Russell McVeagh joins global firms in advising on US$3bn subordinated hybrid notes issue

Russell McVeagh has helped to advise Scentre Group on the issuance of US$3bn subordinated hybrid notes in the US market.

The firm said this is Scentre Group’s inaugural hybrid notes issuance, which “diversifies the company's sources of capital and is expected to be a long-term feature of the group's funding structure.”

The company, which oversees Westfield’s operations in Australia and New Zealand, said that the issue involves US$1.5bn 60-year, non-call 6-year subordinated notes with a coupon of 4.75% and US$1.5bn 60-year, non-call 10-year subordinated notes with a coupon of 5.125%.

“The hybrid notes have a 60-year maturity date and can be redeemed by the group at par with cash from the call date. The notes do not contain any equity conversion features,” Scentre Group said.

With the issuance, the company said it has adequate long-term liquidity to cover “all debt maturities to early 2024.”

“Following the issuance, the group will reduce its indebtedness including borrowings under the group’s revolving bank facilities,” Scentre Group said. “Subject to unforeseen circumstances, the group’s current intention is to make a distribution in early 2021 from surplus net operating cash flows during the period ending 31 December 2020.”

Russell McVeagh collaborated with global firms K&L Gates and Allen & Overy on the deal, which covered several jurisdictions. K&L Gates assisted on the Australian law aspects of the transaction, while Allen & Overy advised on the New York and English law aspects.

Russell McVeagh’s team was led by banking and finance partner John Powell, who was joined by special counsel Tim Stewart and associates Dan Zajac and Jessica Lewis.

Last month, the firm had successfully advised on another cross-border deal involving the return of AU$260m capital to the shareholders of Australasian renewable energy generator Tilt Renewables Limited.