Forum Archive Index - June 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi EK,

>
>
>Most if not all DRIP's price the shares at the average or mean price
>that the shares trade for the 5 days following the share being
>ex-dividend. Hence the price paid is reasonably fair and accurate,
>even more so if issued at a discount.
> 
>EK
>
>

Well I have to admit I am not in any DRIPs so I may be out of touch.  
Nevertheless I found the documentation on the RBD DRIP, that I didn't 
join.  It clearly says when deciding on the share price "C" to use 
for the basis of issuing new shares:

"C is the weighted average sale price for a share calculated on all 
sales of shares of Restaurant Brands which took place on the New 
Zealand Stock exchange on the five trading days immediately preceding 
the record date.  If no sales of Shares occur during the five trading 
days preceding the Record date, then the average sale price shall be 
deemed to be the sale price for the share on the last sale of 
shares of Restaurant Brands which took place prior to such days as 
determined by the New Zealand Stock Exchange."

For RBD at least, price of shares issued is based on the price 
*before* the shares went ex-dividend (the ramped up price) less a 
2.5% discount.  

I also found a Telecom DRIP statement and this clearly states:

"your cash dividends are reinvested at the market prices being the 
weighted average of selling prices on the New Zealand Stock 
Exchange for the five business days immediately following the record 
date."

I have to admit to being genuinely surprised by this, although I 
notice the size of the discount, if one exists is not mentioned 
specifically.  Do you have that information EK?

I am curious now about the terms of other Dividend Reinvestment plans 
out there.  Is there anyone out there who have the documentation 
lying about that can tell us what a particular DRIP that you are 
invested in does?

SNOOPY






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