Sullivan & Cromwell recently advised UBS Group (UBS) on its $3.5 billion offering of two tranches of Tier 1 Capital Notes structured to qualify as additional tier 1 (AT1) capital for Swiss bank regulatory purposes.
As with all AT1 securities, the notes are perpetual and interest payments are fully discretionary. The terms of the notes initially provide for the full principal amount to be permanently written down to zero if certain capital ratio or non-viability events occur. In the event that UBS later obtains shareholder approval for the creation of sufficient conversion capital, the full principal amount of the notes would instead convert into UBS ordinary shares upon the occurrence of such capital ratio or non-viability events.
The notes were offered to qualified institutional buyers in the United States pursuant to Rule 144A and outside the United States in reliance of Regulation S. This was the first offering of AT1 securities by UBS since the announcement in March 2023 that UBS would acquire Credit Suisse, the first offering of contingent convertible AT1 securities by UBS and the first-ever offering of contingent convertible AT1 securities by a U.S.-listed issuer to U.S. investors pursuant to Rule 144A. The transaction closed on November 13, 2023.
The S&C team was led by Evan Simpson and John Horsfield-Bradbury and included Abigail Yevnin.
