Australia | Nov 20 2006
By Rudi Filapek-Vandyck
Telstra (TLS) shares are not the same as the government’s third tranche offering, better known as T3. Many an expert has been stressing the point over the past few weeks and never has the difference between the two become as apparent as on the first day of T3 trading on the Australian Stock Exchange.
Amidst an overall subdued share market, Telstra shares lost more than 4% in value while its new partly paid T3 shares rose and rose. After opening at a small premium to the institutional offer of $2.10 Telstra’s T3 shares rose from $2.11 to $2.14 within the first 30 minutes of public trade.
The buoyant start was already preceded by the news that the Australian government had managed to increase the size of the deal to $15.5bn. Retail investors were offered a 10 cents per share discount to the institutions.
The final institutional offer price was set at $3.70 each, with the second and final instalment payable in May 2008.
At the closing bell, the T3 instalments receipts instalment receipts were the top traded security on the Australian Stock Exchange on Monday topping a volume of 392m shares and closing at the day’s highest point: $2.18.
Telstra’s ordinary shares lost 4% to close at $3.60 which is the price retail investors will pay in total for the T3 instalments they will own on 15 May 2008. Institutions will pay $3.70.
When paying the final instalment investors will receive one bonus shares for each lot of 25 shares they hold.
According to advertisements in today’s newspapers, about 40% of T3 has been allocated to institutional investors.
The apparent higher-than-expected demand meant the government needs to transfer only about 17% of Telstra’s equity to the Future Fund. This should ease some concerns about a potential future overhang.