Question: I have shares in Asciano. I am confused about the proposal from a consortium led by Brookfield Infrastructure Partners Ltd. Reading through some of the inch thick scheme booklet has not helped much. I basically want to know if I should sell my shares, which I believe is the “cash consideration”, or, if I should take the “script consideration”.
The script consideration involves CDIs, which I am not at all familiar with. The valuation range is $8.42 -$9.40 per share at this point in time, but I believe this could change.
I bought 1,500 units at $1.89 in 2010, total price $2,842. I need to make a decision about this by the end of October as I will be away in November when the scheme will be finalised.
Answer (by Paul Rickard): Thanks for the question. I don’t think you should be too worried about going away in November – Asciano provided an updated timetable last week. This now says that the final election date (to decide whether to accept script or cash) won’t be until 6 January. Click here to see more.
As you are probably aware, the ACCC has raised a “red flag” about the deal – and there is some uncertainty as to whether it will go ahead in this form.
The ACCC is not expected to finalise its determination until December 17.
Finally – CDIs (or CHESS Depositary Instruments) are just like shares – just a mechanism to have them listed on the ASX.
Question: What is your view on Origin Energy going forward? I understand that they have a share offer at present, but the value of their shares has dropped considerably in recent times.
Answer (by Paul Rickard): Thanks for the question.
Given that Origin was forced by the market into a capital raising, and is now in debt repayment mode (meaning very limited capital expenditure), you could make a case that Origin is almost like a call option on the oil price.
I don’t like the look of the oil market and hence, Origin is not really on my shopping list at the moment.
However, if you can wear the pain, my guess is that these current levels will, over the next 5 years, prove to be good value.
As far as the brokers are concerned, according to FN Arena, they are marginally bullish with 3 buys, 2 neutrals and 1 sell. The consensus target price is $6.69.
Hope this helps.
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