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

ASX Participants and ASX Clear (ASXCL) Participants are advised for the following implications of the scheme of arrangement of the proposed combination of Tatts Group Limited (ASX Code: TTS) and Tabcorp Holdings Limited (ASX Code: TAH). The Scheme is subject to shareholders and final court approvals. 

Tabcorp will acquire all of the Tatts Shares under the scheme and Tatts shareholders will receive 0.80 New Tabcorp Shares and $0.425 cash, less the amount of any Tatts Special Dividend for each Tatts Share held.

The key dates from the perspective of ETOs are as follows (indicatively):

Scrip and Cash Offer Adjustment

Provided the Scheme Offer is effective, ASX will, after the close of business on the last date of trading of Tatts shares (Wednesday, 13 December 2017), adjust Open Positions in TTS Options under ASX Market Rule 11.3 Procedure 10 as follows:

• The Underlying Securities will become TAHNB shares; the New Contract Size in TA9 will become 0.8 * Old Contract Size;

  note that the options code TA9 will be used for TAHNB Shares

• the Exercise Price in each Series will be adjusted for the Cash component, and in reflection of the reduction of the cash amount, using the following formula: New Exercise Price = (Old Exercise Price - $0.425)/(NC/OC)

  In the adjustment method for the Scrip and Cash Offer under a merger, the value of the total exercise after the adjustment is equal to the value of the total exercise before the adjustment less the amount of cash. This will be applied by ASX for a scrip and cash offer when a company is no longer a going concern under a merger scheme.

OTC series (where any)

Clearing Participants are advised that any OTC series cleared by ASXCL under the ASX Equity OTC Clear service will be adjusted using the same formula as the ETOs as shown in this Derivatives Notice. 

OTC series will be adjusted along with ETO adjustments on the night however, to maintain anonymity; the adjusted OTC series details will not be published in the Derivatives Notice but will be available to CPs the following morning via their own clearing systems.

ETO exercise restrictions (where any) in relation to an adjustment may occur during the period of 10 business days prior to and including expiry, will also apply to OTC series. However such exercise restrictions will not apply on expiry day of an OTC.

Specific Cover

Participants are advised that as the contract size is changing, arrangements may need to be made for additional lodgement of underlying shares to account for any collateral denoted as specific cover. 

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 proposed combination of TTS and TAH with respect to open positions in ASX TTS ETO contracts.

When Effective

The adjustment to TA9 ETOs will be effective on Thursday 14 December 2017.

Following the end of deferred settlement trading, from Wednesday, 27 December 2017, TAHNB will trade as TAH on a normal settlement basis and merge with existing shares. The Options Code for ex-TTS ETOs will then change from TA9 to TAH. 

Restriction on Exercise

Exercise of TTS ETOs will be restricted on the last day of trading of TTS Shares (indicatively Wednesday 13 December 2017).

Exercise of TA9 ETOs will be restricted on the last day of deferred trading of new TAH Shares (indicatively Friday, 22 December 2017)

A further notice will be issued after the close of business on the last date of trading of Tatts shares Wednesday, 13 December 2017. The notice will detail the adjusted contract size and adjusted strikes.

Need more information?

Issued by

Brendan Laird, Senior Manager, Post Trade Operations

Contact information

Cheng Zhang
1800 623 571
cad@asx.com.au

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