Hit notes issuance ‘exciting development for Australian corporate debt capital market’

Global firms’ experts act as AUS$325m and US$425m notes are issued in a rare prospectus notes offering

Hit notes issuance ‘exciting development for Australian corporate debt capital market’

Herbert Smith Freehills (HSF) experts advised on a hit notes issuance by one of Australia’s largest airline groups.

The firm advised Virgin Australia Holdings on its concurrent issues of concurrent issues of Australian dollar-denominated unsecured notes listed on ASX and US dollar-denominated unsecured notes to institutional investors in the US and other jurisdictions.

The Australian denominated-notes were expected to raise about $325m, bumped up from a previous $150m target due to what Virgin Australia said was strong support from investors. The US dollar-denominated notes raised US$425m.

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The notes form part of the funding for Virgin Australia’s acquisition of the approximately 35% stake in its Velocity loyalty program from Affinity Equity Partners. Virgin Australia sold the stake to the private equity investor in 2014. HSF said that surplus money raised will be used for general corporate purposes.

Partners Patrick Lowden and Philippa Stone headed the HSF team, which included partner John Angus, executive counsel Vinh Huynh, and senior associates Steven Catanzariti and Peter Ip. Solicitors Michael Burrell, Jennie Bian, Shananne Joyce, Luca Credentino, and Jennifer Catterson, as well as graduate Katherine Duong, also supported the team.

“The offers mark an exciting development for Australian corporate debt capital markets, demonstrating investor support in a market traditionally dominated by investment grade issuers,” Lowden said.

Stone said that the transactions are an important milestone for Virgin Australia and wished the company well on its acquisition of Velocity. “We are also delighted to be involved in the first prospectus notes offering for some time, diversifying investment opportunities for retail investors,” she said.

UBS Australia was the arranger of the Australian dollar-denominated issuance. Morgan Stanley, Morgans Financial, Ord Minnett and UBS Australia were joint lead managers.

The US dollar-denominated notes issuance had Morgan Stanley, The Hongkong and Shanghai Banking Corporation and UBS Securities as joint lead managers.

HSF recently advised the joint lead managers of Macquarie Group’s recent $1bn placement to institutional investors. That deal comes after the global giant advised Macquarie Group on a $750m capital notes issuance. In both transactions, the team was headed by Stone.

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