Issue of new Tier 1 Convertible Preference Shares and redemption of Reset Preference Shares  

Bendigo and Adelaide Bank ("BEN") today announced an offer of new Convertible Preference Shares ("CPS"), which are expected to be quoted on Australian Securities Exchange ("ASX") and trade under the ASX code ("BENPD").

CPS Offer

BEN intends to raise approximately $125 million through the offer of CPS, with the ability to raise more or less (the "Offer"). CPS are being issued to support BEN's balance sheet growth and to ensure BEN continues to have strong regulatory capital levels, with the proceeds being used to fund the redemption of BEN's Reset Preference Shares (ASX ticker code: BENPA) ("RPS") and for general corporate purposes.

CPS are fully paid, non-cumulative, perpetual, convertible preference shares and will qualify as Tier 1 Capital of BEN under APRA's current prudential standards and will qualify as Additional Tier 1 Capital under APRA's Basel III capital adequacy framework from 1 January 2013 ¹.

CPS will provide investors with floating rate, semi-annual, discretionary, non-cumulative dividends that are expected to be fully franked. The Margin is expected to be in the range of 5.00 per cent to 5.50 per cent, and will be set by way of bookbuild to be conducted on or around 28 September 2012. Based on the expected Margin and current rates, the Dividend Rate on CPS would be equivalent to an unfranked Dividend Rate of between 8.53 per cent and 9.03 per cent per annum ².

If certain conditions are met (including APRA's prior written approval) BEN may elect to redeem or convert CPS into Ordinary Shares of BEN on 13 December 2017. Otherwise, CPS will mandatorily convert into Ordinary Shares of BEN on 13 December 2019 (subject to certain conditions being satisfied and unless exchanged earlier).

The Offer comprises:

• a Reinvestment Offer to Eligible RPS Holders - being registered holders of RPS with a registered address in Australia at 7.00pm (Melbourne time) on 21 September 2012 (see further details below);
• a Securityholder Offer to Eligible Securityholders - being registered holders of Ordinary Shares, BPS, SPS, Capital Notes or Retail Bonds with a registered address in Australia at 7.00pm (Melbourne time) on 21 September 2012;
• a Community Bank^® and Customer Offer to Eligible Community Bank^® Directors or Shareholders and Eligible Customers - being Australian residents who are existing directors and shareholders of a Community Bank^®company or existing BEN retail customers;
• a Broker Firm Offer to Broker Firm Applicants including Eligible RPS Holders - being Australian resident retail clients of a Syndicate Broker;
• an Institutional Offer to Institutional Investors - being certain Institutional Investors invited by the Joint Lead Managers to participate in the Offer; and
• a General Offer to members of the general public who are Australian residents.

The Reinvestment Offer, Securityholder Offer, Community Bank^® and Customer Offer and General Offer are expected to close at 5.00pm (Melbourne time) on 25 October 2012.

The Broker Firm Offer for applications in respect of Reinvested RPS is also expected to close at 5.00pm (Melbourne time) on 25 October 2012 and the Broker Firm Offer for all other applications excluding those in respect of Reinvested RPS is expected to close at 10.00am (Melbourne time) on 31 October 2012.

Redemption of RPS and Reinvestment Offer

BEN intends to issue an Exchange Notice to redeem the outstanding $89 million of RPS for their face value on their upcoming reset date, being 1 November 2012 ³.

Eligible RPS Holders will have the opportunity to participate in the Offer by electing to have some or all of their RPS redemption proceeds (i.e. $100 per RPS) to be applied to the Application Payment for CPS. Under the Reinvestment Offer, Eligible RPS Holders will not be required to make a separate Application Payment to the extent that RPS will be reinvested directly in CPS. Eligible RPS Holders who participate in the Reinvestment Offer are guaranteed an Allocation of one CPS for every RPS they reinvest. Eligible RPS Holders will also have the opportunity to apply for additional CPS but an Application Payment would have to be made for those additional CPS.

All holders of RPS as at the RPS Dividend record date of 17 October 2012 (including RPS holders who elect to participate in the Reinvestment Offer) will receive a final franked RPS Dividend of $3.0968 per RPS on 1 November 2012.

Acceptance of the Reinvestment Offer is voluntary and BEN intends that RPS holders who do not participate in the Reinvestment Offer will be redeemed at the next scheduled reset date on 1 November 2012 using proceeds of the Offer.

Full details of the Offer including the Reinvestment Offer are set out in the prospectus lodged with the Australian Securities and Investments Commission and ASX today ("Prospectus"). A replacement Prospectus, containing the final Margin will be made available when the Offer opens, expected to be on Tuesday, 2 October 2012. Investors should read and consider the Prospectus in full and obtain professional advice before deciding whether to acquire CPS or participate in the Reinvestment Offer. Applications for CPS under the Offer can only be made by completing the Application Form that will be in, or will accompany the Prospectus. This announcement is not financial product advice and has not taken into account your objectives, financial situation or needs.

Investor information

Investors may request a copy of the Prospectus by calling the CPS Information Line on 1300 318 082 (within Australia) or +61 3 9415 4866 (outside of Australia) between 9:00am and 5:00pm (Melbourne time) or by visiting www.BendigoCPSoffer.com.au.

Capitalised terms in this announcement have the meaning given to them in the Prospectus.

Indicative timetable for the Offer

Note: The key dates above are indicative only and may change without notice. All references to time are to Melbourne time.

¹ CPS will qualify as Additional Tier 1 Capital until at least their Optional Exchange Date of 13 December 2017.
² Assuming a Bank Bill Swap Rate of 3.53 per cent and assuming the value of franking credits is taken into account in full. You should be aware that the ability to use franking credits will depend on your individual tax position.
³ The Reinvestment Offer is conditional upon BEN issuing an RPS Exchange Notice on or about 2 October 2012 to redeem RPS on 1 November 2012, which, subject to satisfactory completion of the Bookbuild, it intends to do on the Opening Date for the Offer.
⁴ Dividends are scheduled to be paid at the end of each semi-annual Dividend Period (on 13 June and 13 December) subject to the Payment Tests. If any of these scheduled dates are not Business Days, then the Dividend Payment Date will occur on the next Business Day.
⁵ The Mandatory Conversion Date may be later than 13 December 2019, or may not occur at all, if the Mandatory Conversion Conditions are not satisfied.