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Sumitomo Chemical Co., Ltd. 3rd Unsecured subordinated bonds with interest payment deferrable clause and optional early redemption conditions |
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| 1. Issue amount | JPY 100 billion |
| 2. Initial interest rate | 3.300% per annum (Note 1) |
| 3. Issue date | September 12, 2024 |
| 4. Maturity date | September 12, 2059 |
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5. Early redemption (Note 2) |
Sumitomo Chemical may redeem the Third Hybrid Bonds at its discretion on each interest payment date from and including September 12, 2029, or in case a Tax Event or an Equity Credit Change Event occurs. |
| 6. Interest payment dates | March 12 and September 12 of each year |
| 7. Deferral of interest payments | Sumitomo Chemical may, at its discretion, defer all or part of the interest payments on the Third Hybrid Bonds. |
| 8. Subordination | The Third Hybrid Bonds are ranked subordinated to Sumitomo Chemical’s general debt and senior to the common stock. |
| 9. Rating |
BBB+ (Rating and Investment Information, Inc.) A- (Japan Credit Rating Agency, Ltd.) |
| 10. Equity credit |
“Class 3 - Equity Credit 50” (Rating and Investment Information, Inc.) “Medium, 50%” (Japan Credit Rating Agency, Ltd.) |
| 11. Underwriters |
・SMBC Nikko Securities Inc. |
| 12. Fiscal agent | Sumitomo Mitsui Banking Corporation |
(Note 1) The fixed interest rate will be applied from the day after September 12, 2024, to September 12, 2029, and a variable interest rate from the day after September 12, 2029 (“Step-up interest rates” will be applied from the day after September 12, 2029).
(Note 2) If Sumitomo Chemical acquires the Third Hybrid Bonds before their maturity date by redemption or purchase (the “Early Redemption”), it expects to raise funds within a 12-month period prior to the Early Redemption by issuing common stock, or by issuing other securities or liabilities (the “Replacement Securities”) approved by the rating agencies as having equity attributes equal to or greater than the Third Hybrid Bonds. In the case of an Early Redemption on or after the first call date of the Third Hybrid Bonds, however, Sumitomo Chemical may decide not to raise funds through issuance of the Replacement Securities if certain financial conditions are met.
This notice has been prepared for the sole purpose of publicly announcing Sumitomo Chemical’s issuance of hybrid bonds (subordinated bonds), not for the purpose of soliciting investments or performing any similar act.
]]>1. Purpose and Background of the Third Hybrid Bonds Issuance
To finance acquisitions and investments to advance the “Further Improvement of Business Portfolio”, one of the basic policies of its Corporate Business Plan for FY2019 to FY2021, Sumitomo Chemical raised 250 billion yen by issuing hybrid bonds, which the Company considered to be a financing instrument conducive to maintaining its financial soundness, on December 13, 2019. (First Hybrid Bonds: 150 billion yen, and Second Hybrid Bonds: 100 billion yen).
Sumitomo Chemical considered:
- making early redemption of the total amount of the Second Hybrid Bonds (100 billion yen) for which the first optional redemption date will arrive on December 13, 2024; and
- issuing the Third Hybrid Bonds and making subordinated loans (the “Loans") as refunding securities for the redemption.
Among these, the Company has decided to issue the Third Hybrid Bonds.
The total amount to be raised through the Third Hybrid Bonds and the Loans will be up to 100 billion yen. The breakdown of this amount will be determined, thoroughly considering relevant factors such as demand from investors and interest rate trends.
2. Features of the Third Hybrid Bonds
The Third Hybrid Bonds have features of both equity and debt. Because they are debt, their issuance does not lead to equity dilution, whereas they are similar to equity in features and characteristics, such as an option to defer interest payments, extremely long-term redemption periods, and subordination in liquidation or bankruptcy proceedings. Accordingly, Sumitomo Chemical expects that the two Japanese rating agencies, Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd. will deem 50% of the funds raised through the Third Hybrid Bonds as equity for the purpose of their ratings.
For the outline of the Third Hybrid Bonds, please see the amended shelf registration statement submitted today to the head of the Kanto Local Finance Bureau.
3. Schedule
For the issuance of the Third Hybrid Bonds, Sumitomo Chemical has designated SMBC Nikko Securities Inc. as the administrative lead manager, Daiwa Securities Co., Ltd., Nomura Securities Co., Ltd., Mizuho Securities Co., Ltd., and Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. as the joint lead managers (other than administrative lead manager, listed in Japanese alphabetical order). After considering relevant factors such as demand from investors and interest rate trends comprehensively, Sumitomo Chemical will determine the issuance terms and conditions of the Third Hybrid Bonds, including the issue amount, in early September 2024 at the earliest. The Company will announce its decision as soon as it is made.
(Reference) Summary of the Second Hybrid Bonds
| Name |
Sumitomo Chemical Co., Ltd. |
|---|---|
| Issue amount | JPY 100 billion |
| Early redemption date | December 13,2024 (first optional redemption date) (Planned) |
| Total amount of early redemption | JPY 100 billion (Planned) |
| Early redemption price | JPY 100 per each bond of JPY 100 |
News release:
“Notice Regarding Issuance of Publicly Offered Hybrid Bonds (Subordinated Bonds)” Oct. 30, 2019
“Notice Regarding Determination of Issuance Condition for Publicly Offered Hybrid Bonds (Subordinated Bonds)” Dec. 6, 2019
This notice has been prepared for the sole purpose of publicly announcing Sumitomo Chemical’s issuance of hybrid bonds (subordinated bonds), not for the purpose of soliciting investments or performing any similar act.
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