Challenger Limited (ASX:CGF) refers to the A$400 million floating rate Subordinated Notes (Notes) which were issued on 24 November 2017 by Challenger Life Company Limited (Challenger Life). The Notes are direct, unsecured, subordinated debt obligations of Challenger Life that have qualified as Tier 2 regulatory capital of Challenger Life under the Australian Prudential Regulation Authority’s (APRA’s) prudential standards and will mature on 24 November 2042.

Under the Terms and Conditions of the Notes, Challenger Life has the option to redeem all (but not some only) of the Notes on 24 November 2022 (the Optional Redemption Date), subject to APRA’s prior written approval. If the Notes are not redeemed on the Optional Redemption Date, Holders of the Notes have the option to require conversion of the Notes into ordinary shares in Challenger Limited in November 2024.

The redemption of the Notes has been approved by APRA and Challenger Life has elected to redeem all Notes on the Optional Redemption Date. Challenger Life’s redemption of the Notes does not imply or indicate that Challenger Life or Challenger Limited will in the future exercise any right it may have to redeem any other outstanding regulatory capital instruments issued by Challenger Life or Challenger Limited. Any such redemption would also be subject to the prior written approval of APRA (which approval may or may not be given).

The attached Early Redemption Notice will be delivered to Holders of the Notes via Austraclear.

For each Note held, a Holder will receive the Face Value of A$10,000 together with all unpaid interest which has accrued on the Note up to and including the Optional Redemption Date in cash1. Challenger intends to make these payments on the Optional Redemption Date.

The Australian taxation consequences in relation to the redemption and final interest payments of the Notes may vary according to individual circumstances. It is recommended that Holders seek their own taxation advice in relation to the application of the Australian Tax Act to their particular circumstances.

Terms used but not defined in this announcement are defined in the Terms and Conditions of the Notes which are contained in the Information Memorandum dated Thursday, 16 November 2017.