This Notice is being issued to provide Participants with further information on the Adjustment implication for BLD ETOs.

ASX Participants and ASX Clear (ASXCL) Participants are advised that Boral Limited (ASX Code: BLD) has announced an accelerated renounceable entitlement offer on 21 November 2016. The terms of the issue are 1 for 2.22 at $4.80 per ordinary share. The new shares will rank equally with existing shares on issue.  Participants are advised to refer to all announcements by BLD for details and the full timetables for the institutional and retail offer tranches. 

Implied Market Value of Accelerated Renounceable Entitlement Offer

Participants are advised that the ETO adjustment will be based on the market value of the rights (whether positive or negative) as determined by ASX with reference to the VWAP for ex-entitlement shares and the entitlement price to subscribe for the new shares, and any dividend difference between the new shares and existing shares. 

The indicative timetable (from the ETO’s perspective) is:

Notes:

• Participants may wish to consider making their clients, especially retail traders, aware of the issues relating to rights-style ETO adjustment for entitlement issues in relation to trading or exercise of ETOs on the ex-entitlement day.

• As with any rights-style adjustment that relies on market valuation, Participants are strongly advised that the adjustment to ETOs becomes effective on the commencement of ex-entitlement trading of the underlying securities. However, while any ETO trades entered into after the resumption of trading will be on an adjusted basis (“UA” Under Adjustment flag), the full extent of the adjustments will only be confirmed after VWAP and published by ASX after trading close on that day. Traders can estimate indicative adjustments when the market opens or during the course of the day.

Adjustment to ASX ETOs

ASX has consulted with ASXCL on the implications for BLD ETOs in relation to the entitlement offer. ASX will determine the following adjustment under ASX Operating Rule [2230] Adjustments, Appendix 2230 Procedure 10 Alternative Adjustments as follows:

New contract size is calculated as follows:

NC = OC + n*r/S

Where

NC       = new contract size

OC      = old contract size (currently 100)

n          = the number of entitlements or rights attributed to each OC determined by the issue ratio (1/2.22 *100)

r           = the market value (whether positive or negative value) of the each entitlement or right as determined by ASX, calculated as: S - d - C where: 

S  VWAP ex-entitlement of existing shares on the first day of trading ex-entitlement that the ETOs have also resumed trading (Thursday, 24 November 2016), using the volume-weighted average price on ASX market.

d = ordinary dividend and special dividend for which the new shares are not entitled to (d=$0)

C = consideration paid to exercise the implied rights (i.e. offer entitlement price) (C=$4.80) 

Participants should be aware that there are certain market conditions that can lead to a negative value for ‘r’.  A negative ‘r’ used in the calculation above will create an adjustment where the contract size is adjusted downwards and the exercise price is adjusted upwards.  Please see the recent example of Arrium Limited “ARI”.

The new strikes are calculated as follows:

New Strike = Old Strike * OC/NC

NS = OS * OC/NC

For the strike calculations, the new contract size used by ASX is rounded to 4 decimal places, and the strike factor (OC/NC) is rounded to 6 decimal places.

The strike factor (Old Contract Size/ New Contract Size) for all contract sizes will be based on the result calculated for the standard 100 contract size.

What do I need to do by when?

Participants should be aware of the content of this Notice as it sets out the treatment of the accelerated renounceable entitlement offer with respect to open positions in ASX BLD ETO contracts.

Participants should be aware new BLD ETO strikes will not be listed for trading on Friday, 25 November 2016.  These will be listed for trading on Monday, 28 November 2016.

Exercises Restricted Pending ETO Adjustment

An exercise restriction was applied immediately to BLD ETOs after the announcement of the entitlement offer and the restriction will be lifted effective on the day trading resumes on an ex-entitlement (or ex-rights) basis 

Effective Date

A further notice will be issued after the close of business following the resumption of trading of the underlying securities on an ex-entitlement basis, Thursday, 24 November 2016. The notice will detail the adjusted contract size and adjusted strikes. Participants are reminded that trading on the ex-entitlement day will be on an “under adjustment” basis (UA trading) and effective that day, notwithstanding the adjusted specifications are published by ASX only after close of trading.

Need more information?

Issued by

Eldon Hernando, Senior Officer, Post Trade Operations

Contact information

Eldon Hernando
1800 623 571
cad@asx.com.au

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