Forum Archive Index - November 2003

["Malcolm Cameron" <malharcameron@hotmail.com>]

Snoopy Don't blame the Registry. They just do as they are told Blame Telstra 
the registries do not send out reply paid envelopes with Telstra 
documentation. I even had to pay the postage to tender and they (in my 
opinion) were making a big thing about suggesting you just make a tender 
with out putting in a price so you would not miss out. I would suspect a lot 
of small share holders got screwed. But the usual legal let out consult your 
financial  advisor.






>From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: [sharechat] Disgraceful Service, BK Registries and TLS
>Date: Thu, 27 Nov 2003 18:11:51 +1300
>
>
>I comment on the Telstra Buy Back tender offer document that was
>sent to NZ shareholders by BK registries early this month.   There was
>very little information on the tax consequences for NZ shareholders
>accepting this offer.
>
>The advice offered in bold print on p16
>
>"It is therefore important that you seek professional tax advice to take
>into account your personal circumstances"
>
>while undoubtedly correct, falls far short of the standard of advice I
>would expect from such a document (for NZ shareholders).
>Particularly so, when the advice offered to Australian shareholders is
>so detailed.
>
>The major point of contention I have with the buyback offer document
>is that nowhere does it mention that the decision to structure the
>payout in the form of  $1.50 of capital value plus approximately $3.30
>as a franked distribution means the franked distribution part is
>technically taxable in the hands of New Zealand shareholders.    In fact
>the offer document suggests the opposite, as on p18 it says
>
>"A non-resident shareholder will not be liable to Australian witholding
>tax on any part of the buy-back price,"
>
>Unfortunately, just because the tax is 'not withheld' does not mean that
>the tax is 'not eventually payable'.
>
>If the same shareholders that accepted this offer had sold their shares
>'on market' there would be legally no tax to pay at all.     And who
>would be better off?
>
>Putting some numbers on it, let's say you had 1000 Telstra shares and
>had sold them on market at $A4.80 (around $NZ5.40).  This would net
>you $A4800- , net say 1% brokerage which gives you $A4752  'after
>tax' (this transaction being zero rated for tax).
>
>By contrast if you had tendered your shares to Telstra at $A5.40 (the
>highest price you could), and it was accepted, then you would receive
>a capital repayment of $A1500, and a franked (taxable) payment of
>$A3,900.    Based on the lowest 19% marginal tax rate, this would
>deliver the NZ shareholder a net  $A3,159.  Add that to the capital
>proceeds of $A1500 and you end up with $A4,659.   Note that if your
>marginal tax rate is higher than 19% then you would be *significantly
>worse off*  than this!
>
>In summary, sell on market and get $A4,752.   Sell to buyback offer
>and get $A4,659 (best possible case).    This highlights what is so
>disgraceful about this offer document.
>
>Every New Zealand shareholder with a marketable parcel of TLS
>shares is, without exception, whether they be an individual, company
>or trust,  *worse off* if they accept the Telstra offer!     This offer is
>appalling for 99% of NZ shareholders even in the very best case
>scenario!   I guess legally the offer had to be sent out to all
>shareholders.   But I would have expected a covering note to NZ
>shareholders warning them not to take it up, and sell their shares on
>market instead if they wanted out.   Given that I imagine most TLS
>shareholders on the NZ register are indeed New Zealanders, the
>omission of such  warning documentation I would class as
>unforgiveable.
>
>BK Registries and Telstra NZ, I cannot recall a case of any NZ
>company/registry offering such appalling and misleading service to
>their own shareholders .    I just hope that no New Zealand
>shareholders were 'sucked in' by this scandalous offer.
>
>SNOOPY
>
>discl: still hold TLS
>
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>
>--
>Message sent by Snoopy
>on Pegasus Mail version 4.02
>----------------------------------
>"Dogs have big tongues, so you can bet they don't
>bite them by accident"
>
>
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