New Hope Plans A$300 Million Convertible Notes Issue and Full Repurchase of Existing Notes

Convertible Notes Offering and Debt Repurchase

New Hope Corporation Limited (ASX:NHC) has kicked off a major capital restructuring with a new A$300 million convertible notes offering, coupled with a plan to repurchase up to the full principal amount of its existing A$300 million notes. The final terms of the new notes will be set via a book-build process expected to conclude before market open on 16 April 2026.

The new notes, set to mature in six years with a coupon range between 2.375% and 2.875% per annum, will be listed on the Singapore Exchange Securities Trading Limited (SGX-ST). Investors will have the option to convert their notes into New Hope ordinary shares at a premium of roughly 37.5% to 42.5% above the reference share price of A$5.39, which was the closing price on 15 April. Notably, New Hope retains the flexibility to settle conversions in cash rather than shares, with cash settlement amounts calculated on a 60-day volume weighted average price floor.

Repurchase Strategy and Redemption Rights

Concurrent with the new notes offer, New Hope is conducting a reverse book-build to assess holders’ willingness to sell existing notes for cash. If more than 85% of the existing notes are repurchased, the company intends to redeem any remaining notes at principal plus accrued interest, effectively retiring the outstanding debt early. This move signals a strategic effort to manage debt maturities and potentially optimise the capital structure ahead of maturity dates, with existing notes holders retaining a put option in July 2027.

Additionally, New Hope may amend or acquire further privately negotiated cash-settled call options as economic hedges related to these convertible notes, a tactic designed to manage dilution and market exposure arising from potential conversions.

Delta Placement and Market Impact

To facilitate hedging activities linked to the offering and repurchase, Jefferies, acting as Sole Global Coordinator, may execute a delta placement of New Hope shares at A$5.39. This price will also serve as the initial conversion price benchmark for the new notes. Such placements can increase short-term share supply and influence market dynamics, while also reflecting the coordinator’s substantial exposure through its trading and hedging activities.

This financing move follows New Hope’s recent confirmation of a fully franked 10 cent interim dividend with a Dividend Reinvestment Plan price close to the current share price, underscoring a balanced approach to capital returns and funding needs. The dividend update was announced just a day prior, highlighting the company’s ongoing capital management efforts.

Thermal Coal Prices and Operational Guidance

New Hope’s announcement also touches on the broader market environment, noting that thermal coal prices have risen since late February 2026 amid heightened volatility linked to conflict in the Middle East. The company anticipates that this geopolitical uncertainty will continue to influence energy markets beyond immediate events.

Operationally, New Hope reports that production and cost metrics remain comfortably within its FY26 guidance range, suggesting resilience amid market fluctuations. This steadiness provides some reassurance to investors amid the complexity of the capital raising and debt management initiatives.