Indicative pricing for green Capital Bond offer
Contact Energy Limited Level 2 Harbour City Tower, 29 Brandon Street, Wellington 6011 | PO Box 10742, Wellington 6143
P: +64 4 499 4001 | F: +64 4 499 4003 | W: contactenergy.co.nz
23 September 2024
Contact announces indicative pricing for green Capital
Bond offer
Contact Energy Limited (Contact) has announced an offer of up to $200 million (with the
ability to accept oversubscriptions at Contact’s discretion) of unsecured subordinated green
capital bonds (Capital Bonds) to New Zealand retail and institutional investors.
The offer opens today, 23 September 2024, and is expected to close at 11.00am, on 26
September 2024.
The indicative margin range for the Capital Bonds is 2.15% to 2.30% per annum. The actual
margin (which may be above or below the indicative margin range) and the interest rate for
the first five years (which will be subject to a minimum interest rate of 5.65%) will be
determined following a bookbuild process on 26 September 2024 and will be announced by
Contact via NZX shortly thereafter.
For so long as the Capital Bonds remain outstanding, the interest rate will be reset at five-
yearly intervals to be equal to sum of the five-year swap rate, the margin and a step-up of
0.25%, unless otherwise determined as part of a successful election process.
The Capital Bonds are expected to be issued on 3 October 2024 and quoted on the NZX
Debt Market on 4 October 2024.
Details of the offer and the Capital Bonds are contained in the indicative terms sheet. The
indicative terms sheet is available at https://contact.co.nz/AboutUs/Investor-Centre/bondoffer
or by contacting one of the Joint Lead Managers to the offer (listed below) or your usual
financial adviser.
There is no public pool for the offer, with all of the Capital Bonds being reserved for clients of
the Joint Lead Managers, institutional investors and other primary market participants invited
to participants invited to participate in the bookbuild.
Copies of the indicative terms sheet and investor presentation have also been provided to
NZX.
Bank of New Zealand Craigs Investment Partners Limited
09 375 1391 0800 272 442
Forsyth Barr Limited
0800 367 227
-ends-
Contact announces indicative pricing for green Capital Bond offer | 23 September 2024 | Contact Energy Ltd
2
Investor enquiries
Shelley Hollingsworth
Investor Relations and Strategy Manager
+64 27 227 2429
shelley.hollingsworth@contactenergy.co.nz
Media enquiries
Louise Wright
Head of Communications and Reputation
+64 21 840 313
media@contactenergy.co.nz
---
Monday, 23 September 2024
CLEANSING NOTICE
Contact Energy Limited (Contact) gives notice under clause 20(1)(a) of schedule 8 of the Financial
Markets Conduct Regulations 2014 (FMC Regulations) that it proposes to make an offer for the issue
of unsecured, subordinated, redeemable, cumulative interest bearing green capital bonds maturing 3
October 2054 (unless redeemed earlier) (Capital Bonds) in reliance upon the exclusion in clause 19
of schedule 1 of the Financial Markets Conduct Act 2013 (FMCA).
The main terms of the offer and the Capital Bonds are set out in the attached Terms Sheet.
Except for the interest rate and maturity date, the Capital Bonds will have identical rights, privileges,
limitations and conditions as Contact's unsecured, subordinated, redeemable, cumulative interest
bearing green capital bonds maturing on 19 November 2051, which are quoted on the NZX Debt
Market under ticker code CEN060 (the Quoted Capital Bonds) and therefore are of the same class
as the Quoted Capital Bonds for the purposes of the FMCA and the FMC Regulations.
The Quoted Capital Bonds have been continuously quoted on the NZX Debt Market over the
preceding three months and trading in the Quoted Capital Bonds has not been suspended during that
three-month period.
As at the date of this notice, Contact is in compliance with:
1. the continuous disclosure obligations that apply to it in relation to the Quoted Capital Bonds; and
2. its financial reporting obligations (as defined in the FMC Regulations).
As at the date of this notice, there is no information that is "excluded information" required to be
disclosed for the purposes of the FMC Regulations.
As at the date of this notice, there is no information that would be required to be disclosed under a
continuous disclosure obligation or which would be excluded information required to be disclosed for
the purposes of the FMC Regulations if the Quoted Capital Bonds had had the same redemption date
or interest rate as the Capital Bonds.
Contact Energy Limited Level 2 Harbour City Tower, 29 Brandon Street, Wellington 6011 | PO Box 10742, Wellington 6143
P: +64 4 499 4001 | F: +64 4 499 4003 | W: contactenergy.co.nz
---
Indicative Terms Sheet
Green Capital Bonds
23 September 2024
Indicative Terms
Sheet
23 September 2024
This indicative terms sheet (Terms Sheet) sets out
the key terms of the offer (Offer) by Contact
Energy Limited (Contact or Issuer) of up to
NZ$200 million (with the ability to accept
oversubscriptions at Contact's discretion) of
unsecured, subordinated, redeemable, cumulative,
interest bearing green capital bonds maturing on
3 October 2054 (Capital Bonds) under its
Amended and Restated Master Trust Deed dated
21 August 2015 (as further amended from time to
time) as modified and supplemented by the
Supplemental Trust Deed dated 20 September
2023 entered into between Contact and The New
Zealand Guardian Trust Company Limited
(Supervisor) (together, Trust Documents). Unless
the context otherwise requires, capitalised terms
used in this Terms Sheet have the same meaning
given to them in the Trust Documents.
Important notice
The offer of debt securities by Contact is made in
reliance upon the exclusion in clause 19 of schedule 1
of the Financial Markets Conduct Act 2013 (FMCA).
The Offer contained in this Terms Sheet is an offer of
debt securities that have identical rights, privileges,
limitations and conditions (except for the interest rate
and maturity date) as Contact’s NZ$225 million
unsecured, subordinated, redeemable, cumulative,
interest bearing green capital bonds with an interest
rate of 4.33% per annum and a final maturity of 19
November 2051, which are currently quoted on the
NZX Debt Market under the ticker code CEN060
(CEN060 Bonds).
Accordingly, the Capital Bonds are the same class
as the CEN060 Bonds for the purposes of the
FMCA and the Financial Markets Conduct
Regulations 2014 (FMC Regulations).
Contact is subject to a disclosure obligation that
requires it to notify certain material information to
NZX Limited (NZX) for the purpose of that
information being made available to participants in
the market and that information can be found by
visiting www.nzx.com/companies/CEN.
The CEN060 Bonds are the only debt securities of
Contact that are in the same class as the Capital
Bonds and are currently quoted on the NZX Debt
Market.
Investors should look to the market price of the
CEN060 Bonds referred to above to find out how
the market assesses the returns and risk premium
for those bonds. When comparing yield of different
debt securities, it is important to consider all
relevant factors (including rating (if any), maturity
and other terms of the relevant debt securities).
Investors should carefully consider the features of
the Capital Bonds which differ from the features of
a standard senior bond. Those features include
the ability of Contact to defer interest, optional
redemption rights for Contact, a margin step-up
and the subordinated nature of the Capital Bonds.
Investors should read this Terms Sheet carefully
(including the risks discussed on page 10) and
seek financial advice before deciding to invest in
the Capital Bonds.
ADDRESS DETAILS:
Issuer:
Contact Energy
Limited
Arranger and
Joint Lead
Manager:
Forsyth Barr
Limited
Joint Lead
Manager and
Green
Programme
Co-ordinator:
Bank of New
Zealand
Joint Lead
Manager:
Craigs
Investment
Partners
Limited
Registrar: Link
Market
Services
Limited
Supervisor:
The New
Zealand
Guardian Trust
Company
Limited
Legal Adviser
to Issuer:
Buddle Findlay
Level 2, Harbour
City Tower, 29
Brandon Street
Wellington 6011
Level 22, NTT
Tower, 157
Lambton Quay
Wellington 6011
Level 6, Deloitte
Centre, 80
Queen Street
Auckland 1010
Level 36, Vero
Centre, 48
Shortland Street
Auckland 1010
Level 30, PwC
Tower, 15
Customs Street
West
Auckland 1010
Level 6, 191
Queen Street,
Auckland
Central,
Auckland, 1010,
New Zealand
Level 18, HSBC
Tower 188 Quay
Street, Auckland
1010
2
Contact Energy Capital Bonds – Indicative Terms Sheet
Issuer Contact Energy Limited (Contact).
Description of Capital Bonds
The Capital Bonds are unsecured, subordinated, redeemable, cumulative,
interest bearing debt securities of Contact ranking equally and without
preference among themselves and equally with all other outstanding
unsecured and subordinated indebtedness of Contact, except indebtedness
preferred by law.
The Capital Bonds are Green Debt Instruments under Contact’s Sustainable
Finance Framework and are certified by the Climate Bonds Initiative (CBI)
based on the Climate Bonds Standard. A copy of the Sustainable Finance
Framework is available on Contact’s website:
www.contact.co.nz/aboutus/sustainability/financial-sustainability
Ranking
The Capital Bonds will be unsecured and will rank equally among themselves
and will be subordinated to all other indebtedness of Contact, other than
indebtedness expressed to rank equally with, or subordinate to, the Capital
Bonds. The Capital Bonds will rank equally with the CEN060 Bonds. See
“Ranking on liquidation” on page 6.
Purpose
The proceeds from the issue of the Capital Bonds will be used by Contact for
the financing and refinancing of renewable generation and other eligible green
assets (Green Assets) in accordance with the terms of the Sustainable
Finance Framework.
No guarantee
Contact is the issuer and the sole obligor in respect of the Capital Bonds. No
other person guarantees the Capital Bonds.
Further indebtedness
Contact may incur finance debt from time to time without the consent of
holders of Capital Bonds (Bondholders), including finance debt which ranks in
priority to the Capital Bonds.
Equity content
S&P Global Ratings is expected to assign an “intermediate” equity content to
the Capital Bonds. Where such equity credit content is assigned, S&P Global
Ratings will consider that the Capital Bonds comprise 50% equity when
calculating its financial ratios for Contact.
The equity content is expected to fall to minimal (0%) on 3 October 2034.
Capital structure
Contact believes that hybrid securities such as the Capital Bonds that are
ascribed equity content are an effective capital management tool and intends
to maintain such instruments as a key feature of its capital structure going
forward.
Credit ratings
S&P Global Ratings
Issuer credit rating
BBB (stable outlook)
Expected issue credit rating
BB+
The expected issue credit rating of the Capital Bonds is two notches below
Contact’s issuer credit rating of BBB (and Contact’s stand-alone credit profile
of ‘bbb’). One notch is deducted for the Capital Bonds being subordinated and
a second notch is deducted because of the potential for interest payments to
be deferred.
A credit rating is an independent opinion of the capability and willingness of an
entity to repay its debts (in other words, its creditworthiness). It is not a
guarantee that the financial product being offered is a safe investment. A
credit rating should be considered alongside all other relevant information
making an investment decision.
A credit rating is not a recommendation by any rating organisation to buy, sell
or hold Capital Bonds. Contact's credit rating provided above is current as at
the date of this Terms Sheet and any rating may be subject to suspension,
revision or withdrawal at any time by the S&P Global Ratings.
3
Contact Energy Capital Bonds – Indicative Terms Sheet
Offer Up to NZ$200 million (with the ability to accept oversubscriptions at Contact’s
discretion).
The Offer is not underwritten.
The Offer will be conducted on a firm allocation basis as described in more
detail below under the heading “Who may apply & How to apply”.
Expected date of initial
quotation and trading on the
NZX Debt Market
Friday, 4 October 2024.
Term 30 years (maturing 3 October 2054) unless Redeemed earlier.
Issue Price and Principal
Amount
NZ$1.00 per Capital Bond.
Interest Rate from the Issue
Date to the First Reset Date
The percentage per annum equal to the sum of the Benchmark Rate
(determined on the Rate Set Date) plus the Margin, but subject to the
Minimum Interest Rate of 5.65% per annum for this period.
Benchmark Rate
The mid-market NZD swap rate, determined according to market convention
(i) on the Rate Set Date for a term matching the period from the Issue Date to
the First Reset Date and (ii) at or around 11.00am New Zealand time on each
Reset Date for a 5-year term, in each case, with reference to Bloomberg page
‘ICNZ4’ (or any successor page) and adjusted to a quarterly equivalent rate
(rounded to 2 decimal places, if necessary, with 0.005 being rounded up).
Margin
The indicative Margin range for the period to the First Reset Date is 2.15% to
2.30% per annum for the Capital Bonds.
The actual Margin for the Capital Bonds for the period prior to the First Reset
Date (which may be above or below the indicative Margin range) will be set by
Contact (in consultation with the Joint Lead Managers) on the Rate Set Date
following the Bookbuild and will be announced by Contact via NZX on the Rate
Set Date.
During any subsequent period which commences on a Reset Date, the Margin
will be the Margin that applied immediately prior to that Reset Date, unless
otherwise determined as part of a Successful Election Process.
Interest Payments Interest will be payable on an Interest Payment Date and (if the date on which
Redemption is to occur is not an Interest Payment Date) the date in respect of
which any Capital Bonds are to be Redeemed, to the Bondholder as at 5.00pm
on the relevant Record Date.
Interest Payment Dates Interest shall be paid quarterly in arrear in equal payments on 3 January, 3 April,
3 July, 3 October of each year (or if that day is not a Business Day, the next
Business Day). Interest accrues on the Capital Bonds until (but excluding) the
date on which they are Redeemed.
Any interest on Capital Bonds payable on a date which is not an Interest
Payment Date will be calculated on the basis of the number of days elapsed
and a 365-day year, and shall accrue in respect of the period from, and
including, the previous Interest Payment Date until, but excluding, the date for
payment of that interest.
The first Interest Payment Date is 3 January 2025.
Interest may be deferred at the discretion of Contact – see “Discretionary
deferral of interest” below.
Record Date In relation to any payments due on a Capital Bond, the date which is
10 calendar days before the due date for the payment.
In relation to an Election Process (as defined below), the date which is two
Business Days prior to the date on which the applicable Election Notice is
given.
In either case, if that date is not a Business Day, the Record Date will be the
preceding Business Day.
4
Contact Energy Capital Bonds – Indicative Terms Sheet
Reset Dates The First Reset Date for the Capital Bonds is the date that is five years after
the Issue Date (3 October 2029). Thereafter, there is a further Reset Date
every five years. As part of a Successful Election Process, a different Reset
Date may be adopted.
Interest Rate after each
Reset Date
If not Redeemed prior, the Interest Rate applying from each Reset Date up to
but excluding the next Reset Date will be the fixed rate of interest expressed as
a percentage per annum equal to the then Benchmark Rate on that Reset Date
plus the Margin plus the Step-up Percentage.
If a Successful Election Process has been completed, the Interest Rate after
each Reset Date will be as set out in the relevant Election Notice (as defined
below).
Step-up Percentage 0.25%.
Discretionary deferral of
interest
Contact may defer payment of interest on the Capital Bonds at any time for up
to five years at its sole discretion by notifying Bondholders. Where an interest
payment has not been paid on its due date, notice of its deferral shall be
deemed to have been given.
If Contact defers the payment of interest, the interest payable will itself accrue
interest (compounding on each Interest Payment Date) at the prevailing
Interest Rate (in aggregate, the Unpaid Interest) until the Interest Payment
Date on which all Unpaid Interest is paid.
Unpaid interest is cumulative.
See “Deferral of interest payments” under the “Risks” section on page 10.
Distribution Stopper Whilst there is any Unpaid Interest outstanding Contact shall not:
(i) make any dividends, distributions or payments of interest on any shares
or securities ranking after the Capital Bonds; or
(ii) acquire, redeem or repay any share or other security ranking after the
Capital Bonds (or provide financial assistance for the acquisition of such
shares or securities),
in each case, without obtaining a Bondholder Special Resolution; or
(iii) make any dividends, distributions or payments of interest on any other
securities ranking pari passu with the Capital Bonds; or
(iv) acquire, redeem or repay any other security ranking pari passu with the
Capital Bonds (or provide financial assistance for the acquisition of such
securities),
in each case, other than on a pro-rata basis,
(together, the Distribution Stopper).
Election Process No earlier than six months and not later than 30 Business Days before any
Reset Date, Contact may give to each Bondholder a notice (Election Notice)
specifying new terms and conditions (New Conditions) (including for example
a new Margin) proposed to apply from the next Reset Date. Bondholders may
elect to accept or reject the New Conditions in respect of some or all of their
Capital Bonds. Bondholders who do not respond will be deemed to have
accepted the New Conditions.
If Contact declares a Successful Election Process then it is obliged to
Repurchase any Capital Bonds held by a Bondholder who has rejected the New
Conditions for the Repurchase Amount. Contact may choose to establish a
resale facility to seek buyers for those Capital Bonds.
If Contact does not wish to Repurchase all Capital Bonds from those
Bondholders that have rejected the New Conditions then Contact must declare
that the Election Process has failed, in which case the existing terms and
conditions will continue to apply and all Capital Bonds will remain outstanding.
Optional early Redemption by
Contact
Contact may, by giving Bondholders prior written notice, Redeem some or all of
the Capital Bonds on:
(i) any Reset Date; or
(ii) any Interest Payment Date after a Reset Date if a Successful Election
5
Contact Energy Capital Bonds – Indicative Terms Sheet
Process has not been undertaken in respect of that Reset Date,
provided that after any partial Redemption, there will still be at least
100,000,000 Capital Bonds outstanding. Any partial Redemption will be done on
a proportionate basis and may include adjustments to take account of the
effect on marketable parcels and other logistical considerations.
Contact may Redeem all (but not some only) of the Capital Bonds if:
(iii) there are less than 100,000,000 Capital Bonds on issue;
(iv) a Tax Event (as defined below) occurs; or
(v) a Rating Agency Event (as defined below) occurs.
If the Redemption occurs pursuant to paragraph (i), (iii) or (iv), the amount
payable will be the aggregate of the Principal Amount of the Capital Bonds plus
any Unpaid Interest plus any interest scheduled to be paid on the date of
Redemption (Redemption Amount).
If the Redemption occurs pursuant to paragraph (ii) or (v), the amount payable
will be the greater of:
(i) the Redemption Amount; and
(ii) the market price of the Capital Bonds (determined in accordance with
the Trust Documents), which will include accrued interest at the relevant
time.
Tax Event A Tax Event will occur if Contact (having taken appropriate legal or tax advice)
determines that there has been, or there will be, a change in New Zealand law
applying after the Issue Date, as a result of which any interest payable on the
Capital Bonds is not, or will not be, fully deductible for income tax purposes.
Rating Agency Event A Rating Agency Event means:
(i) the receipt by Contact of notice from S&P Global Ratings that, as a result
of a change of criteria, the Capital Bonds will no longer have the same
equity content classification from S&P Global Ratings as it had
immediately prior to the change in criteria; or
(ii) Contact ceasing to hold a credit rating.
Events of Default The Events of Default are contained in the Supplemental Trust Deed for the
Offer. They include:
(i) a failure by Contact to make a payment, including of principal or interest
(to the extent payment of interest has not been, or is not capable of
being deferred) due in respect of the Capital Bonds), including on
Redemption when due (subject to applicable grace periods);
(ii) a failure by Contact to comply with the Distribution Stopper (when it is
applicable); or
(iii) an insolvency event of Contact occurs.
This summary does not cover all of the Events of Default. For full details of the
Events of Default see the corresponding definition in clause 1.2 of the
Supplemental Trust Deed.
No Event of Default Failure by Contact to:
(i) allocate the proceeds of the Capital Bonds as described in the
Sustainable Finance Framework;
(ii) meet the Climate Bonds Standard, Green Bond Principles or the
Sustainable Finance Framework in respect of the Capital Bonds;
(iii) maintain CBI certification of the Capital Bonds or other Green Debt
Instruments;
(iv) comply with any environmental laws and standards in respect of the
Green Assets or otherwise;
(v) receive further assurance from CBI;
(vi) comply with the Sustainable Finance Framework (including updating its
website in respect of the Capital Bonds);
(vii) notify Bondholders that the Capital Bonds cease to comply with the
6
Contact Energy Capital Bonds – Indicative Terms Sheet
Sustainable Finance Framework, the Green Bond Principles or Climate
Bonds Standard; or
(viii) in any other way ensure that the Capital Bonds retain their green
attributes,
is not an Event of Default or other default or breach of any obligation under the
Trust Documents and does not have the result of requiring, or permitting
Bondholders or Contact to require, the Capital Bonds to be repaid early.
Contact may, depending on the exact circumstances, provide the market with
an update in relation to the ongoing status of the Capital Bonds as green
capital bonds.
Ranking on liquidation On a liquidation of Contact amounts owing to Bondholders rank equally with all
other unsecured, subordinated obligations of Contact. The Capital Bonds rank
behind Contact’s bank debt, senior bonds (including senior green bonds), US
private placement notes, commercial paper and any amounts owing to
unsubordinated general and trade creditors, as well as indebtedness preferred
by law and secured indebtedness. The ranking of the Capital Bonds on a
liquidation of Contact is summarised in the diagram below.
Ranking
on
liquidation
Type of liability/equity Indicative
amount
1
Higher
ranking
/ earlier
priority
Lower
ranking
/ later
priority
Liabilities
that rank
above the
Capital
Bonds
Liabilities preferred by law (for
example, Inland Revenue for certain
unpaid taxes), unsubordinated
creditors (including banks and
financial institutions that have lent
money to Contact, holders of
Contact’s senior bonds (including
senior green bonds), holders of
Contact’s US private placement
notes, commercial paper and
unsubordinated trade and general
creditors)
NZ$3,364
million
2
Liabilities
that rank
equally
with the
Capital
Bonds
The Capital Bonds
The CEN060 Bonds and any other
subordinated obligations of Contact
NZ$200
million
NZ$225
million
Equity Ordinary shares, reserves and
retained earnings
NZ$2,619
million
Notes:
1. Amounts shown above are indicative based on the financial position of
Contact as at 30 June 2024 adjusted for the issue of the Capital Bonds
assuming an issue size of NZ$200 million. The actual amounts of
liabilities and equity of Contact at the point of its liquidation will be
different to the indicative amounts set out in the diagram above.
Amounts above are subject to rounding adjustments.
7
Contact Energy Capital Bonds – Indicative Terms Sheet
2. This represents the total liabilities of Contact consolidated group (other
than the CEN060 Bonds) as at 30 June 2024. It includes amounts
corresponding to deferred tax (approximately NZ$524 million), derivative
financial instruments (approximately NZ$405 million and lease liabilities
(approximately NZ$47 million) not all of which would be crystallised on
liquidation. Such liabilities on liquidation may be materially different.
Minimum application amount
and minimum holding
NZ$5,000 with multiples of NZ$1,000 thereafter.
Transfer restrictions As a Bondholder, you may only transfer Capital Bonds if the transfer is in
respect of Capital Bonds having an aggregate Principal Amount that is an
integral multiple of NZ$1,000. However, Contact will not register any transfer
of Capital Bonds if the transfer would result in the transferor or the transferee
holding or continuing to hold Capital Bonds with an aggregate Principal Amount
of less than NZ$5,000, unless the transferor would then hold no Capital Bonds.
NZX Debt Market quotation An application has been made to NZX for permission to quote the Capital
Bonds on the NZX Debt Market and all of the requirements of NZX relating
thereto that can be complied with on or before the distribution of this Terms
Sheet have been duly complied with. However, the Capital Bonds have not yet
been approved for trading and NZX accepts no responsibility for any statement
in this Terms Sheet.
NZX is a licensed market operator, and the NZX Debt Market is a licensed
market under the FMCA.
NZX Debt Market ticker code CEN090.
ISIN NZCEND0090L6.
Business Day A day (other than a Saturday or Sunday) on which registered banks are
generally open for business in Auckland and Wellington.
If an Interest Payment Date, Redemption Date or the Maturity Date falls on a
day that is not a Business Day, the due date for any payment to be made on
that date will be the next Business Day, with no adjustment to be made to the
amount payable as a result of the delay in payment.
Governing law New Zealand.
Who may apply
& How to apply
All of the Capital Bonds including any oversubscriptions will be reserved for
clients of the Joint Lead Managers, institutional investors and other primary
market participants invited to participate in the bookbuild.
There will be no public pool for the Capital Bonds.
Retail investors should contact the Joint Lead Managers, their financial adviser
or any Primary Market Participant for details on how they may acquire Capital
Bonds. You can find a Primary Market Participant by visiting
www.nzx.com/investing/find-a-participant
Any allotment of Capital Bonds will be at Contact’s discretion, in consultation
with the Joint Lead Managers. Contact reserves the right to refuse to make any
allotment (or part thereof) without giving any reason. Contact may deal with
oversubscriptions (if any) in its sole discretion.
Each investor’s financial adviser will be able to advise them as to what
arrangements will need to be put in place for the investors to trade the Capital
Bonds including obtaining a common shareholder number (CSN), an
authorisation code (FIN) and opening an account with a Primary Market
Participant as well as the costs and timeframes for putting such arrangements
in place.
Securities Registrar and
Paying Agent
Link Market Services Limited.
The Capital Bonds will be accepted for settlement within the NZClear system.
Supervisor The New Zealand Guardian Trust Company Limited.
Arranger Forsyth Barr Limited.
8
Contact Energy Capital Bonds – Indicative Terms Sheet
Joint Lead Managers Bank of New Zealand, Craigs Investment Partners Limited and Forsyth Barr
Limited.
Green Programme Co-
ordinator
Bank of New Zealand.
Fees
Taxes may be deducted from interest payments on the Capital Bonds.
You are not required to pay brokerage or any other fees or charges to Contact
to purchase the Capital Bonds. However, you may have to pay brokerage to the
firm from whom you receive an allocation of Capital Bonds or for the transfer of
Capital Bonds.
Brokerage
Contact will pay brokerage of 0.50% and firm fees of 0.50% (as applicable).
Selling restrictions
The selling restrictions set out in the schedule to this Terms Sheet apply to the
Capital Bonds. The Capital Bonds must not be offered or sold other than in
strict compliance with those selling restrictions.
By subscribing for Capital Bonds, you indemnify Contact, the Arranger, the Joint
Lead Managers and the Supervisor in respect of any loss incurred as a result of
you breaching the selling restrictions in Schedule 1 or clause 4.5 of the Master
Trust Deed.
Non-reliance
This Terms Sheet does not constitute a recommendation by the Arranger, the
Joint Lead Managers, the Green Programme Co-ordinator, the Supervisor or any
of their respective directors, officers, employees, agents or advisers to
subscribe for, or purchase, any of the Capital Bonds. None of these parties or
any of their respective directors, officers, employees, agents or advisers accept
any liability whatsoever for any loss arising from this Terms Sheet or its
contents or otherwise arising in connection with the Offer.
The Arranger, the Joint Lead Managers, the Green Programme Co-ordinator and
the Supervisor have not independently verified the information contained in this
Terms Sheet. In accepting delivery of this Terms Sheet, you acknowledge that
none of the Arranger, the Joint Lead Managers, the Green Programme Co-
ordinator, the Supervisor nor their respective directors, officers, employees,
agents or advisers gives any warranty or representation of accuracy or reliability
and they take no responsibility for it. They have no liability for any errors or
omissions (including for negligence) in this Terms Sheet, and you waive all
claims in that regard.
Sustainable Finance
Framework Assurance
Contact has received a pre-issuance certification from CBI in respect of the
Capital Bonds.
Contact has engaged Ernst & Young Limited to provide independent assurance
of the Sustainable Finance Framework to confirm that the Sustainable Finance
Framework continues to meet the requirements of the Climate Bonds Standard
and the Green Bond Principles. Contact will seek to obtain further assurance at
least annually.
Copies of the CBI certification and the latest Ernst & Young Limited
independent limited assurance report (which details the assurance procedures
and standards followed) can be found here:
www.contact.co.nz/aboutus/sustainability/financial-sustainability
9
Contact Energy Capital Bonds – Indicative Terms Sheet
Key Dates
Opening Date Monday, 23 September 2024
Closing Date 11.00am, Thursday, 26 September 2024
Rate Set Date Thursday, 26 September 2024
Issue Date Thursday, 3 October 2024
First Reset Date 3 October 2029
Maturity Date 3 October 2054
The dates set out in this Terms Sheet are indicative only and Contact, in conjunction with the Joint Lead
Managers, may change the dates set out in this Terms Sheet. Contact has the right in its absolute discretion and
without notice to close the offer early, to extend the Closing Date, or to choose not to proceed with the offer. If
the Closing Date is changed, other dates (such as the Issue Date, Interest Payment Dates and the Maturity
Date) may be changed accordingly.
Other Information
Any internet site addresses provided in this Terms Sheet are for reference only and, except as expressly stated
otherwise, the content of any such internet site is not incorporated by reference into, and does not form part of,
this Terms Sheet.
Copies of the Trust Documents will be made available by Contact for inspection during usual business hours by
any Bondholder at Contact’s registered office listed above (or such office as Contact may notify the Bondholders
from time to time). Copies of the Trust Documents are also available on Contact’s website:
www.contact.co.nz/aboutus/investor-centre/investor-information#Bond-information
Investors should seek qualified, independent financial and taxation advice before deciding to invest. Investors
will be personally responsible for all tax return filing obligations in respect of their investment in the Capital
Bonds, compliance with the financial arrangements rules (if applicable) and payment of provisional or terminal
tax (if required) on interest derived.
For further information regarding Contact, visit www.nzx.com/companies/CEN.
10
Contact Energy Capital Bonds – Indicative Terms Sheet
RISKS
An investment in the Capital Bonds is subject to the risks that:
(i) Contact becomes insolvent and is unable to meet its obligations under the Capital Bonds; and/or
(ii) if the investor wishes to sell the Capital Bonds before maturity, the investor is unable to find a buyer or
that the amount received is less than the principal amount paid for the Capital Bonds.
Investors should carefully consider the features of the Capital Bonds which differ from the features of a standard
senior bond. Those features include the ability of Contact to defer interest, optional early redemption rights for
Contact, a margin step-up, an election process and the subordinated nature of the Capital Bonds. Key risks
concerning those features are set out in detail below.
This summary does not cover all of the risks of investing in the Capital Bonds. For example, whilst certain risks
in relation to the Capital Bonds are set out in more detail below, those risks relating to Contact, rather than the
Capital Bonds themselves, are not set out below on the basis that information relating to Contact and its
operations is already disclosed to the market pursuant to Contact’s continuous disclosure obligations under the
NZX Listing Rules. Also, the summary below sets out the risks in relation to the Capital Bonds that differ from
risks in relation to standard senior bonds. It does not cover the risks that are common to both the Capital Bonds
and standard senior bonds (such as risks around liquidity and your ability to sell the Capital Bonds at a given
price, or at all).
Investors should carefully consider those risk factors (together with the other information in this Terms Sheet)
before deciding to invest in the Capital Bonds.
The statement of risks in this Terms Sheet also does not take account of the personal circumstances, financial
position or investment requirements of any investor. It is important, therefore, that before making any
investment decision, investors give consideration to the suitability of an investment in the Capital Bonds in light
of his or her individual risk profile for investments, investment objectives and personal circumstances (including
financial and taxation issues).
The interest rate for the Capital Bonds should also reflect the degree of credit risk. In general, higher returns are
demanded by investors from businesses with higher risk of defaulting on their commitments. You need to
decide whether the Offer of Capital Bonds is fair.
You should speak to your financial adviser about the risks involved with an investment in the Capital Bonds.
Deferral of interest payments
There is a risk that interest payments on the Capital Bonds will be deferred by Contact for a period of up to five
years, as described in the paragraph headed “Discretionary deferral of interest” on page 4.
Contact has a broad discretion to defer the payment of interest on the Capital Bonds, and Bondholders will not
have an immediate redemption right in those circumstances.
Redemption prior to the Maturity Date
Although the Capital Bonds have a term of 30 years, Contact may choose to Redeem the Capital Bonds early in
certain circumstances.
Contact may elect to Redeem the Capital Bonds in the circumstances outlined in the paragraph headed
“Optional early Redemption by Contact” on page 4. While some of those Redemption triggers may appear to be
unlikely to occur, recent history suggests that such events can occur, and Contact will have the right to Redeem
after five years and on each subsequent Reset Date.
If Contact is entitled to Redeem any of the Capital Bonds, the method and date by which Contact elects or is
required to do so may not accord with the preference of individual Bondholders. This may be disadvantageous
in light of market conditions or a Bondholder’s individual circumstances.
Ranking
The Capital Bonds rank behind all of Contact’s unsubordinated obligations. In a liquidation of Contact, the
holders of the Capital Bonds would be paid only after all amounts owing by Contact to its bankers, holders of
senior bonds (including green senior bonds), holders of US private placement notes, holders of commercial
paper and general and trade unsubordinated creditors, have been paid. After payment of those amounts, there
may be insufficient funds available to the liquidator to repay all or any of the amounts owing on the Capital
Bonds.
11
Contact Energy Capital Bonds – Indicative Terms Sheet
Supervisor’s enforcement rights
Investors should be aware that even if the right to seek repayment of the Capital Bonds is exercised following
the occurrence of an Event of Default, the Supervisor has very limited powers to enforce these rights given the
subordinated nature of the Capital Bonds. For example, the Supervisor has no ability to appoint a receiver with a
view to recovering amounts owing to Bondholders and is only entitled to file a conditional claim in the event of
the liquidation of the Issuer requiring repayment of the Capital Bonds after all prior ranking indebtedness has
been repaid in full
CBI disclaimer
The certification of the Capital Bonds as Climate Bonds by the Climate Bonds Initiative is based solely on the
Climate Bonds Standard and does not, and is not intended to, make any representation, warranty, undertaking,
express or implied, or give any assurance with respect to any other matter relating to the Capital Bonds, the
Sustainable Finance Framework, any other Green Debt Instrument or Green Asset, including but not limited to
this Terms Sheet, the Trust Documents, any transaction documents, Contact or the management of Contact.
The certification of the Capital Bonds as Climate Bonds by the Climate Bonds Initiative was addressed solely to
the board of directors of Contact and is not a recommendation to any person to purchase, hold or sell the Capital
Bonds (or any other Green Debt Instruments in the Sustainable Finance Framework) and such certification does
not address the market price or suitability of the Capital Bonds or the Sustainable Finance Framework for a
particular investor. Each potential purchaser of the Capital Bonds should determine for itself the relevance of
this certification. Any purchase of Capital Bonds should be based upon such investigation that each potential
purchaser deems necessary. The certification also does not address the merits of the decision by Contact or any
third party to participate in the Capital Bonds, any other Green Debt Instruments or any Green Asset and does
not express and should not be deemed to be an expression of an opinion as to Contact or any aspect of the
Capital Bonds, any other Green Debt Instruments or any Green Asset (including but not limited to the financial
viability of the Capital Bonds, any other Green Debt Instruments or any Green Asset) other than with respect to
conformance with the Climate Bonds Standard.
In issuing or monitoring, as applicable, the certification, the Climate Bonds Initiative has assumed and relied
upon and will assume and rely upon the fairness, accuracy, reasonableness and completeness in all material
respects of the information supplied or otherwise made available to the Climate Bonds Initiative. The Climate
Bonds Initiative does not assume or accept any responsibility or liability to any person for independently
verifying (and it has not verified) such information or to undertake (and it has not undertaken) any independent
evaluation of any Green Debt Instruments, Green Asset or Contact. In addition, the Climate Bonds Initiative does
not assume any obligation to conduct (and it has not conducted) any physical inspection of any Green Debt
Instruments or Green Asset. The certification may only be used with the Capital Bonds and may not be used for
any other purpose without the Climate Bonds Initiative’s prior written consent.
The certification does not, and is not in any way intended to, address the likelihood of timely payment of interest
when due on the Capital Bonds (or any other Green Debt Instruments in the Sustainable Finance Framework)
and/or the payment of principal at maturity or any other date.
The certification may be withdrawn at any time in the Climate Bonds Initiative’s sole and absolute discretion and
there can be no assurance that such certification will not be withdrawn.
Arranger and Joint Lead Manager important information
None of the Arranger, the Joint Lead Managers nor any of their respective directors, officers, employees and
agents: (a) to the extent permitted by law, accept any responsibility or liability whatsoever for this Terms Sheet
or any loss arising from this Terms Sheet or its contents or otherwise arising in connection with the offer of
Capital Bonds; (b) authorised or caused the issue of, or made any statement in, any part of this Terms Sheet;
and (c) make any representation, recommendation or warranty, express or implied regarding the origin, validity,
accuracy, adequacy, reasonableness or completeness of, or any errors or omissions in, any information,
statement or opinion contained in this Terms Sheet. This Terms Sheet does not constitute financial advice or a
recommendation from the Arranger, any Joint Lead Manager or any of their respective directors, officers,
employees, agents or advisers to purchase, any Capital Bonds. Each investor must make its own independent
investigation and assessment of the financial condition and affairs of the issuer before deciding whether or not
to invest in the Capital Bonds.
12
Contact Energy Capital Bonds – Indicative Terms Sheet
SCHEDULE - SELLING RESTRICTIONS
The Green Bonds may only be offered for sale or sold in New Zealand in conformity with all applicable laws and
regulations in New Zealand. No Capital Bonds may be offered for sale or sold in any other country or jurisdiction
except in conformity with all applicable laws and regulations of that country or jurisdiction and the selling
restrictions contained in this Terms Sheet. This Terms Sheet may not be published, delivered or distributed in or
from any country or jurisdiction except under circumstances which will result in compliance with all applicable
laws and regulations in that country or jurisdiction and the selling restrictions contained in this Terms Sheet.
Without limiting the generality of the above, the following selling restrictions apply in respect of each relevant
jurisdiction:
Member States of the European Economic Area
In relation to each Member State of the European Economic Area, no Capital Bonds have been offered and no
Capital Bonds will be offered that are the subject of the offering contemplated by this Terms Sheet in relation
thereto to the public in that Member State except that an offer of Capital Bonds to the public in the Member
State may be made:
a) to any legal entity which is a qualified investor as defined in the EU Prospectus Regulation;
b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the EU Prospectus
Regulation) subject to obtaining the prior consent of the Joint Lead Managers for any such offer; or
c) in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation,
provided that no such offer of the Capital Bonds shall require Contact or the Joint Lead Managers to publish a
prospectus pursuant to Article 3 of the EU Prospectus Regulation or supplement a prospectus pursuant to Article
23 of the EU Prospectus Regulation.
For the purposes of this provision, the expression an offer of the Capital Bonds to the public in relation to any
Capital Bonds in any Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and the Capital Bonds to be offered so as to enable an investor to decide to
purchase or subscribe for the Capital Bonds and the expression EU Prospectus Regulation means Regulation
(EU) 2017/1129.
United Kingdom
No Capital Bonds have been offered and no Capital Bonds will be offered that are the subject of the offering
contemplated by this Terms Sheet in relation thereto to the public in the United Kingdom except that it may
make an offer of such Capital Bonds to the public in the United Kingdom:
a) to any legal entity which is a qualified investor as defined in Article 2 of the UK Prospectus Regulation;
b) to fewer than 150 natural or legal persons (other than qualified investors as defined in Article 2 of the UK
Prospectus Regulation) in the United Kingdom subject to obtaining the prior consent of the Joint Lead
Managers for any such offer; or
c) in any other circumstances falling within section 86 of the Financial Services and Markets Act 2000
(FSMA),
provided that no such offer of the Capital Bonds shall require Contact or the Joint Lead Managers to publish a
prospectus pursuant to section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK
Prospectus Regulation.
For the purposes of this provision, the expression an offer of the Capital Bonds to the public in relation to any
Capital Bonds means the communication in any form and by any means of sufficient information on the terms of
the offer and the Capital Bonds to be offered so as to enable an investor to decide to purchase or subscribe for
the Capital Bonds and the expression UK Prospectus Regulation means Regulation (EU) 2017/1129 as it forms
part of domestic law by virtue of the European Union (Withdrawal) Act 2018.
Other regulatory restrictions
No communication, invitation or inducement to engage in investment activity (within the meaning of section 21
of the FSMA) has been or may be made or caused to be made or will be made in connection with the issue or
sale of the Capital Bonds in circumstances in which section 21(1) of the FSMA applies to Contact.
All applicable provisions of the FSMA with respect to anything done by it in relation to the Capital Bonds in, from
or otherwise involving the United Kingdom, must be complied with.
Singapore
This Terms Sheet has not been registered as a prospectus with the Monetary Authority of Singapore.
Accordingly, this Terms Sheet and any other document or material in connection with the offer or sale, or
invitation for subscription or purchase, of the Capital Bonds may not be circulated or distributed, nor may the
Capital Bonds be offered or sold, or caused to be made the subject of an invitation for subscription or purchase,
13
Contact Energy Capital Bonds – Indicative Terms Sheet
whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in
Section 4A of the Securities and Futures Act 2001 of Singapore, as modified or amended from time to time (SFA)
pursuant to Section 274 of the SFA or (ii) to an accredited investor (as defined in Section 4A of the SFA)
pursuant to and in accordance with the conditions specified in Section 275 of the SFA.
Australia
No prospectus or other disclosure document (as defined in the Corporations Act 2001 of Australia (Corporations
Act)) in relation to the Capital Bonds (including this Terms Sheet) has been, or will be, lodged with, or registered
by, the Australian Securities and Investments Commission (ASIC) or any other regulatory authority in Australia.
No person may:
a) make or invite (directly or indirectly) an offer of the Capital Bonds for issue, sale or purchase in, to or from
Australia (including an offer or invitation which is received by a person in Australia); and
b) distribute or publish, any Terms Sheet, information memorandum, prospectus or any other offering
material or advertisement relating to the Capital Bonds in Australia, unless:
i. the minimum aggregate consideration payable by each offeree or invitee is at least A$500,000 (or its
equivalent in an alternative currency and, in either case, disregarding moneys lent by the offeror or
its associates) or the offer or invitation otherwise does not require disclosure to investors in
accordance with Part 6D.2 or Chapter 7 of the Corporations Act;
ii. the offer or invitation is not made to a person who is a “retail client” within the meaning of section
761G of the Corporations Act;
iii. such action complies with all applicable laws, regulations and directives (including, without
limitation, the licensing requirements set out in Chapter 7 of the Corporations Act); and
iv. such action does not require any document to be lodged with, or registered by, ASIC or any other
regulatory authority in Australia.
By applying for the Capital Bonds under this Terms Sheet, each person to whom the Capital Bonds are issued
(an Investor):
a) will be deemed by Contact and the Joint Lead Managers to have acknowledged that if any Investor on-
sells the Capital Bonds within 12 months from their issue, the Investor will be required to lodge a
prospectus or other disclosure document (as defined in the Corporations Act) with ASIC unless either:
i. that sale is to an investor within one of the categories set out in sections 708(8) or 708(11) of the
Corporations Act to whom it is lawful to offer the Capital Bonds in Australia without a prospectus or
other disclosure document lodged with ASIC; or
ii. the sale offer is received outside Australia; and
b) will be deemed by Contact and the Joint Lead Managers to have undertaken not to sell those Capital
Bonds in any circumstances other than those described in paragraphs (a)(i) and (a)(ii) above for 12
months after the date of issue of such Capital Bonds.
This Terms Sheet is not, and under no circumstances is to be construed as, an advertisement or public offering
of any Capital Bonds in Australia.
United States of America
The Capital Bonds have not been and will not be registered under the Securities Act of 1933, as amended
(Securities Act) and may not be offered or sold within the United States or to, or for the account or benefit of,
U.S. persons (as defined in Regulation S under the Securities Act (Regulation S)) except in accordance with
Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements
of the Securities Act.
None of Contact, any Joint Lead Manager nor any person acting on its or their behalf has engaged or will engage
in any directed selling efforts in relation to the Capital Bonds, and each of Contact, any Joint Lead Manager have
complied and will comply with the offering restrictions requirements of Regulation S under the Securities Act.
The Capital Bonds will not be offered or sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time, or (ii) otherwise until 40 days after the completion of the
distribution of all Capital Bonds of the Tranche of which such Capital Bonds are part, as determined and certified
by any Joint Lead Manager, except in accordance with Rule 903 of Regulation S under the Securities Act. Any
Capital Bonds sold to any distributor, dealer or person receiving a selling concession, fee or other remuneration
during the distribution compliance period require a confirmation or notice to the purchaser at or prior to the
confirmation of the sale to substantially the following effect:
14
Contact Energy Capital Bonds – Indicative Terms Sheet
‘The Capital Bonds covered hereby have not been registered under the United States Securities Act of 1933, as
amended (the ‘Securities Act’) or with any securities regulatory authority of any state or other jurisdiction of the
United States and may not be offered or sold within the United States, or to or for the account or benefit of, U.S.
persons (as defined in Regulation S under the Securities Act) (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the offering of the Capital Bonds and the closing
date except in either case pursuant to a valid exemption from registration in accordance with Regulation S under
the Securities Act. Terms used above have the meaning given to them by Regulation S.’
Until 40 days after the completion of the distribution of all Capital Bonds of the Tranche of which those Capital
Bonds are a part, an offer or sale of the Capital Bonds within the United States by any Joint Lead Manager, or
any dealer or other distributor (whether or not participating in the offering) may violate the registration
requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Regulation S.
Hong Kong
No Capital Bonds have been offered or sold or will be or may be offered or sold in Hong Kong, by means of any
document, other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571)
of Hong Kong (the SFO) and any rules made under the SFO; or (b) in other circumstances which do not result in
the document being a prospectus as defined in the Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Cap. 32) of Hong Kong (the C(WUMP)O) or which do not constitute an offer to the public within the
meaning of the C(WUMP)O.
No advertisement, invitation or document relating to the Capital Bonds may be issued or in the possession of
any person or will be issued or be in the possession of any person in each case for the purpose of issue, whether
in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by,
the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with
respect to the Capital Bonds which are or are intended to be disposed of only to persons outside Hong Kong or
only to ‘professional investors’ as defined in the SFO and any rules made under the SFO.
Japan
The Capital Bonds have not been and will not be registered in Japan pursuant to Article 4, Paragraph 1 of the
Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the FlEA) in reliance upon
the exemption from the registration requirements since the offering constitutes the small number private
placement as provided for in “ha” of Article 2, Paragraph 3, Item 2 of the FlEA. A Japanese Person who transfers
the Capital Bonds shall not transfer or resell the Capital Bonds except where the transferor transfers or resells
all the Capital Bonds en bloc to one transferee. For the purposes of this paragraph, Japanese Person shall mean
any person resident in Japan, including any corporation or other entity organised under the laws of Japan.
Indemnity
By its subscription for the Capital Bonds, each Bondholder agrees to indemnify Contact, the Arranger, the Joint
Lead Managers and the Supervisor and each of their respective directors, officers and employees for any loss,
cost, liability or expense sustained or incurred by Contact, the Arranger, the Joint Lead Managers or the
Supervisor, as the case may be, as a result of the breach by that Bondholder of the selling restrictions set out
above.
---
11
Investor presentation
23 September 2024
Contact Energy Limited
Green Capital Bond Offer
Joint Lead Managers:
2
Important Notice
This presentation has been prepared by Contact Energy Limited (Issuer) in relation to the offer of unsecured,
subordinated, redeemable, cumulative, interest bearing, green capital bonds (Capital Bonds) (Offer) made in reliance
upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conduct Act 2013 (FMCA).
The Offer is an offer of debt securities that have identical rights, privileges, limitations and conditions (except for the
interest rate and maturity date) as the Issuer’s: NZ$225,000,000 unsecured, subordinated, redeemable, cumulative,
interest bearing, green capital bonds (which have a fixed interest rate of 4.33% per annum) maturing on 19 November
2051, which are currently quoted on the NZX Debt Market under the ticker code CEN060 (CEN060 Bonds).
The Capital Bonds are of the same class as the CEN060 Bonds (the Existing Bonds) for the purposes of the FMCA
and the Financial Markets Conduct Regulations 2014. The Issuer is also subject to a disclosure obligation that
requires it to notify certain material information to NZX Limited (NZX) for the purposes of that information being made
available to participants in the market and that information can be found atwww.nzx.com/companies/CEN
The Existing Bonds are the only debt securities of the Issuer that are currently quoted and in the same class as the
Capital Bonds.
Investors should look to the market price of the Existing Bonds to find out how the market assesses the returns and risk
premium for those bonds. When comparing the yield of two debt securities, it is important to consider all relevant
factors (including credit rating, maturity and other terms of the relevant debt securities).
Investors should carefully consider the features of the Capital Bonds which differ from the features of a standard
senior bond. Those features include the ability of Contact to defer interest, optional redemption rights for Contact, and
margin step-up and the subordinated nature of the Capital Bonds. An indicative terms sheet dated 23 September 2024
(Terms Sheet) has been prepared in respect of the Offer. Investors should read the Terms Sheet carefully and seek
financial advice before deciding to invest in the Capital Bonds. Investors should not purchase the Capital Bonds until
they have read the Terms Sheet.
Capitalised terms used in this presentation but not defined have the meaning given to them in the Terms Sheet.
Arranger, Joint Lead Manager and Supervisor Important Information
None of Forsyth Barr Limited (the Arranger), Bank of New Zealand and Craigs Investment Partners Limited (together,
the Joint Lead Managers), The New Zealand Guardian Trust Company Limited (the Supervisor), nor any of their
respective directors, officers, employees, affiliates or agents (a) authorised or caused the issue of, or made any
statement in, any part of this presentation, (b) make any representation, recommendation or warranty, express or
implied, regarding the origin, validity, accuracy, reasonableness or completeness of, or any errors or omissions in, any
information, statement or opinion contained in this presentation, or (c) to the extent permitted by law, accept any
responsibility or liability for this presentation or for any loss arising from this presentation or its contents or otherwise
arising in connection with the Offer.
This presentation does not constitute financial advice or a recommendation from the Arranger, any Joint Lead Manager
or the Supervisor or any of their respective directors, officers, employees, affiliates or agents.
You must make your own independent investigation and assessment of the financial condition and affairs of the Issuer
before deciding whether or not to invest in the Capital Bonds.
Issuer Important Information
Neither the Issuer, nor any of its respective directors, officers, employees, affiliates or agents (a) make any
representation, recommendation or warranty, express or implied, regarding the origin, validity, accuracy,
reasonableness or completeness of, or any errors or omissions in, any information, statements or opinion contained in
this presentation or, (b) to the extent permitted by law, accept any responsibility or liability for this presentation or for
any loss arising from this presentation or its contents or otherwise arising in connection with the Offer.
This presentation does not constitute financial advice or a recommendation from the Issuer or any of its directors,
officers, employees, affiliates or agents.
You must make your own independent investigation and assessment of the financial condition and affairs of the Issuer
before deciding whether or not to invest in the Capital Bonds.
This presentation contains certain 'forward-looking statements' such as indication of, and guidance on, future earnings
and financial position and performance. Such projections and forward-looking statements are not guarantees or
predictions of future performance and involve known and unknown risks and uncertainties and other factors, many of
which are beyond the control of the Issuer and may involve significant elements of subjective judgement and
assumptions as to future events which may or may not be correct.
Past performance information provided in this presentation is not indicative of future performance and no guarantee of
future returns is implied or given.
Investments in the Capital Bonds are an investment in the Issuer and may be affected by the on-going performance,
financial position and solvency of the Issuer.
This presentation is for preliminary information purposes only and is not an offer to sell or the solicitation of an offer to
purchase or subscribe for the Capital Bonds and no part of it shall form the basis of or be relied upon in connection
with any contract or commitment whatsoever.
The information in this presentation was prepared by the Issuer with due care and attention, is given in good faith and
has been obtained from sources believed to be reliable and accurate at the date of preparation, but its accuracy,
correctness and completeness cannot be guaranteed.
Application has been made to NZX for permission to quote the Capital Bonds on the NZX Debt Market and all the
requirements of NZX relating thereto that can be complied with on or before the date of distribution of the terms sheet
have been duly complied with. However, NZX accepts no responsibility for any statement in this presentation. NZX is a
licensed market operator, and the NZX Debt Market is a licensed market under the FMCA.
Disclaimer and important information
33
Agenda
Contact Energy Strategy and
Performance Update
Capital Structure and Funding
Key Terms and Dates
9-13
18-21
22-27
Offer Highlights
4
Manawa Acquisition
14-17
Electricity Market Overview
5-8
44
Offer highlights
30 year
Legal tenor, maturing
3 October 2054
Subordinated
debt
Sits below senior debt and above
equity
BB+
Expected issue credit
rating with S&P
Fixed
Interest rate for 5 years
paid quarterly
Green
Certified with the CBI under Contact’s
Sustainable Finance Framework to
finance renewable generation
$200m
With additional oversubscriptions
55
Electricity Market Overview
Strategy and Performance Update
Contact Strategy
and Update
Manawa Acquisition
66
New Zealand’s reliable, competitive and environmentally
sustainable electricity system
Spot
electricity
pool
Million consumers
1
2.3
5+
Generators
Competitive
29
Distribution
businesses
National
transmission
grid operator
1
Regulated monopolies
8
Retailers
over 50k connections
Competitive
21%
14%
32%
21%
8%
4%
13%
52%
35%
Channel
by volume
19%
24%
16%
25%
16%
% by ICP
(parent company)
Source: EMI, July 2023-Jun 2024
Major generators’ respective operating reports, July 2023-Jun 2024. Mercury's FY24 generation is
as reported on page 5 of its FY24 Integrated Report and appears to exclude a portion geothermal
output associated with joint ventures (captured under other market participants).
Source: MBIE quarterly electricity generation and consumption, Sep 22 – Mar 24.
EMI, Aug 2024.
1
Total ICP including residential, Small Medium Enterprises, C&I
Source: EA website
Indicative
sector
revenue
share
C&I
Retail
NZAS
Other
7
Contact has led the way in decarbonising the NZ electricity system through geothermal development
NZ electricity supply is highly renewable
Electricity generation carbon emissions (units of CO2e)
1
Source: MBIE quarterly electricity and liquid fuel emissions data tables
2015
Coal
2005
2010
2020
Gas
-72%
Electricity generation mix comparison 2005 and 2023
of flexible alternatives (including thermal) are required
to manage dry year risk
4
3-5TWh
60
6
19
3
10
2
Geothermal
and wind have
begun to
displace
fossil fuels
2
Source: NZX hydro, annual average controlled lake storage volumes (post-market formation) 1997 – 2023
3
MBIE Electricity Generation statistics (post-market formation) 1997 – 2023
4
Source: NZ Battery Indicative Business Case, MBIE, 2023
1
Source: MBIE quarterly electricity generation and consumption data
Calendar year
Calendar year
61%
18%
7%
9%
Hydro
Geothermal
Wind
Coal
Gas
3%
Other
2%
57%
7%
13%
19%
Hydro
Geothermal
1%
Wind
Coal
2%
Other
Gas
2023
2005
20,000
22,000
24,000
26,000
28,000
30,000
199720022007201220172022
Max
Min
24,203
1,500
2,000
2,500
3,000
3,500
199720022007201220172022
Max
Min
2,639
New Zealand has limited hydro storage and high variability
Controlled hydro lake storage volumes (GWh)
3
Annual hydro generation volumes (GWh)
2
88
Hydrology
Short-term external factors that
can influence the marketinclude
thermal fuel price volatility and
availability risks as well as swings in
hydrology conditions.
Short-term
wholesale
electricity
prices
The market responds to changes in supply and demand by
sending price signals
Wholesale and futures electricity pricing ($/MWh)
Source: EMI wholesale pricing (OTA) - data to 30 June 2024
Long-term pricing is linked to the long-run marginal costs of new renewable projects to meet demand,
plus costs associated with firming renewable intermittency. On this basis, Contact expects the long-term
wholesale price to revert to $115-125/MWh (2024 real - OTA).
And the fundamental requirement for thermal to support a hydro dominated system supports forward electricity prices
0
50
100
150
200
250
300
350
Jun-
15
Jun-
16
Jun-
17
Jun-
18
Jun-
19
Jun-
20
Jun-
21
Jun-
22
Jun-
23
Jun-
24
10 year
average
spot price =
$114/MWh
Long-dated futures (>12 months)
Short-dated futures (<12 months)
Monthly average spot price
9
Our strategy to lead NZ’s decarbonisation
Enablers
Transformative ways of working:
create a flexible and high-performing
environment for New Zealand’s top talent
Outcomes
Growth
Pivot our business to a new growth era that
captures the value unlocked by decarbonisation
Resilience
Deliver sustainable shareholder returns,
aligned with our ESG commitment
Performance
Realise a step-change in performance, materially
growing EBITDAF through strategic investments
Strategic
theme
Objective
Grow
demand
Attract new industrial demand with
globally competitive renewables
Grow renewable
development
Build renewable generation and
flexibility on the back of new demand
Decarbonise
our portfolio
Lead an orderly transition
to renewables
Create outstanding
customer experiences
Create New NZ's leading energy and services
brand to meet more of our customers’ needs
Operational excellence:
continuously improving our operations
through innovation and digitisation
ESG: create long-term value through our strong
performance across a broad set of environmental,
social and governance factors
10
Contact is preparing for further investment
in renewable generation and storage
Geothermal generation potential (TWh p.a.)
1
Includes mean geothermal generation (existing stations) plus Tauhara volume based on 135MW currently online. Also includes ~50GWh uplift already delivered on Wairakei field (see note 6).
2
Represents uplift in Tauhara output expected from completion of final commissioning activity in 2024 (0.1TWh) and the first planned outage in October 2025 (0.2TWh).
3
For projects included in the “land access secured” category, indicative output is shown based on early estimates of capacity per hectare and assumed capacity factors of ~40% for wind and 20-25% for solar.
4
Consent already received for 100MW grid-scale battery at Stratford.
5
All uncommitted investments are subject to Board investment decisions. The Tauhara, Te Huka 3, Roxburgh, Kōwhai Park and Glenbrook battery investments have been committed to.
6
In FY24 Contact operationalised the higher consented fluid take at the Wairakei field (5kt per day) translating to a ~50GWh p.a. uplift in average geothermal generation (before new developments online) applying at ~30MWh/kt efficiency factor.
7
45GWh p.a. uplift is based on mean hydrology conditions.
Wind and solar options under development (TWh p.a.)
3
Land access secured
Consenting underway
Under construction
4TWh
Wind
2TWh
Solar
Key updates (including grid-scale batteries)
•Kōwhai Park solar (0.3TWh) and Glenbrook battery
(100MW) now under construction.
•Stratford battery (100MW) consented.
•Consenting underway includes:
‒Glorit solar (0.3TWh.
‒Stratford solar (0.3TWh).
‒Southland Wind (0.9-1.2TWh).
•Earliest expected FID for these projects is FY26.
•Contact is investigating the potential to include
additional battery capacity within the Glorit and
Stratford solar consenting processes.
4
•Expected FID and online dates depend on
supportive market conditions and funding
arrangements.
20242025
2026
2027>2028
>2028
Calendar year
Tauhara
(1.1TWh)
Te Huka 3
(0.4TWh)
Te Mihi
Stage 2
(0.8TWh)
Roxburgh
(45GWh
7
uplift)
Tauhara 2
Te Mihi Stage 3
(up to 1TWh)
Remaining capacity
(consented) net of full
Wairakei closure
Wairakei
Partial
closure
(-0.8TWh)
Kōwhai Park
(Solar)
(0.3TWh)
Battery
(100MW)
Tauhara
(0.2TWh uplift)
Planned geothermal plus other renewables under construction
5
Expected generation (indicative):
Wairakei
(50GWh
6
uplift)
Current
generation
(mean)
1
0.3
Tauhara uplift
2
0.4
Te Huka 3Current +
under
construction
0.3
Te Mihi 2&3
(uplift
remaining net
of Wairakei
retirement)
0.7
Tauhara
(remaining)
Potential
under current
consents
4.4
5.2
6.3
+1.8
Under constructionRemaining consented
(up to)
Tauhara
(0.1TWh
uplift)
11
Impacts of the energy transition in New Zealand
are starting to become clearer
Theme
Characteristics
Observable impacts
Domestic natural gas
production in decline
Thermal power stations
closing as more intermittent
renewables come online
High level of activity to
advance renewable
electricity builds
•Ageing natural gas fields with limited
forward plans for further investment.
•Drilling / maintenance on major
domestic fields unsuccessful.
•Overall trend of output decline.
•Scarcity of new long-term gas
contracts (and at elevated prices).
•Spot gas trading at over $35/PJ.
•Higher reliance on coal for electricity
generation.
•Stored gas and coal depleted.
•More intermittent renewable
generation entering the market,
leading to increased price volatility.
•High-cost baseload gas generation
no longer aligns to market needs.
•Thermal power stations closing.
•High fixed costs associated with
running thermal plant need to be
recovered on lower volume.
•Wholesale electricity prices
materially higher when thermal
generation is required.
•High volume of proposed renewable
developments putting pressure on
consenting bodies.
•Constrained contracting market.
•Generators and independent
developers competing for quality
resource e.g. land / sites.
•Backlog in consenting processes.
•Cost escalation on domestic
construction and productive
resource.
•Expected returns on Contact’s
projects at or nearing FID remain
above targets.
1
1
See slide 29 (Annual Results Investor Presentation dated 20/08/24) .
12
Key themes from the FY24 financial results
Uplift in expected and normalised
EBITDAF; Outperformed FY24
guidance; Expecting $770m in FY25
Non-cash accounting topics:
Net movement in the AGS onerous contract provision
of $12m within EBITDAF; Write-offs $50m outside
EBITDAF (peaker, Tauhara, software upgrades)
Cash conversion elevated by high
thermal generation and
capitalisation of Tauhara interest
Accelerated domestic gas decline
leading to more expensive risk
management products
Sales channels repricing to better
align with wholesale market;
Retail facing headwinds from
network cost increases
Shift in national fuel mix leading
to more pronounced
summer / winter pricing
13
Uplift in Contact’s expected FY25 EBITDAF to be driven
by the realisation of growth investment
164
44
600
FY24 EBITDAF
(normalised
and expected)
Renewable
generation
changes
Long-term
channel price
19
Market
channel price
-32
Gas, carbon
and risk
management
costs
-19
Net volume
impact
-5
Other
operating costs
and income
770
FY25 EBITDAF
(normalised
and expected)
+170
¹ See slide 40 (Annual Results Investor Presentation dated 20/08/24) for assumptions underpinning FY24 normalised and expected earnings.
Normalised and expected EBITDAF ($ million)
1
FY25 normalised and expected EBITDAF includes generation from Tauhara and Te Huka 3
480
520
550
600
770
553
546
573
663
FY21FY22FY23FY24FY25
Actual result delivered
Guidance (at beginning of the year)
Guidance vs Actual
Like-for-like increase of $170m (28%) on year-on-year guidance
Strong track record of delivering
performance above guidance
(Guidance reflects normalised and expected EBITDAF
based on mean hydrology conditions)
Guidance CAGR FY21 to FY25 (~13% p.a.)
Normalised and expected EBITDAF is based on mean hydrology conditions
Start to FY25 has been characterised by low hydro inflows and high wholesale prices. These conditions have a partially offsetting
impact on earnings (resulting in above or below normalised expected performance).
Of note, July 2024 EBITDAF was $10m below normalised and mean expected.
1414
Manawa Energy
Acquisition
15
A highly strategic and financially compelling acquisition
~$220m Normalised
EBITDAF contribution post
realisation of future
embedded value, portfolio
benefits and cost synergies
(~$75m higher than Manawa
reported FY24)
2
123
456
Transaction structure
maintains Contact’s BBB
credit rating, retains capital
options for renewable
development and enables
Manawa shareholders to share
in combination benefits
Greater stability of both
portfolio generation and
cash flow expected to
support an uplift in
Contact’s DPS profile by
1cps in FY26 (40cps) and by
2 - 3cps in FY27 (41- 42cps)
1
Accelerates Contact’s strategy
to grow its renewable
generation portfolio and
decarbonise with a combined
development pipeline of
>10TWh and complementary
development capabilities
Transaction implies a
10.7x Normalised
EV/EBITDAF acquisition
multiple and is forecast to
deliver an IRR exceeding
Contact’s WACC
1
All dividend decisions are a matter for the Board. These align to the dividend policy and are dependent on business and market conditions when each payment decision is made.
2
Normalised EBITDAF represents Manawa’s FY24 Reported EBITDAF adjusted for expected future mean annual hydro generation, Contact’s view of expected long-run wholesale electricity prices and expected cost synergy and portfolio
combination benefits. Please refer to pages 24 and 41 for further detail, and to pages 25 and 27 for expected integration and transaction costs to achieve the Normalised EBITDAF (Investor Presentation – Contact acquisition of Manawa
dated 11/09/24).
Geographically diversified
hydro schemes are
complementary, enhancing
portfolio resilience and the
ability to support the energy
market
16
Important combination for the New Zealand energy
market and energy transition
✓
Attractive and diversified
combined renewable
development pipeline of
>10TWh supported by
complementary capabilities
“The combination with Manawa is expected to create a more diversified, resilient and efficient Contact business, which will be positioned to better manage dry
year risk, execute on renewable development opportunities and support New Zealand’s energy transition”
- Mike Fuge, CEO
1
When compared to the volume that can be supported by Contact’s and Manawa Energy’s standalone hydro portfolios.
✓
Increased hydro generation
diversification and greater
portfolio resilience
✓
Greater ability to offer competitive
risk management products to the
market
Greater ability to develop
and invest in future
intermittent renewable
generation
Increasing renewable generation
capacity can
Ability for customers to reduce
exposure to spot-market rates
in ‘dry years’ through hedging
Combination benefitsEnhanced Contact abilities Expected energy market benefits
✓
✓
Balance sheet and scale efficiencies –
including reduced cost of capital,
while retaining capital options
Greater ability to place a higher
volume of fixed price supply
agreements into the market
1
Enhance energy market security
✓
✓
✓
✓
OR
✓
Contribute to reducing
wholesale electricity prices
Reduce reliance on baseload or
discretionary thermal generation
✓
17
Acquisition summary
Funding & capital
structure
Acquisition overview
Transaction process
•Estimated cash consideration and repayment of outstanding Manawa bank debt and bonds will initially be funded via new committed Contact bank
debt facilities
•Contact Net Debt / EBITDAF is expected to rise temporarily above 3.0x on a spot basis
4
at the time of closing before progressively decreasing to
below 3.0x in the short term
−post transaction announcement, Standard & Poor’s (S&P) have reaffirmed Contact’s BBB credit rating on a stable outlook
•Contact has entered into a Scheme Implementation Agreement (Scheme) to acquire 100% of Manawa
•As consideration, eligible Manawa shareholders are expected to receive
0.5719x
1
Contact shares for each Manawa share held on the record date
(equivalent to $4.79 per Manawa share); plus cash consideration of $1.16 per Manawa share
2
•Total consideration implies a value of $5.95 per Manawa share and a Manawa enterprise value of ~$2.3bn
−equates to a 47.6% premium to last close and 47.4% premium to the 30-day VWAP
−implies a Normalised EV / EBITDAF acquisition multiple of 10.7x
•The Scheme is subject to a number of conditions including Contact obtaining NZ Commerce Commission approval
•Major Manawa shareholders Infratil and TECT Holdings (who together represent 77.9% of Manawa’s shares) have committed to vote in favour of the
Scheme subject to certain conditions
−Manawa shareholders are expected to own ~18.5%
1
of Contact post completion of the Transaction
•The current indicative timetable is targeting the Scheme taking effect first half 2025
5
Contact has entered into a Scheme Implementation Agreement with Manawa to acquire 100% of Manawa via a
mixture of Contact shares and cash
1
Based on the Contact SIA price of $8.3755 (calculated as the 5-day VWAP to market close 10th September 2024) and excludes any adjustments for dividends declared and paid by Contact between Scheme signing and implementation.
2
Final cash consideration and the number of shares issued to Manawa shareholders are subject to adjustments for dividends declared paid by Contact and Manawa between Scheme signing and implementation.
3
All dividend decisions are a matter for the
Board. These align to the dividend policy and are dependent on business and market conditions when each payment decision is made.
4
Does not account for smoothing.
5
All dates are indicative only and subject to change.
•~$220m Normalised EBITDAF contribution post realisation of future embedded value, portfolio benefits and cost synergies
•Transaction is accretive on a Normalised EBITDAF less SIB capex per share basis and is expected to deliver an IRR exceeding Contact’s WACC
•Expected Contact cost of capital benefits from greater earnings stability, generation diversification and reduced thermal generation exposure
•Greater stability of generation and cash flow is expected to support an uplift in Contact’s DPS profile by 1cps in FY26 (40cps) and by 2 - 3cps in
FY27 (41 – 42cps)
3
Financial impacts
1818
Capital
Structure &
Funding
19
•A Green Australian Medium Term Note (AMTN)
was issued during the year. This was partly to
refinance a maturing tranche of USPP in
December 2023, but also provided additional
funding for the ongoing capital investment
programme.
•Contact’s hydropower assets have now (as at
30/6/24) been included in the green asset pool that
supports Contact’s Green Borrowing Programme,
having been subject to an assurance review by EY
verifying compliance with the Climate Bonds
Standard and the Hydropower sector criteria (see
our GBP Update Report – Independent Assurance
FY24)
•Contact’s planning aligns with maintaining its
investment grade credit rating. This requires net
debt to EBITDAF to remain below 3.0x over a
sustained period. Point estimate net debt to
EBITDAF is currently 2.7x and Contact’s EBITDAF
outlook, DRP and capacity for additional hybrid
bonds (such as the Capital Bonds) provide the
ability to manage this metric effectively.
Contact’s sustainable finance principles are built on diversified sources of funding
Closing net debt ($m)
Face value of borrowings less cash
Interest rate (%)
Weighted average gross interest
2
on average borrowings
Net debt to EBITDAF (x)
Includes S&P adjustments (prior to FY20, AGS was treated as a lease)
3
Borrowing maturities ($m)
Average tenor of 5.9 years as at 30 June 2024
Strong balance sheet
1
Includes $87m of collateral held on deposit for margin calls associated with the trading of electricity price derivatives on the ASX.
2
Gross interest includes all interest on borrowings, bank commitment fees and deferred financing costs. Unwind of leases, provisions and capitalised interest not included.
3
Illustrated here on a point basis based on expected S&P adjustments. FY21 and FY22 have been restated based on latest understanding of S&P approach.
990
1,036
774
1,025
1,474
1,834
-229
25
-47
FY19
22
-44
FY20
21
-150
FY21
25
-168
FY22
49
-140
FY23
47
FY24
1
968
1,014
645
882
1,383
1,652
Lease obligationsBorrowingsCash on hand
67
434
225
100
135
350
300
150
250
350
7
FY25
7
FY26
7
FY27
22
4
FY28FY29FY30FY31FY52
107
292
357
625
367
Undrawn bank facilities
Domestic bonds
USPP
NEXI
Capital bonds
AMTN
2.3
2.4
1.4
1.8
2.6
2.7
FY19FY20FY21FY22FY23FY24
1,224
1,029
974
892
1,310
1,727
5.3%
FY19
5.2%
FY20
5.2%
FY21
5.4%
FY22
5.8%
FY23
6.1%
FY24
Average gross interestAverage gross debt
2020
Sustainable finance
•Contact established its Green Borrowing Programme in 2017 – the first such certification completed by a New Zealand issuer and the first green certification
of an entire debt programme globally. This demonstrates Contact’s commitment to investing in renewable energy assets (i.e. geothermal and hydro power)
which have achieved independent certification by the Climate Bonds Initiative (CBI).
•The Green Borrowing Programme is described within Contact’s Sustainable Finance Framework (Framework), which aligns with the International Capital
Markets Association Green Bond Principles, and the Asia Pacific Loan Market Association Green Loan Principles. The Framework, which also incorporates
the issuance of sustainability-linked instruments was released in November 2022 and has been externally reviewed by Ernst & Young.
Eligible Asset Criteria – Green
Bond
•In alignment with the Sustainable Finance
Framework, Contact will use the net proceeds from
the Green Bond issue to finance or refinance
Eligible Green Assets and/or Activities.
•Eligible Green Assets and/or Activities are those
that meet the eligibility criteria set out to the right
and will comply with one or more of the Green Bond
Principles, Green Loan Principles or the Climate
Bonds Standard, and contribute to meeting the
United Nations Sustainable Development Goals
(SDGs).
2121
Green Borrowing Programme
•Contact recognises the importance investors place on transparency and disclosure relating to Green Debt Instruments. Our Framework, CBI programmatic certification,
annual independent assurance statement and annual Integrated Reports are available on our website. Contact’s reporting in relation to this Capital Bonds issue will be
outlined within the Capital Bonds documents.
•A key metric is the Green Ratio whereby the total green asset value must be at least equal to total green debt (i.e. a ratio of 1.0 minimum). As at 30 June 2024, Contact’s
Green Ratio is met at 2.4 times.
Hydropower Sustainability Standard
Assessment
•Inclusion of Contact’s Hydro Assets in its
Green Borrowing Programme per the
Climate Bonds Standard involved
undertaking a Hydropower Sustainability
Assessment.
•Contact’s ESG performance benchmarked
the Clyde and Roxburgh hydro schemes
against best international practice.
•The assessment was detailed and broad –
involving a site visit from international
accredited assessors, collecting evidence
and engaging with internal and external
stakeholders across 12 different
sustainability topics.
•Contact is the first company in New Zealand
to have undertaken the assessment. We
received silver certification from the
International Hydropower Association and
reached gold level in 10 of the 12 topics.
2222
Key Terms
and Dates
2323
IssuerContact Energy Limited (Contact)
InstrumentUnsecured, subordinated, redeemable, cumulative, interest bearing debt securities
Purpose
The proceeds from the issue of the Capital Bonds will be used by Contact for the financing and refinancing of renewable generation and other eligible green
assets in accordance with the terms of the Sustainable Finance Framework
GuarantorsNone
Ranking
The Capital Bonds will rank equally among themselves and will be subordinated to all other indebtedness of Contact, other than indebtedness expressed to
rank equally with, or subordinated to, the Capital Bonds
The Capital Bonds will rank equally with the CEN060 Bonds
Credit rating
Expected issue credit rating – BB+ by S&P
The expected issue credit rating of the Capital Bonds is two notches below Contact's issuer credit rating of BBB. One notch is deducted for the Capital
Bonds being subordinated and a second notch is deducted because of the potential for interest payments to be deferred
Issue amountUp to $200m (with the ability to accept oversubscriptions at Contact's discretion)
Term30 years (maturing 3 October 2054)
Reset Dates3 October 2029 and every five years thereafter. As part of a Successful Election Process, a different Reset Date may be adopted
Optional early
Redemption by Contact
On each Reset Date, any Interest Payment Date after a Reset Date if a Successful Election Process has not been undertaken, a Tax Event, a Rating
Agency Event or if there are less than 100m Capital Bonds on issue
Interest Rate
The Interest Rate and Margin for the first five-year period will be set following a bookbuild on 26 September2024 as the Benchmark Rate plus the Margin,
subject to a minimum Interest Rate
If not redeemed earlier, on each Reset Date,unless there has been a Successful Election Process,the Interest Rate for the next five-year period will reset to
the Benchmark Rate on the applicable Reset Date plus the Margin plus the Step-up Percentage (0.25%)
Deferral of interest
Payment of interest can be deferred at any time for up to five years at the sole discretion of Contact, with a distribution stopper in place while any Unpaid
Interest remains outstanding
Deferred interest is cumulative
Quotation*It is expected the Capital Bonds will be quoted under the ticker code CEN090 on the NZX Debt Market
Key terms of the Capital Bonds
* Application has been made to NZX for permission to quote the Capital Bonds on the NZX Debt Market and all the requirements of NZX relating thereto have been complied with on or before the distribution of the Terms Sheet have
been duly complied with. However, NZX accepts no responsibility for any statement in the Terms Sheet or this presentation. NZX is a licensed market operator, and the NZX Debt Market is a licensed market under the FMCA.
2424
The Margin and the Interest Rate for the period until the First Reset Date (3
October 2029) is to be set by the bookbuild
Before each Reset Date, Contact may propose, through an Election Process,
new terms and conditions (including a new Interest Rate and Margin) that
wouldapply to the Capital Bonds from that Reset Date
If no Successful Election Process occurs, the Interest Rate for the next five-
year period resets to the sum of the Benchmark Rate on that Reset Date plus
the Margin plus the Step-up Percentage of 0.25%
Interest payments
An interest payment may be deferred at Contact's sole discretion for up to
five years
If deferred, an interest payment amount will itself accrue interest at the
prevailing Interest Rate on the Capital Bonds (in aggregate, the Unpaid
Interest)
If there is any Unpaid Interest outstanding, Contact shall not:
•make any distributions on, or acquire, redeem or repay, any of its shares
or other securities ranking behind the Capital Bonds
•make any distributions on, or acquire, redeem or repay, any securities
ranking pari passu with the Capital Bonds (other than on a pro-rata
basis)
Interest deferralInterest Rate
2525
Contactmust Redeem Capital Bonds on the
Maturity Date or if an Event of Default occurs
Contact also has a right to Redeem:
a)all or some of the Capital Bonds on any Reset Date;
b)all or some of the Capital Bonds on any Interest Payment
Date after a Reset Date if a Successful Election Process has
not been undertaken in respect of that Reset Date;
c)all of the Capital Bonds if there are less than 100m Capital
Bonds on issue;
d)all of the Capital Bonds if a Tax Event
(1)
occurs; or
e)all ofthe Capital Bonds if a Rating Agency Event
(2)
occurs
Issuer redemption rights
The redemption price will be:
If Redemption is on the Maturity Date, a Reset Date, occurs where there are less than a 100m
Capital Bonds on issue or due to theoccurrenceof a Tax Event:
a)the Principal Amount plus Unpaid Interest plus accrued interest;
If Redemption occurs where a Successful Election Process has not been undertaken or due to the
occurrence of a Rating Agency Event, the higher of:
a)the Principal Amount plus Unpaid Interest plus accrued interest; and
b)the market price, which will include accrued interest
A partial redemption will bepermitted only to the extent there will be at least 100m Capital Bonds
outstanding after the partial redemption
1)A Tax Event is where a change of law or regulation has, or will, occur and interest payable on the Capital Bonds is not, or will not be, fully tax deductible.
2)A Rating Agency Event occurs where Standard & Poor’s changes its criteria and the Capital Bonds no longer qualify for intermediate equity content or if Contact
ceases to have a credit rating.
2626
Key early redemption drivers
Contact can Redeem the Capital Bonds or run an Election Process
•If the Election Process is unsuccessful the effective Margin will increase by
the Step-up Percentage (0.25%)
•Capital Bonds are redeemableat par whereas any subsequent issuer call
betweenReset Dates will be at the higher of par and market value(unless
there are less than 100m Capital Bonds on issue or due tothe occurrence
of aTax Event)
•If the Capital Bonds are not redeemedat year five then at year ten there is
a refinancing requirement at the same time as there is a loss of equity
content
•Equity content falls to minimal, S&P treats the Capital Bonds as
100% debt in Contact's financial ratios
•Likely to be high-cost debt with limited benefits
•These outcomes are not consistent with the rationale for the issue
Year ten
Year five
•Notwithstanding these early redemption drivers, Contact considers that hybrid securities that are ascribed equity content,
such as the Capital Bonds, will be a key feature of its capital structure going forward
•As such, if Contact chooses to redeem the Capital Bonds early, current expectation is that equivalent replacement securities
would be issued to fund that redemption
20292034
2727
2024
Monday, 23 September
Opening Date
Indicative pricing and Terms Sheet released
Thursday, 26 September
Closing Date (11am)
Rate Set Date
Thursday, 3 OctoberIssue Date
Friday, 4 OctoberExpected Quotation Date
2025Friday, 3 JanuaryFirst Interest Payment Date
2029Wednesday, 3 OctoberFirst Reset Date
2034Tuesday, 3 OctoberEquity credit content expected to fall to minimal (0%)
2054Saturday, 3 OctoberMaturity Date
Key information and timeline
The Offer
Bookbuild process
NZX Firms, institutional investors and other
approved parties to be invited to participate
in the bookbuild process
No public pool
Minimum applications
$5,000 and multiples of $1,000 thereafter
Fees
Firm fees of 0.50% to those participating in
the bookbuild
Brokerage fee of 0.50%
Joint Lead Managers
Bank of New Zealand
Craigs Investment Partners
Forsyth Barr
2828
Appendix
2929
A reminder of the Election Process
Bondholders who accepted
the New Conditions
New Conditions will apply
to their Capital Bonds
Bondholders who rejected
the New Conditions
Contact Repurchases their Capital
Bonds
Bondholders who did nothing
are deemed to have accepted
the New Conditions
New Conditions will applyto
their Capital Bonds
Election Notice is revoked
and the Capital Bonds remain
on current terms
Step-up Percentage of 0.25% applies
Bondholders decide to:
a) accept New Conditions
b) reject New Conditions: or
c) do nothing
Election Notice given proposing New Conditions
Election Process not successful
Contact declares a Successful Election Process
30
Thank you
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- KPG — Kiwi Property: Kiwi Property launches Green Bond offer2024-12-01
“Kiwi Property Group Limited (Kiwi Property) today announced it is offering up to NZ$100 million ( plus up to NZ$25 million of oversubscriptions at its discretion) of 5.5-year fixed- rate senior secured green bonds (Green Bonds) to institutional and New Zealand retail investors.…”
- KPG — Kiwi Property: Kiwi Property confirms Green Bond offer interest rate2024-12-05
“Kiwi Property Group Limited (Kiwi Property) today announced that the issue size of its 5.5-year fixed-rate senior secured green bond (Green Bonds) offer has been set at NZ$125 million, following a successful bookbuild process. This includes oversubscriptions of NZ$25 million.…”
- FCG — Fonterra Co-operative Group Limited: Fonterra launches Retail Bond Offer2024-10-28
“29 October 2024 Fonterra launches retail bond offer Fonterra Co-operative Group Limited (Fonterra) confirms today that it is offering up to NZ$250,000,000 of unsubordinated, unsecured five year fixed rate bonds (with the ability to accept up to NZ$100,000,000 in oversubsc…”