Distributions paid to Holders will normally be Interest on Notes. However, after an Assignment Event, Distributions will be Dividends on Preference Shares.
Regardless of whether a Distribution is Interest on Notes or a Dividend on Preference Shares, the amount of the Distribution will be calculated on the same basis. You will not be entitled to both interest on Notes and a Dividend on Preference Shares at the same time.
How will the Distribution Rate be calculated?
The Distribution Rate for the next Distribution period will be calculated on the Distribution Payment Date for the previous distribution period. It will be the Market Rate plus a Margin. Until the first Reset Date, the Market Rate is the 90 Day Bank Bill Rate (which will be determined each quarter), and the Margin is the Initial Margin of 1.0000 % per annum.
All calculations of the Distribution Rate will be rounded to four decimal places. The distribution payable each quarter is calculated based on the Issue Price, Distribution Rate, number of days in the quarter and number of ANZ StEPS held. ANZ will announce the details of the Distribution to be paid shortly after the payment of the previous Distribution.
What is the 90 Day Bank Bill Rate?
The 90 Day Bank Bill Rate is the primary benchmark interest rate for the Australian money market commonly used by major Australian banks to lend short term cash to each other over a 90 day period. The 90 Day Bank Bill Rate changes to reflect the supply and demand within the cash and currency markets and other factors.
Will your Distribution be franked?
Your Distribution will not be franked if it is paid as Interest on Notes – which ANZ and ANZ (NZ) expect to be the case. However, if an Assignment Event occurs, then your distribution will be paid as Dividends on Preference Shares.
When will your Distributions be paid?
ANZ will pay your Distributions on Distribution Payment Dates. Unless ANZ changes Distribution Payment Dates on any Reset Date, your Distribution will be determined and paid on the following dates each year:
Distribution Rate determined
Distribution paid
15 December
15 March
15 March
15 June
15 June
15 September
15 September
15 December
If any of those days is not a Business Day, then the relevant determination and payment will happen on the next Business Day.
How will your Distributions be paid?
Your Distributions will be paid either directly into an account at an Australian financial institution that you nominate, or by cheque (non-Australian residents only) mailed to the address you provide to ANZ's Share Registrar. All Distributions will be paid in Australian dollars.
To be entitled to a Distribution, you must be recorded as the registered Holder on the relevant record date – which is at least 11 Business Days (or any other period determined under the Listing Rules from time to time) before the relevant Distribution Payment Date.
Will Distributions always be paid?
There can be no assurance the Distributions will be paid on ANZ StEPS. The payment of a Distribution depends on three Payment Tests which ANZ currently expects to meet:
The first Payment Test involves the effect of the Distribution on ANZ's capital adequacy requirements as set by Australian Prudential Regulation Authority(APRA). A distribution requires APRA approval if the Distribution will cause the Total Capital Adequacy Ration or Tier 1 Capital Ration of ANZ (on a Level 1 basis), or the relevant entities within the Group (on a Level 2 or Level 3 basis) to not comply with APRA's capital adequacy guidelines as they apply to ANZ as a single entity, a regulated banking group or a consolidated group;
The second Payment Test involves whether the Distribution exceeds ANZ's consolidated distributable Profits on the relevant record date. If it does, a Distribution requires APRA's approval; and
The third Payment Test is whether APRA objects to the payment of the Distribution. If it does, ANZ may not pay a Distribution.
If an Assignment Event occurs, the Payment Tests that apply to Dividends also include whether ANZ may legally pay a dividend and the requirement for Directors to resolve to pay dividends, which they may or may not do in their sole discretion.
What happens if your Distribution is not paid?
If your distribution is not paid within 20 Business Days after the relevant Distribution Payment Date, then an Assignment Event occurs. If a Distribution is not paid after an Assignment Event, ANZ will not be required to make up the distribution Payment. However, ANZ will be subject to a 'dividend stopper'.
Are there any consequences for ANZ if your Distributions are not paid?
Yes. If ANZ does not pay a Distribution within 20 Business Days after a relevant Distribution Payment Date, an Assignment Event occurs and a 'dividend stopper' will apply to ANZ.
A 'dividend stopper', prevents ANZ from declaring or payment dividends or making distributions, returning share capital, or redeeming or repurchasing any share capital that ranks below the Preference Share component of your ANZ StEPS. This prevents ANZ from paying dividends or Ordinary shares.
The 'dividend stopper' will be lifted if ANZ pays an Optional dividend equal to the unpaid amount of any distribution in the preceding year.
