Flight Centre Extends Debt Maturity Amid Convertible Notes Repurchase Plan
Flight Centre Travel Group has launched a A$450 million convertible notes offering due 2032, aiming to repurchase up to A$325 million of existing notes and support its growth ambitions with extended debt maturity.
- A$450 million senior unsecured convertible notes offering due 2032
- Concurrent repurchase of up to A$325 million of existing convertible notes
- New notes to be listed on Singapore Exchange and convertible into ordinary shares
- Coupon expected between 2.0% and 2.5% with conversion premium of 37.5%–42.5%
- Jefferies acting as sole lead manager and conducting a Delta Placement of shares
Flight Centre’s Strategic Capital Move
Flight Centre Travel Group (ASX, FLT) has announced a significant capital management initiative with the launch of a A$450 million senior unsecured convertible notes offering due in 2032. This move is designed to refinance a portion of its existing convertible notes maturing in 2027 and 2028, while simultaneously providing additional liquidity to fuel its growth plans.
Managing Director Graham Turner described the transaction as a continuation of the company’s proactive approach to capital management. By extending its debt maturity profile, Flight Centre aims to maintain balance sheet flexibility and secure low-cost fixed-rate funding, a crucial advantage in the current economic environment.
Details of the Offering and Repurchase
The new convertible notes will be offered to eligible investors through a book-build process, with final terms expected imminently. The notes carry a coupon rate anticipated between 2.0% and 2.5% per annum, payable semi-annually, and feature a conversion premium ranging from 37.5% to 42.5% over the reference share price set at A$11.95. Conversion rights extend from 41 business days after settlement until shortly before maturity in 2032.
Concurrently, Flight Centre plans to repurchase up to A$125 million of its 2027 notes and potentially all outstanding 2028 notes, totaling approximately A$325 million. This repurchase will be conducted via a reverse book-build process, prioritizing holders who participate in the new offering. The repurchase price will be determined through this process, giving the company discretion over allocations.
Market and Structural Implications
The new notes will be listed on the Singapore Exchange Securities Trading Limited (SGX-ST), reflecting Flight Centre’s strategy to tap into diverse capital markets. The issuance is expected to be physically settled through the issuance of new ordinary shares upon conversion, which could have implications for shareholder dilution depending on conversion activity.
Jefferies (Australia) Pty Ltd is acting as the sole lead manager and bookrunner for the offering, as well as dealer manager for the repurchase. To hedge the transaction, Jefferies will conduct a Delta Placement of up to 10.4 million ordinary shares at a price slightly discounted to the market close, which will also set the initial conversion price for the new notes.
Looking Ahead
This capital raising and refinancing effort underscores Flight Centre’s commitment to managing its debt profile prudently while positioning itself for growth in a competitive travel services sector. Investors will be watching closely for the final pricing and investor uptake, which will signal market confidence in Flight Centre’s strategy and outlook.
Bottom Line?
Flight Centre’s convertible notes offering marks a pivotal step in balancing growth ambitions with disciplined capital management.
Questions in the middle?
- What will be the final coupon rate and conversion premium after the book-build?
- How will the repurchase allocations impact existing noteholders and potential dilution?
- What growth initiatives will Flight Centre prioritize with the proceeds from the new notes?
