On 20 August 2018, Woolworths Group Limited (ASX Code: WOW) announced a special dividend of $0.10 (fully franked) and an ordinary dividend of $0.50 (fully franked). The special dividend and ordinary dividend have the same record date of Friday, 14 September 2018.

Indicative timetable impacting WOW ETOs

Effective Date

All trading in WOW ETO contracts will be on an adjusted basis effective on the ex-date, Thursday, 13 September 2018.

This standard method of adjustment will be processed on Wednesday, 12 September 2018 after market close. ASX will calculate and perform the following 3 adjustments to your open positions.

Contract Size

Theoretical New Contract Size = Old Contract Size + (total special dividend paid per Old Contract Size)/(S – OD – SD)

Where

S = VWAP of the last cum-dividend share price (expressed in dollars)

OD = amount of ordinary regular dividend per share, if any (OD = $0.50)

SD = amount of special dividend per share (SD= $0.10).

Cash Adjustment Payments made for Contract Size Rounding

The theoretical new contract size (TC) will be calculated to 4 decimal places and will be truncated using the TMC threshold so that if the theoretical new contract size falls between 100 and to up to but not including 102, the new contract size will be truncated to the standard 100.

The difference, due to truncation, between the theoretical contract size and the adjusted (new) contract size, will be cash adjusted using the ETO cash equalization adjustment payment formula detailed in the final notice.

For cash equalization payments for any contract size rounding, takers (buyer) will be credited and writers (sellers) will be debited. (Note, for share consolidations, it is possible for a LEPO taker (buyer) to be debited if the LEPO strike is adjusted back to 1 cent after initial rounding).

Exercise Price

New Exercise Price = Old Exercise Price x Old Contract Size/ Theoretical New Contract Size

The strike factor (OC/TC) for all contract sizes will be based on the result calculated for the standard 100 contract size.

The theoretical new contract size is calculated to the nearest four decimal points in the intermediate calculation for the new exercise price.

eg;

For 100 contract size:

New Size              = 100 + 100 x 0.10/(cumVWAP - 0.50 - 0.10)

                            = 100 + 10/(cumVWAP- 0.60), subject to TMC threshold truncation

New Strike           = Old Strike x 100/Theoretical New Contract Size calculated                                                  to 4 decimal places.

                             = Old Strike x strike factor, rounded to 6 decimal places.

OTC series

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 Notice.

To maintain anonymity, the adjusted OTC series details will not be published in the Notice but will be available to clearing participants the following morning via their own clearing systems.

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

What do I need to do by when?

Specific Cover

As the contract size may be changing arrangements may need to be made for additional lodgement of underlying securities for any collateral denoted as specific cover.

A further notice will be issued after close of trading, Wednesday 12 September 2018 which will list the adjusted series.

Need more information?

Issued by

Brendan Laird, Senior Manager, Post Trade Operations

Contact information

Nehali Dani
1800 623 571
cad@asx.com.au

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