offer to buy or sell, or a solicitation of an offer to sell or buy, any Capital Securities or other securities in the United States. Securities may not be offered or sold in the United States absent registration under, or an exemption from the registration requirements of, the Securities Act. The New Capital Securities have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold or delivered, directly or indirectly, in the United States or to, or for the account or benefit of, any U.S. person (as defined in Regulation S of the Securities Act).

Each holder of Capital Securities participating in the Offer will represent that it is not located in the United States and it is not participating in the Offer from the United States, or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in the Offer from the United States. For the purposes of this and the above two paragraphs, United States means the United States of America, its territories and possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands), any state of the United States of America and the District of Columbia.

Italy: None of the Offer, this announcement and the Tender Offer Memorandum or any other documents or materials relating to the Offer has been or will be submitted to the clearance procedures of the Commissione Nazionale per le Società e la Borsa (CONSOB) pursuant to Italian laws and regulations.  The Offer is being carried out in the Republic of Italy (Italy) as an exempted offer pursuant to article 101-bis, paragraph 3-bis of the Legislative Decree No. 58 of 24 February 1998, as amended (the Financial Services Act) and article 35-bis, paragraph 4 of CONSOB Regulation No. 11971 of 14 May 1999, as amended. Securityholders or beneficial owners of the Capital Securities that are located in Italy may tender their Capital Securities in the Offer through authorised persons (such as investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with the Financial Services Act, CONSOB Regulation No. 20307 of 13 February 2018, as amended from time to time, and Legislative Decree No. 385 of 1 September 1993, as amended) and in compliance with applicable laws and regulations or with requirements imposed by CONSOB or any other Italian authority.

Each intermediary must comply with the applicable laws and regulations concerning information duties vis-à-vis its clients in connection with the Capital Securities and/or the Offer.

United Kingdom: This announcement and the Tender Offer Memorandum have been issued by Coventry Building Society of Economic House, PO Box 9, High Street, Coventry, CV1 5QN, United Kingdom, which is authorised by the Prudential Regulation Authority (the PRA) and regulated by the PRA and the Financial Conduct Authority (the FCA). This announcement is directed, and the Tender Offer Memorandum is being distributed, only to existing holders of the Capital Securities, and is only addressed to such existing holders in the United Kingdom where they would (if they were clients of the Society) be per se professional clients or per se eligible counterparties of the Society within the meaning of the FCA rules. Neither this announcement nor the Tender Offer Memorandum is addressed to or directed at any persons who would be retail clients within the meaning of the FCA rules and any such persons should not act or rely on it. Recipients of this announcement and the Tender Offer Memorandum should note that the Society is acting on its own account in relation to the Offer and will not be responsible to any other person for providing the protections which would be afforded to clients of the Society or for providing advice in relation to the Offer.

In addition, the communication of this announcement and the Tender Offer Memorandum and any other documents or materials relating to the Offer is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000, as amended. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to, and may only be acted upon by, those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Financial Promotion Order)) or persons who are within Article 43 of the Financial Promotion Order or any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order (together, relevant persons). Any investment or investment activity to which this announcement and the Tender Offer Memorandum relates is available only to relevant persons and will be engaged in only with relevant persons (and is subject to other restrictions referred to in the Financial Promotion Order).

France: The Offer is not being made, directly or indirectly, to the public in the Republic of France (France).  Neither this announcement nor the Tender Offer Memorandum nor any other document or material relating to the Offer has been or shall be distributed to the public in France and only (i) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and/or (ii) qualified investors (investisseurs qualifiés), other than individuals, acting for their own account, all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code monétaire et financier, are eligible to participate in the Offer.  Neither this announcement nor the Tender Offer Memorandum has been nor will they be submitted for clearance to nor approved by the Autorité des Marchés Financiers.

Belgium: Neither this announcement nor the Tender Offer Memorandum nor any other documents or materials relating to the Offer have been submitted to or will be submitted for approval or recognition to the Belgian Financial Services and Markets Authority (Autoriteit voor financiële diensten en markten / Autorité des services et marchés financiers) and, accordingly, the Offer may not be made in Belgium by way of a public offering, as defined in Articles 3 and 6 of the Belgian Law of 1 April 2007 on public takeover bids as amended or replaced from time to time. Accordingly, the Offer may not be advertised and the Offer will not be extended, and neither this announcement nor the Tender Offer Memorandum nor any other documents or materials relating to the Offer (including any memorandum, information circular, brochure or any similar documents) has been or shall be distributed or made available, directly or indirectly, to any person in Belgium other than "qualified investors" in the sense of Article 10 of the Belgian Law of 16 June 2006 on the public offer of placement instruments and the admission to trading of placement instruments on regulated markets, acting on their own account. Insofar as Belgium is concerned, this announcement and the Tender Offer Memorandum have been issued only for the personal use of the above qualified investors and exclusively for the purpose of the Offer. Accordingly, the information contained in this announcement and the Tender Offer Memorandum may not be used for any other purpose or disclosed to any other person in Belgium.

General: Neither this announcement nor the Tender Offer Memorandum constitutes an offer to buy or the solicitation of an offer to sell Capital Securities (and tenders of Capital Securities in the Offer will not be accepted from Securityholders) in any circumstances in which such offer or solicitation is unlawful.  In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer and any Dealer Manager or any of their respective affiliates is such a licensed broker or dealer in any such jurisdiction, the Offer shall be deemed to be made by such Dealer Manager or such affiliate, as the case may be, on behalf of the Society in such jurisdiction.

New Capital Securities: Any investment decision to purchase any New Capital Securities should be made solely on the basis of the information contained in the offering circular prepared in connection with the issue and listing of the New Capital Securities (the Offering Circular), and no reliance is to be placed on any representations other than those contained in the Offering Circular. Subject to compliance with all applicable securities laws and regulations, the Offering Circular is expected to be available from the joint lead managers for the new issue on request. The New Capital Securities are not being, and will not be, offered or sold in the United States. Securities may not be offered, sold or delivered in the United States absent registration under, or an exemption from the registration requirements of, the United States Securities Act of 1933, as amended (the Securities Act).  The New Capital Securities have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered, sold or delivered, directly or indirectly, within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act).

Compliance information for the New Capital Securities: MiFID II product governance - eligible counterparties and professional clients only (all distribution channels). PRIIPs Regulation / FCA CoCo restriction - no sales to EEA retail investors; no key information document has been or will be prepared.

 

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