CVC’s Unsecured Notes Raise: What Risks Should Investors Watch?

Overview of the Offer

CVC Limited, an ASX-listed investment company focused primarily on real estate opportunities, has launched a new capital raising initiative through the issuance of redeemable, unsecured, non-convertible notes known as CVC Notes 3. The offer comprises a New Money Offer targeting new investors and a Reinvestment Offer for existing holders of CVCHA notes, allowing them to exchange their holdings on a one-for-one basis.

The total face value of the notes offered is $50 million, with the ability to raise more or less depending on investor demand. Each note carries a face value of $100 and pays a floating interest rate based on the 3-month BBSW rate plus a margin expected to be between 4.50% and 4.75%, subject to final determination through a Bookbuild process.

Investment Features and Terms

The CVC Notes 3 mature on 11 December 2028 unless redeemed earlier. Interest payments are scheduled quarterly in arrears and are not deferrable or discretionary, providing investors with a predictable income stream. The notes rank unsecured and unsubordinated, placing them behind secured creditors but ahead of ordinary shareholders in the event of a winding-up.

Early redemption rights exist for CVC in certain circumstances, including regulatory events or changes of control, with an early redemption premium of $2.00 per note payable in such cases. Holders also have rights to require redemption following a change of control or delisting event.

Reinvestment Offer for CVCHA Holders

Existing CVCHA holders have the option to reinvest their holdings into the new CVC Notes 3. Eligible holders can exchange their CVCHA on a one-for-one basis and receive a $2.00 cash payment per note plus any accrued interest. This offer provides continuity for investors wishing to maintain exposure to CVC’s investment portfolio while benefiting from the updated terms and longer maturity.

Applications under both the New Money and Reinvestment Offers must be made through brokers, with eligibility criteria including receiving personal financial advice or being classified as an institutional investor. The offer is not underwritten, and allocations under the New Money Offer may be scaled back at the discretion of brokers.

CVC’s Investment Focus and Financial Position

CVC’s portfolio is predominantly invested in property, including direct and indirect holdings such as loans, preference equity, joint ventures, and development projects across key Australian growth corridors. The company has a history of value-adding through rezoning and development, with significant projects in locations like Marsden Park, Donnybrook, and Liverpool.

As at 30 June 2025, CVC reported net assets of approximately $181.8 million. The company’s strategy emphasizes capital preservation and generating attractive returns through active management and selective investment. The proceeds from the notes offer will support CVC’s ongoing capital management and enable it to pursue new real estate opportunities while redeeming existing CVCHA notes.

Risks and Regulatory Considerations

The prospectus outlines a range of risks including liquidity risk of the notes post-listing, interest rate fluctuations, early redemption risk, and the unsecured nature of the notes. Investors should be aware that interest payments are not guaranteed and that the notes are unrated, which may affect market price and liquidity.

CVC is subject to regulatory compliance under ASIC and ASX rules, including new design and distribution obligations to ensure the notes are offered to suitable investors. The notes will be quoted on the ASX under the code CVCHB, with Melbourne Securities Corporation Limited appointed as trustee and E&P Capital Pty Limited as lead manager.

Next Steps for Investors

The offer opens on 20 November 2025 and closes on 3 December 2025, with settlement expected on 9 December and issue of notes on 10 December. Trading on the ASX is anticipated to commence on 12 December 2025. Investors interested in participating should contact their brokers promptly to register interest and ensure eligibility.