National Australia Bank (“NAB”) announced this morning its intention to raise $750 million (with the ability to raise more or less) through the issue of NAB Capital Notes 2. NAB is issuing the Notes to raise regulatory capital which will qualify as Additional Tier 1 Capital.

Please find below a brief summary of the terms of the Offer. The Notes are subject to investment risk and investors should consider the Prospectus (including the Investment Risks set out in Section 6) and any updates to the Prospectus before making any decision about whether to acquire or hold the Notes. **We have attached the term sheet and investor presentation – if you would like to view the full prospectus, please let us know and we will send you a copy.**

Key features of NAB Capital Notes 2

Detail Description
Issue Price $100
Issuer National Australia Bank
Distributions NAB Capital Notes 2 are expected to pay a discretionary, quarterly, floating rate, non-cumulative Distribution. The Distribution Rate is equal to the sum of the Bank Bill Rate and a Margin, which is adjusted for NAB’s Tax Rate1 to reflect franking credits attached to each Distribution (subject to availability)2. Distributions are expected to be fully franked.

The Margin is expected to be in the range of 4.95% to 5.10% per annum and will be determined under the Book-build.

Term Perpetual with no fixed maturity date. However, Notes may be Converted, Redeemed or Transferred as outlined below.
Scheduled Conversion NAB Capital Notes 2 will mandatorily Convert into Ordinary Shares on 8 July 2024 or if an Acquisition Event occurs, provided certain conditions are met.
Optional Conversion/Redemption/Resale With the prior written approval of the Australian Prudential Regulation Authority (APRA), NAB may elect to Convert, Redeem or Resell NAB Capital Notes 2 on 7 July 2022, or on the occurrence of particular events, provided certain conditions are met.

NAB must immediately Convert NAB Capital Notes 2 into Ordinary Shares if a Loss Absorption Event occurs. A Loss Absorption Event may occur where NAB encounters severe financial difficulty. Depending on the market price of Ordinary Shares at that time, a Conversion in those circumstances is likely to result in Holders receiving Ordinary Shares that are worth significantly less than the Issue Price for each NAB Capital Note 2 they hold.

Holders’ right to request early Conversion/ Redemption/Resale Holders of NAB Capital Notes 2 will have no right to request that NAB Capital Notes 2 be redeemed. Without a Conversion, Redemption or Resale, Holders would have to sell their NAB Capital Notes 2 on the ASX at the prevailing market price.
Ranking In a winding-up of NAB, NAB Capital Notes 2 rank ahead of Ordinary Shares, equally and without preference amongst themselves and Equal Ranking Instruments, and junior to creditors of NAB, including depositors – though the amount of any return in a winding-up will be adversely affected if a Loss Absorption Event has occurred.
Risks NAB Capital Notes 2 are subject to risks which could affect their performance, including Distribution Rate risk and market price fluctuations. Information about the key risks of investing in NAB Capital Notes 2 is set out in the Prospectus.

Key dates for the Offer

Details Date
Record date for Security holder Offer 26 May 2016
Announcement of Offer and lodgement of the Prospectus with ASIC 31 May 2016
Book-build 7 June 2016
Announcement of the Margin 8 June 2016
Offer opens 8 June 2016
Security holder Offer closes 30 June 2016
Broker Firm and Institutional Offer closes 6 July 2016
Issue Date of NAB Capital Notes 2 7 July 2016
Commencement of deferred settlement trading 8 July 2016
Holding Statements dispatched 8 July 2016
Commencement of normal settlement trading 12 July 2016
First Distribution Payment Date 7 October 2016
Optional Conversion/Redemption/Resale date3 7 July 2022
Mandatory Conversion date4 8 July 2024

If you would like to place a bid in the Broker Firm Offer please contact us ASAP to place your bid. Bids will need to be received by 10am Monday 6 June 2016 (unless offer is closed early).

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