News Column

Telstra announces off-market share buy-back up to $1 billion

August 14, 2014



ENP Newswire - 14 August 2014

Release date- 13082014 - Telstra today announced it would return up to approximately $1 billion of capital to shareholders through an off-market share buy-back tender process.

Telstra CEO David Thodey announced the buy-back, part of a $4.7 billion return to shareholders from Telstra's 2014 financial year operations, during the company's full year results presentation in Sydney.

The buy-back will be funded from excess cash generated through Telstra's strong operating performance and recent asset sales, including 70% of Telstra's Sensis directories business and Telstra's 74.6% interest in Hong Kong mobiles business, CSL New World Limited.

Mr Thodey said the buy-back was considered the most effective way to deploy surplus capital from strong operational performance and significant asset sales.

'Telstra's level of free cashflow exceeds what we need in the short to medium term so the return of surplus capital to shareholders is considered appropriate in the current environment,' he said.

Mr Thodey said shareholders who chose not to participate in the buy-back and retain their Telstra shares were expected to benefit from improved earnings per share because the number of shares on issue will be reduced as a result of the buy-back.

The buy-back will be managed through a tender process with the tender period closing on Friday, 3 October 2014. Terms and conditions of the Buy-Back will be contained in a Buy-Back Booklet to be issued to shareholders and expected to be available at www.telstra.com/buyback on 27 August.

Telstra also announced today an increased final dividend of 15 cents per share, taking total dividends for FY14 to 29.5 cents. The $4.7 billion return to shareholders from operations in FY14 compared with $3.5 billion in FY13.

Details of the Buy-Back

The Buy-Back will involve a tender process, under which Eligible Shareholders will be invited to tender their Shares to Telstra at specified discounts from 6% to 14% inclusive (at 1% intervals) to the Market Price and/or as a Final Price Tender (which is the option of accepting the final Buy-Back Price, no matter where in the discount range it is).

Eligible Shareholders may also select a Minimum Price below which Shares tendered by them will not be bought back.

Telstra will determine the final Buy-Back Price as the lowest price at which it can buy-back the targeted amount of capital ($1 billion), based on the tenders received from all participating shareholders. For Eligible Shareholders who choose to participate in the Buy-Back:

if the Buy-Back Discount is less than the discount they selected, shareholders will receive the lower Buy-Back Discount; and

if the Buy-Back Discount is greater than the discount they selected, then those Shares will not be bought back.

Shareholders who successfully tender may be subject to scale back if the total value of Shares, tendered at or greater than the Buy-Back Discount and/or as Final Price Tenders, exceeds Telstra's target buy back amount (approximately $1 billion worth of Shares). The scale back has been structured to ensure that Eligible Shareholders with small holdings will not be disadvantaged. Before applying any scale back, Telstra will first buy back a Priority Allocation which is expected to be 925 Shares from each shareholder who has successfully tendered Shares.

Additionally, shareholders who tender all of their Shares at one or more tender discounts equal to or greater than the Buy-Back Discount and/or as a Final Price Tender, and who would be left with a holding of 375 Shares or less as a result of the scale back, will have their Tender(s) accepted in full without applying a scale back.

Shareholders will receive the fully franked dividend of 15 cents per share on any Shares held by them on 29 August 2014 even if they are subsequently successfully tendered under the Buy-Back.

The Buy-Back Price will have two components: a capital component of $2.33 and a fully franked dividend component equal to the difference between the Buy-Back Price and $2.33.

For some Telstra shareholders, depending on their particular circumstances, the after-tax return from participating in the Buy-Back may be greater than if they had sold their Shares on-market. The Buy-Back will have different tax consequences for different shareholders. Shareholders should seek their own professional advice (including tax advice) about the implications of participation in the Buy-Back in respect of their own individual circumstances.

While Telstra intends to buy back up to approximately $1 billion worth of Shares, it retains absolute discretion to vary the size of the Buy-Back depending on demand and market conditions, including by choosing not to buy back any Shares.

The terms and conditions of the Buy-Back will be set out in a booklet to be distributed to shareholders by Thursday, 4 September 2014. The booklet, in addition to an online tax calculator, is expected to be available at www.telstra.com/buyback on 27 August 2014.

Certain shareholders are not eligible to participate, directly or indirectly, in the Buy-Back, including any (i) person who is located or resident in the United States, (ii) U.S. person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended), or (iii) agent, fiduciary or other intermediary acting on a nondiscretionary basis for a principal giving instructions from within the United States.

Timetable

Event

Date

August 2014

Announcement of the Buy-Back

Thursday, 14 August

Last day that Shares can be acquired to be eligible to participate in the Buy-Back and as a consequence may be eligible for Buy-Back franking entitlements

Tuesday, 19 August

Buy-Back Ex-entitlement Date: the date that Shares commence trading on ASX on an ex-Buy-Back basis

Wednesday, 20 August

Buy-Back Record Date: determination of Eligible Shareholders entitled to participate in the Buy-Back

Friday, 22 August

Dividend Ex-entitlement Date: the date that Shares commence trading on an ex-entitlement basis for the 2014 final dividend

Wednesday, 27 August

Dividend record date: determination of Eligible Shareholders entitled to receive the 2014 final dividend

Friday, 29 August

September 2014

Distribution of Buy-Back Documents to shareholders is expected to be completed

Thursday, 4 September

Tender Period opens

Monday, 8 September

Payment date for 2014 final dividend

Friday, 26 September

October 2014

Tender Period closes: Tenders must be received by the Registry no later than 7.00pm (Australian Eastern Standard Time)

Friday, 3 October

Buy-Back Date: Buy-Back Price and scale back (if any) determined and Buy-Back Contracts entered into.

Monday, 6 October

Buy-Back proceeds paid to successful shareholders and updated holding statements dispatched

Tuesday, 14 October

While Telstra does not anticipate any changes to these dates and times, it reserves the right to vary them. Any change in date or time will take effect from the time it is authorised by the Board and will be publicly announced as soon as practicable following the Board's authorisation. Telstra may also decide not to proceed with the Buy-Back and may vary the size of the Buy-Back.

Shareholder enquiries

A Telstra enquiry line in relation to the Buy-Back will be available from Monday, 27 August 2014. Shareholders who have enquiries may contact Telstra's information line on 1300 88 66 77 within Australia, 0800 835 787 within New Zealand or +61 1300 88 66 77 if you are calling from outside Australia and New Zealand, or visit www.telstra.com/buyback.

Important Notices

Capitalised terms in this announcement have the same meaning as will be contained within the Buy-Back Booklet.

Not for distribution or release in or into or to any person located or resident in the United States.

This media release does not constitute, or form part of, any offer or invitation to sell, or any solicitation of any offer to purchase securities in any jurisdiction, nor shall it or the fact of its distribution be relied on in connection with any contract thereof. No indications of interest in the Buy-Back are sought by this media release.

The Buy-Back is not being made, and will not be made, directly or indirectly in or into, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of or by use of any facilities of a national securities exchange of, the United States. Shares may not be tendered in the Buy-Back by any use, means, instrumentality or facility from or within the United States or by any: (i) person who is located or resident in the United States; (ii) U.S. person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended); (iii) agent, fiduciary or other intermediary acting on a nondiscretionary basis for a principal giving instructions from within the United States. American Depositary Receipts representing Shares of Telstra may not be tendered in the Buy-Back.

Buy-Back documents, including the booklet describing the terms and conditions of the Buy-Back and tender forms, when issued, and any other documents or materials relating to the Buy-Back are not being, and must not be, directly or indirectly mailed or otherwise transmitted, distributed or forwarded (including, without limitation, by custodians, nominees or trustees) in or into the United States or to any persons located or resident in the United States. Any purported Tender of Shares in the Buy-Back resulting directly or indirectly from a violation of these restrictions will be invalid.

For the purposes of this announcement, 'United States' means the United States of America, its territories and possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands), any state of the United States of America and the District of Columbia.

Forward looking statements

This media release contains forward looking statements, including statements regarding the implementation of the Buy-Back and its effects on our business and securities. The results and effects of the Buy-Back may differ materially from those expressed in, or implied by, these forward looking statements. Factors that could cause or contribute to such differences include the number of Shares bought back, the final Buy-Back Price and the general trading and economic conditions affecting our business. We do not undertake any obligation to revise these forward looking statements to reflect any future events or circumstances.

Media contact: Nicole McKechnie, 0429 004 617, media@team.telstra.com


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Source: ENP Newswire


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