DBS Group starts tender offer for S$800 million 4.7% preference shares

By Toni Weeks

San Luis Obispo, Calif., Nov. 7 - DBS Group Holdings Ltd. began a tender offer on Nov. 7 for S$800 million of its S$1.7 billion of 4.7% non-cumulative non-convertible non-voting class N preference shares callable in 2020 issued by DBS Bank Ltd., according to a company notice.

Holders who tender their preference shares will receive Singapore dollar-denominated non-cumulative non-convertible perpetual capital securities first callable in 2019 issued by DBS Bank.

The capital securities will have an initial distribution rate of between 4.7% and 4.9% and will be issued in a principal amount equal to the liquidation preference of the existing class N preference shares accepted for purchase.

DBS will also pay accrued dividends.

Shares must be tendered in liquidation preference of S$250,000 and integral multiples thereof. Holders who tender their existing preference shares must declare the minimum initial distribution rate per year that they are willing to accept. The options are 4.7%, 4.75%, 4.8%, 4.85% and 4.9%. A holder may opt for a different minimum initial distribution rate for each S$250,000 of shares tendered.

The company will accept tenders with the lowest minimum initial distribution rate until the maximum acceptance amount is reached. If the company receives tenders in excess of the cap, tenders with a lower minimum initial distribution rate will have priority.

Pricing will be set on Nov. 25 or Nov. 26, with the results of the tender offer announced as soon as practicable after pricing.

The tender offer expires at 4 a.m. ET on Nov. 21. Settlement is expected Dec. 3.

DBS is undertaking the tender offer because the capital securities are expected to qualify in full as tier-1 capital, whereas the existing preference shares are only recognized as tier-1 capital in an amount equal to 90% of all such instruments outstanding on Jan. 1, 2013, with the percentage declining by 10% each subsequent year until it reaches zero.

DBS Bank is the lead dealer manager for the tender offer. Co-managers are Barclays Bank plc, Singapore Branch and Deutsche Bank AG, Singapore Branch.

The tender agent is Deutsche Bank AG, Singapore Branch (65 6423 8232 / 5970 / 6440 / 5982 or sg.tenderoffer@list.db.com).

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