Indicative Interest Margin for Bond Offer

channelnz.com


NZX RELEASE

6 May 2022

Channel Infrastructure announces indicative issue margin for
unsecured, unsubordinated, fixed rate bond offer
Further to the announcement by Channel Infrastructure NZ Limited ("Channel Infrastructure") of an offer of
up to $100 million (with the ability to accept over subscriptions of up to an additional $25 million at Channel
Infrastructure’s discretion) of 5 year, unsecured, unsubordinated, fixed rate bonds maturing on 20 May 2027
("Bonds"), Channel Infrastructure today announced the indicative issue margin and minimum interest rate to
be used in setting the interest rate to apply to the Bonds.

The offer opens today (Friday, 6 May 2022) and is expected to close on Friday, 13 May 2022 at 11am (New
Zealand time).

The interest rate will be set as the sum of the underlying swap rate plus the issue margin, subject to a
minimum interest rate of 5.80% per annum. The indicative issue margin range has been set at 1.80% to
2.10% per annum.

An announcement of the interest rate for the Bonds will be made following a bookbuild process, which is
expected to be completed on or about 13 May 2022.

There is no public pool for the Bonds, with all of the Bonds under the Offer being reserved for clients of the
joint lead managers, and other approved financial intermediaries.

This offer is being made in accordance with the Financial Markets Conduct Act 2013 and the Bonds are
expected to be quoted on the NZX Debt Market.

Further details of the offer are contained in the product disclosure statement (“PDS”) for the Bonds. The PDS
is available through www.channelnz.com/investor-centre/bonds or by contacting a joint lead manager or your
usual financial advice provider and must be obtained by investors before they decide to acquire any Bonds.

channelnz.com
For further information please contact:

Joint Arranger and Joint Lead Manager
Bank of New Zealand




Phone: 0800 284 017

Joint Arranger and Joint Lead Manager
Forsyth Barr




Phone: 0800 367 227

Joint Lead Manager
Jarden Securities Limited



Phone: 0800 005 678

- ENDS -
Authorised by:
Chris Bougen
General Counsel and Company Secretary
Investor Relations contact:
Anna Bonney
investorrelations@channelnz.com

Media contact:
Laura Malcolm
communications@channelnz.com
+64 21 02363 297

channelnz.com

About Channel Infrastructure NZ
Channel Infrastructure is New Zealand’s leading fuel infrastructure company.
Channel Infrastructure owns critical infrastructure, supplying the Northland and Auckland markets, which
make up 40% of New Zealand’s fuel demand and all of the jet fuel to the Auckland International Airport.
Utilising the deep-water harbour and jetty infrastructure at Marsden Point, as well as 280 million litres of
storage tanks, and the 170-kilometre pipeline from Marsden Point to Auckland we receive, store, test and
distribute fuel owned by our customers. Channel Infrastructure’s wholly-owned subsidiary, Independent
Petroleum Laboratories, provides fuel quality testing services at Marsden Point and around New Zealand.
Channel Infrastructure is well positioned to support New Zealand’s changing future fuel needs, with growth
opportunities at the Marsden Point site including additional fuel storage to support fuel security, renewable
electricity supply through the Maranga Ra solar project, and work underway with customers and partners on
biofuel and hydrogen opportunities.
For more information on Channel Infrastructure, please visit: www.channelnz.com

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Indicative
Terms
Sheet
Unsecured, unsubordinated,
fixed rate 5 year bonds
6 May 2022
Joint Lead Managers

Indicative terms sheet for an offer of up to NZ$100,000,000 (with the ability
to accept oversubscriptions of up to an additional NZ$25,000,000 at
Channel Infrastructure’s discretion) of unsecured, unsubordinated, fixed
rate bonds.
This indicative terms sheet (“Terms Sheet”) should be read together with the product disclosure statement (“PDS”)
dated 28 April 2022 for the offer of unsecured, unsubordinated, fixed rate bonds (“Bonds”) by Channel Infrastructure NZ
Limited (“Offer”). The PDS is available at www.business.govt.nz/disclose and can also be obtained from the Joint Lead
Managers or your usual financial advice provider. Investors must obtain and read a copy of the PDS before they apply
for any Bonds.
Capitalised terms used but not defined in this Terms Sheet have the meaning given to them in the PDS.
IssuerChannel Infrastructure NZ Limited (“Channel Infrastructure”).
Description of
the Bonds
Unsecured, unsubordinated, fixed rate bonds.
Offer amountUp to $100 million (with the ability to accept oversubscriptions of up to an additional
$25 million at Channel Infrastructure’s discretion).
Term5 years maturing on 20 May 2027.
Opening DateFriday, 6 May 2022.
Closing Date11:00am on Friday, 13 May 2022.
Rate Set DateFriday, 13 May 2022.
Issue DateFriday, 20 May 2022.
Maturity DateThursday, 20 May 2027.
Issue price $1.00 per Bond, being the Principal Amount of each Bond.
Purpose of the OfferThe net proceeds of the Offer are to be applied towards repaying a portion of Channel
Infrastructure’s existing bank debt and will also provide diversification of funding that
aligns with an infrastructure business.
Who may apply
for Bonds
The Offer is open to investors resident in New Zealand and institutional investors.
There is no public pool for the Bonds.
All Bonds (including any oversubscriptions) have been reserved for subscription by clients
of the Joint Lead Managers, Primary Market Participants and other approved financial
intermediaries invited to participate in a bookbuild conducted by the Joint Lead Managers.
Channel Infrastructure NZ Limited | Indicative Terms Sheet2

SecurityThe Bonds are not secured against any assets of Channel Infrastructure or the Channel
Infrastructure Group.
Guarantee The Bonds will be guaranteed by the Guarantors under the Negative Pledge Deed. As at
the date of this Terms Sheet, Channel Terminal Services Limited is the only Guarantor.
Under the Negative Pledge Deed, Channel Infrastructure has agreed that:
(a) at all times the Total Tangible Assets of the Guaranteeing Group will not be less than
85% of the Total Tangible Assets of the consolidated Channel Infrastructure Group; and
(b) on each test date, EBITDA of the Guaranteeing Group will not be less than 85% of
EBITDA of the consolidated Channel Infrastructure Group.
Ranking of the BondsOn a liquidation of Channel Infrastructure, each Bond will rank as unsecured and
unsubordinated debt obligations of Channel Infrastructure, ranking:
• behind any secured liabilities and liabilities which are preferred by law;
• equally with other Bonds and equally among the rights and claims of equal ranking
obligations including the lenders of Channel Infrastructure’s bank debt and all other
unsecured, unsubordinated obligations, including trade creditors; and
• ahead of holders of subordinated debt (including the Subordinated Notes) and ahead
of Shareholders.
Interest RateThe Bonds will pay a fixed rate of interest until the Maturity Date.
The Interest Rate will be determined by Channel Infrastructure in conjunction with the
Joint Lead Managers following the bookbuild and set at the sum of the Swap Rate and
the Issue Margin or, if greater, the minimum Interest Rate of 5.80% per annum.
The Interest Rate will be announced by Channel Infrastructure via NZX on or about the
Rate Set Date.
Indicative Issue MarginThe indicative Issue Margin range is 1.80% to 2.10% per annum.
The Issue Margin (which may be above or below the indicative Issue Margin) will be
announced via the NZX on or about the Rate Set Date.
Swap RateThe mid-market swap rate of a term matching the period from the Issue Date to the
Maturity Date, as calculated by Channel Infrastructure in conjunction with the Joint
Lead Managers, according to market convention, with reference to Bloomberg page
‘ICNZ4’ (or any successor page) on the Rate Set Date and expressed on a quarterly basis
(rounded to 2 decimal places, if necessary, with 0.005 rounded up).
Interest Payment
Dates
Interest shall be paid quarterly in arrear in equal amounts on 20 February, 20 May,
20 August and 20 November in each year, (or if that day is not a Business Day, the next
Business Day) until and including the Maturity Date, with the First Interest Payment Date
being 20 August 2022 (with payment on 22 August 2022, being the first Business Day
following the First Interest Payment Date).
Record dateThe record date for each Interest Payment Date is 5.00pm on the date that is 10 Business
Days before the relevant Interest Payment Date. If the record date falls on a day which is
not a Business Day, the record date will be the immediately preceding Business Day.
Business DayA day (other than Saturday or Sunday) on which registered banks are generally open
for business in Auckland and Wellington, except that in the context of the Listing Rules it
means a day on which the NZX Debt Market is open for trading.
Channel Infrastructure NZ Limited | Indicative Terms Sheet3

Financial covenantsThe Supplemental Trust Deed contains the following financial covenants:
(a) the ratio of EBITDA of the consolidated Channel Infrastructure Group to Net Interest
Expense of the consolidated Channel Infrastructure Group (calculated for the 12
month period ending on each relevant test date) will not be less than 2.5:1 on two
successive semi-annual test dates (the “Interest Cover Ratio”); and
(b) Net Debt of the consolidated Channel Infrastructure Group to Net Debt plus Equity
does not at any time exceed 60% (“Gearing Ratio”).
The first test date for the financial covenants is 31 December 2022.
Negative pledgeThe Negative Pledge Deed contains a negative pledge which provides that Channel
Infrastructure and each Guarantor will not create or permit to subsist any security over
their assets other than certain permitted security interests which are described in the
Negative Pledge Deed. Channel Infrastructure and each Guarantor may, in addition,
from time to time create or permit to subsist other security interests over their assets
provided that the aggregate principal amount secured by all such other security
interests does not exceed 7.5% of the Total Tangible Assets of the consolidated Channel
Infrastructure Group.
Early redemptionBondholders have no right to require Channel Infrastructure to redeem the Bonds prior to
the Maturity Date. However, Channel Infrastructure may be required to repay the Bonds
early if there is an Event of Default (as described in the PDS and the Supplemental Trust
Deed). The Events of Default are:
• failure by Channel Infrastructure or a Guarantor to make a payment under a
Transaction Document (which includes failure to make payment under the Bonds),
subject to certain grace periods;
• failure to comply with the Interest Cover Ratio or failure to comply with the Gearing
Ratio;
• any material misrepresentation by Channel Infrastructure or a Guarantor under a
Transaction Document, subject to certain grace periods;
• a breach by Channel Infrastructure or a Guarantor of a provision of a Transaction
Document in a material respect, subject to certain grace periods;
• indebtedness of Channel Infrastructure or any other Guarantor for borrowed money
in excess of $10 million in aggregate is not paid within any applicable grace period or
(if no grace period applies) when due or is accelerated by being declared due and
payable before it would otherwise have been due by reason of any event of default,
termination event or equivalent or analogous event; and
• an Insolvency Event occurs in respect of Channel Infrastructure or a Guarantor.
Minimum application
amount
Minimum application of $5,000 with multiples of $1,000 thereafter.
Transfer restrictionsChannel Infrastructure may decline to accept or register a transfer of the Bonds if the
transfer would result in the transferor or the transferee holding or continuing to hold
Bonds with a Principal Amount of less than $5,000 (if not zero) or if the transfer is not in
multiples of $1,000.
Brokerage0.50% on firm allocations plus 0.50% brokerage, paid by Channel Infrastructure.
You are not required to pay any additional brokerage or any other fee or charges to
Channel Infrastructure to purchase the Bonds. However, you may have to pay brokerage
to the firm from whom you receive an allocation of Bonds, or for the transfer of Bonds.
Channel Infrastructure NZ Limited | Indicative Terms Sheet4

ISINNZCHIDT002C2.
Quotation Application has been made to NZX for permission to quote the Bonds on the NZX Debt
Market and all the requirements of NZX relating to that quotation that can be complied
with on or before the date of distribution of this Terms Sheet or the PDS have been
duly complied with. However, the Bonds have not yet been approved for trading and
NZX accepts no responsibility for any statement in this Terms Sheet or the PDS. NZX is a
licensed market operator, and the NZX Debt Market is a licensed market, under the FMCA.
NZX Debt Market
ticker code
NZX ticker code CHI020 has been reserved for the Bonds.
Expected date of
initial quotation on
NZX Debt Market
Monday, 23 May 2022.
Governing lawNew Zealand.
Joint ArrangersBank of New Zealand and Forsyth Barr Limited.
Joint Lead ManagersBank of New Zealand, Forsyth Barr Limited and Jarden Securities Limited.
SupervisorThe New Zealand Guardian Trust Company Limited.
Securities Registrar Computershare Investor Services Limited.
Selling restrictions
You may only offer for sale or sell any Bonds in conformity with all applicable laws and regulations in any jurisdiction in
which it is offered, sold or delivered.
Channel Infrastructure has not taken and will not take any action which would permit a public offering of Bonds, or
possession or distribution of any offering material in respect of the Bonds, in any country or jurisdiction where action for
that purpose is required (other than New Zealand).
Any information memorandum, disclosure statement, circular, advertisement or other offering material in respect of the
Bonds may only be published, delivered or distributed in compliance with all applicable laws and regulations (including
those of the country or jurisdiction in which the material is published, delivered or distributed).
By subscribing for Bonds, each investor agrees to indemnify, among others, Channel Infrastructure, the Supervisor, the
Joint Arrangers and the Joint Lead Managers and their respective directors, officers, employees and agents in respect
of any loss, cost, liability or damages suffered as a result of an investor breaching the selling restrictions referred to in
this section.
Channel Infrastructure NZ | Product Disclosure Statement Terms Sheet5

Channel Infrastructure NZ | Product Disclosure Statement Terms Sheet6