Heritage issue $50 million ASX listed debt transaction

Heritage Building Society announced today that it had raised $50 million from the issue of 500,000 subordinated, unsecured debt securities that will be quoted on the ASX.

Heritage Notes are expected to commence trading on a deferred settlement basis on ASX at 12.00pm (Sydney time) on 26 October 2009 under the code “HBSHA”. It is expected that trading on ASX will commence on a normal settlement basis on 30 October 2009.

Heritage Notes are a new style of transaction for Australia’s largest building society.

Heritage CEO Mr John Minz said that the demand for Heritage notes was extremely strong with the Notes being more than three times oversubscribed.

“Today’s issue is a pleasing result and marks a milestone in the Society’s growth opportunities. The level of interest that we received demonstrates the strength of the investment offering for members and investors,” Mr Minz said.

“The investment opportunity, which has a ten year maturity (subject to early redemption), has received strong support from both wholesale and retail investors.

“The Notes will qualify as Lower Tier 2 capital in accordance with APRA’s prudential standards, therefore the additional $50 million in capital that has been raised via this transaction will form an integral element of Heritage’s ongoing capital management strategy and will ensure the Society retains its strong financial position.”

Heritage Chairman Mr Brian Carter said that this transaction signifies a new era for Heritage demonstrating a high level of innovation and sophistication and added flexibility in managing the Society’s capital mix.

“This transaction is not only a first for Heritage but the first ASX listed debt transaction by a mutual Authorised Deposit-taking Institution (ADI),” Mr Carter said.

“The subordinated debt does not mean that Heritage is de-mutualising nor is the organisation considering an equity listing on the ASX.”

”This is a significant milestone for the Society and it is exciting news for members and other investors who have taken the opportunity to invest in the transaction.”

“The Heritage Notes transaction demonstrates that there is plenty of retail investor confidence in Heritage and strong demand for this type of product even though the capital markets have been under pressure.”

The proceeds from the $50 million transaction will be used for general business purposes.

Allocation policy
Member Offer applicants Each valid application will receive full allocations up to the first $5,000. For applications above $5,000, each valid application will also receive 44.64% of the total application amount above $5,000.1
General Offer applicants Each valid application will receive allocations up to $5,000.
Broker Firm Offer applicants Broker firm allocations were determined in the bookbuild on 22 September 2009. Successful applicants under the Broker Firm Offer should consult with their Syndicate Broker to confirm their allocation.
Institutional Offer applicants Allocations to Institutional Offer applicants were determined in the bookbuild on 22 September 2009. Successful applicants under the Institutional Offer have been advised of their allocations.

1. Subject to rounding. An additional $100 was allocated to the largest Member applicant for rounding purposes.

CHESS allotment advices and issuer sponsored holding statements (Holding Statements), which contain the number of Heritage Notes issued to each successful applicant, will be mailed by 27 October 2009. Any refund cheques will also be mailed by this date.

Any holder wishing to trade Heritage Notes prior to receiving their Holding Statement is responsible for confirming their holding prior to trading to avoid the risk of selling Heritage Notes they do not own. Please contact your Syndicate Broker if you have received an allocation through the Broker Firm Offer or, if you have applied through the Member Offer or General Offer, you can call the Heritage Notes Information Line on 1300 022 174 (within Australia) or +61 3 9938 4344 (outside Australia), Monday to Friday, 9.00am to 5.00pm (Queensland time). Investors who sell their Heritage Notes before receiving their Holding Statement do so at their own risk.

The Heritage Notes offer was made under a prospectus dated 14 September 2009 (Prospectus). Unless otherwise noted, capitalised terms used in this notice have the meanings given to them in the Prospectus.

This release contains general information only and does not take into account the investment objectives, financial situation or particular needs of individual investors. Investors should obtain their own independent advice from a qualified financial adviser having regard to their own investment objectives, financial situation and needs.

The Joint Lead Managers for the transaction were UBS and Westpac, with FIIG Securities acting as Syndicate Broker.

* Based on a $150,000 loan over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.