OTHER STRUCTURING OPTIONS
The Office of Asset Sales noted that it had been suggested that preference
share variants or other forms of hybrid securities could be considered
as capital raising options for public investment in Telstra. Amongst the
options put forward are preference shares with fixed and variable coupon
rates, participation rights, cumulative and non cumulative dividends and
optional rather than mandatory redemption. There are large number of structuring
possibilities for such preference shares and other types of hybrid securities
and these are set out at appendix 4.
Whether these preference shares and other types of hybrid securities
would be classified as equity or debt by the financial markets, and in
Telstra's accounts, depends on the specific terms and conditions attached.
[26]
Telstra also mentioned convertible notes briefly in their submission
but did not support them as a form of capital raising for the partial
sale of the company. [27]
The government, if it so desired, could create its own unique hybrid
share based on some of options suggested in evidence or alternatively,
Division 4 of the Telstra (Dilution of Public Ownership) Bill 1996 which
provides other ways for the partial sale of Telstra, including:
- the transfer by the Commonwealth of any of its shares in Telstra;
- the transfer by the Commonwealth of interests in its shares in Telstra
to a company (the sale-scheme trustee) in the company's capacity
as the trustee of a trust established by a trust deed (the sale-scheme
trust deed);
- an investor in Telstra initially acquiring a particular interest in
shares in Telstra and subsequently acquiring the remaining interests
in those shares;
- the payment by Telstra of a dividend;
- the reduction of Telstra's share capital;
- the cancellation of a particular parcel of shares in Telstra held
by the Commonwealth;
- Telstra buying back shares in itself;
- the issue of securities in Telstra;
- the redemption of redeemable preference shares in Telstra held by
the Commonwealth;
- the alteration of Telstra's constitution.
Footnotes
[26] Submission No. 5, Office of Asset Sales,
p. 66
[27] Submission No. 1, Telstra, p. 1