Ad-hoc: Rheinmetall AG Launches an Offering of EUR 1 Billion Convertible Bonds
On January 31, 2023, Rheinmetall AG announced the launch of an offering for convertible bonds, aiming to secure gross proceeds of EUR 1 billion.
The company’s executive board, with the supervisory board’s approval, has put forth two series of unsubordinated, unsecured convertible bonds. The first series, known as “Series A,” has a principal amount of EUR 500 million, maturing on February 7, 2028. The second series, “Series B,” also priced at EUR 500 million, will mature on February 7, 2030. Collectively referred to as the “Bonds,” these will be convertible into about 3.14 million new and/or existing no-par value ordinary bearer shares of Rheinmetall.
These bonds are being offered through an accelerated bookbuilding process exclusively to institutional investors outside of the United States and other specified jurisdictions, adhering to Regulation S under the U.S. Securities Act of 1933 and other applicable laws.
The bonds, each with a denomination of EUR 100,000, will be issued at their principal amount. Unless previously converted, redeemed, or repurchased and cancelled, they will be redeemed at maturity for their principal amount. Series A will offer an annual coupon between 1.625% and 2.125%, while Series B will have a coupon ranging from 2.00% to 2.50%, with payment on a semi-annual basis. The conversion premium for both series will be set between 40% and 45% above the reference share price, calculated as the average of the volume-weighted average price of the shares on XETRA during today’s trading day.
The company retains the right to redeem all outstanding bonds of the relevant series under certain conditions, such as if the price of shares reaches or exceeds 130% of the prevailing conversion price.
A separate announcement will disclose the final terms of the bonds later today, with settlement expected around February 7, 2023. Following settlement, the company aims to have the bonds traded on the Open Market segment (Freiverkehr) of the Frankfurt Stock Exchange.
The anticipated net proceeds from this bond issue will primarily fund the acquisition of Expal Systems S.A., as announced on November 13, 2022. The company seeks to maintain strategic flexibility for internal and external growth initiatives while general corporate purposes will also be supported. Additional funding for the remaining purchase price will come from existing cash reserves and bank loans.
A 90-day lock-up period post-settlement is agreed upon, subject to customary exemptions and conditions set by joint global coordinators.
