Friday 23 September 2016 by FIIG Research ripples_on_water Trade opportunities

StockCo Holdings launches $30m Subordinated 8.75% Fixed Rate Notes

THIS CONTENT IS SUITABLE FOR WHOLESALE INVESTORS ONLY

Agricultural financier StockCo Holdings has announced the launch of a $30m medium term note issue, available to wholesale clients with a minimum investment of A$50,000

cattle

The Notes offer a fixed return (paid monthly) of 8.75%pa for five years stepping up to 9.50% if not called in Sep Oct 2021. The Notes are callable at the Issuer’s option on interest payment dates from Sep Oct 2019 at $103, Sep Oct 2020 at $101.50 or Sep Oct 2021 at par.

The Issuer

StockCo is a private company which provides specialty livestock finance. StockCo fund 100% of the value of livestock as they are purchased for the final, or “finishing”, stage of the livestock’s lifecycle. StockCo takes first ranking security over the livestock assets, and maintains full recourse to the borrower and related entities, including the ability to mortgage any real assets.

In New Zealand, the group has been operating for 20 years and has funded over NZD $1.1b in livestock. The New Zealand business currently has assets under management of NZD $85m. StockCo’s historical loss rate in their NZ operations has been 0.40%.

StockCo has replicated this business model in Australia, having had an exploratory presence in Australia since 2005, and launching their Australian finishing finance business in 2014. Since commencing in Australia, StockCo has grown the Australian business and has current outstanding loans of ~A$100m, and are the largest specialist livestock financier in Australia.

The livestock collateral is a liquid asset that is readily realisable, which can additionally be tracked using Australia’s National Livestock Identification System (NLIS). Further, by funding livestock during the finishing stage, as it gains weight (and thus value), StockCo’s security position naturally improves over time.

The Offer

  • StockCo Holdings Pty Limited (ABN 54 604 825 836) to issue A$30,000,000 of Medium Term Notes.
  • The Issuer of the Notes is a holding company; as such Noteholders are structurally subordinated to creditors of StockCo AgriCapital, the Group’s operating subsidiary which holds the lending assets of the group.
  • The Notes offer a fixed return (paid monthly) of 8.75% p.a. for five years stepping up to 9.50% if not called in Sep Oct 2021. The Notes are callable at the Issuer’s option on interest payment dates from Sep Oct 2019 at $103, Sep Oct 2020 at $101.50 or Sep Oct 2021 at par.
  • The Notes benefit from a package of maintenance covenants that limits future borrowing of the Issuer and the asset owning subsidiary. The covenants can force them to repay debt or raise additional equity if performance deteriorates, supported by a clear unwind mechanism if breaches cannot be remedied.
  • The Notes are not listed on an exchange or rated by a Ratings Agency.
  • FIIG is the Sole Lead Arranger for this transaction and the Notes are available to Wholesale Clients only (pursuant to the Corporations Act 2001 (Cwlth)), with an initial minimum subscription of A$50,000 and in increments of A$1,000 thereafter.

To apply please contact your FIIG representative or phone 1800 01 01 81.