$100 notes convert to shares.
Accounting software vendor MYOB has announced to the Australian Stock Exchange (ASX) a $125 million offer of subordinated notes, a five-year security that pays a minimum 10 percent floating interest and could be converted to shares if the company itself was listed.
MYOB Finance Australia, a member of the MYOB group, has applied to be admitted to the ASX and for the notes to be quoted on the ASX. A prospectus was available for download from www.myobnotesoffer.com.
“The net proceeds of the Offer will be used to partly repay senior debt facilities that were used to finance the acquisition of MYOB and make a return of capital to the current owner of the MYOB Group, who may reinvest those proceeds in future product development or for acquisitions by MYOB, return it to its ultimate owners, or use the proceeds itself at its discretion,” MYOB said in a press release.
The convertible note was a specialised debt instrument that was probably intended to give MYOB owner Bain Capital “some breathing space”, said Michael McCarthy, a market analyst from CNC Markets, a trading analytical firm.
“If they felt that this enterprise were to significantly increase in value any time soon they probably wouldn’t be doing this. It’s expressing a “Goldilocks” view – the company is neither growing too fast nor is it growing too slowly.”
“MYOB Subordinated Notes provide investors with an opportunity to invest in a leading provider of business management solutions in Australia and New Zealand. MYOB generates strong cashflow and benefits from a high proportion of recurring revenue,” said MYOB CEO Tim Reed in the release.
“Our recent investment in cloud technologies, such as the MYOB Live product suite, is an important part of our strategy to grow our client base and further strengthen our market position as an online solutions provider.”
The notes would have an issue price of $100 each with a minimum 50 notes ($5,000) per application. The notes were for five year terms unless redeemed earlier. Floating rate and unfranked cash payments were payable quarterly in arrears and must be paid subject to suspension.
If an IPO occurred, eligible holders of notes would receive a priority right to subscribe at a discount of 2.5 percent to the price per security offered to retail investors.