Question: I have been offered shares in TPG Telecom Limited.
 These shares are in our superannuation fund. Do we take up the offer?
 Would you take the maximum amount of $15,000?
Answer (Paul Rickard): TPG Telecom (TPM) is conducting a $50 million share purchase plan (SPP) following the completion of a $300 million placement to institutions that was used to reduce debt following the acquisition of iiNet.
The purchase price will be the lesser of:
a) $10.40 (the same price paid by the institutions); and
b) a 2% discount to the weighted average on market trading price of TPM shares next week (week ending 4 Dec).
With TPM shares trading today at $10.50, the purchase price (a maximum of $10.40) is relatively attractive.
Taking a long-term view, TPG is a well run company and on the basis of the strong institutional support for the placement (only a 3.9% discount in somewhat soft market), I would be inclined to back the company and participate in the SPP up to the max. One note of hesitation – it has had a pretty good run this last 12 months, and the analysts feel it is fairly fully priced.
Bottom line – apart from the potential for a trading profit, my participation would probably depend on my exposure.
Question: Will the higher margins on the recent AMP and now Macquarie Notes 2 (MCN2) hybrids (over 5%) affect the pricing of other hybrids?
Answer (By Paul Rickard): Whenever there is new supply, existing issues tend to get sold off a touch (that is, a lower price means a higher effective margin).
As it is only around $400 million, it is not that big – so I wouldn’t expect too much impact and from what I have seen to date, there hasn’t been that much movement in the prices of other hybrids
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