Paladin Energy Ltd (PDN) Share Consolidation – Adjustment implications for ETOs

ASX Notice No. 0352.24.04 dated 9 April 2024 outlined the adjustment method for Paladin Energy Ltd (ASX Code: PDN) ETOs due to the announcement of a 1 for 10 share consolidation.

Effective Date

The effective date of this adjustment is Thursday, 11 April 2024.

Exercises Restrictions and Deferred Settlement after ETO Adjustment

Exercises of PDN ETOs (including OTC series) will be restricted on the last day of trading of pre-consolidated shares on Wednesday, 10 April 2024. New post-consolidation shares will trade on a deferred settlement basis under ASX code PDNDA commencing on Thursday, 11 April 2024. Normal T+2 trading in PDN will commence on Monday, 22 April 2024.

The ETO code for PDN will remain unchanged, when the underlying is adjusted into PDNDA post-consolidation shares. Exercises for PDN will follow the deferred settlement of the underlying.

Standard Method of Adjustment

For an old contract size of 100 shares, the new contract size will be adjusted, using TMC threshold truncation.

Theoretical New Contract Size = Old Contract Size x Issue Ratio

Where:

TC = Theoretical New Contract Size

OC = Old Contract Size (100)

Issue Ratio = Consolidation amount provided (1 share for every 10, = 1/10, = 0.1)

Contract Size

Theoretical New Contract Size            = 100 x 0.1

                                                                  = 10

                                                                  = The Theoretical New Contract Size will not need to be                                                                            truncated based on the above calculation. No cash                                                                                    adjustment will be required.

Exercise Price

New Exercise Price = Old Strike Price / Issue Ratio

e.g. for 100 contract size and an old strike price of 35 cents

New Strike                                             = 0.35 / 0.1

                                                                = $3.50, or 350 cents

Please note that this is a non-rights style adjustment.

Cash Equalisation Adjustment Payments for Contract Size Roundings

The cash adjustment is calculated by taking the difference between the contract value of the option before and after the adjustment.  Variants to the formula apply for rights style adjustments and when the adjustment occurs on the day of the option’s expiry.

Cash adjustment = (BOP * BUV) – (AOP * AUV)

Where

BUV =Before (adjustment) Unit Value = BP * BU rounded to nearest cent

AUV =After (adjustment) Unit Value = AP * AU rounded to nearest cent

BU = units per lot (multiplier) before the adjustment (old traded entity)

AU = units per lot (multiplier) after the adjustment (old traded entity)

BP = for rights style, =SP/Adjustment Factor, for non-rights style=SP.

AP = for rights style, =SP, for non-rights style=SP * Adjustment Factor.

SP = settlement price of the option if not the options expiry day, otherwise the intrinsic price (underlying price-strike price for calls, strike-underlying price for puts) if on expiry date.  Refer Notes 1 and 2 below

BOP =pre-adjusted open position Refer Notes 1 and 3 below

AOP =post-adjusted open position Refer Notes 1 and 3 below

Note:

1.     Cash adjustments on expiry will apply to exercised positions only.

2.     The intrinsic price used for exercised positions on expiry is based on the adjusted strike price for rights style adjustments and the pre-adjusted strike price for non-rights style adjustments.  Set negative intrinsic prices to zero i.e. if an out of the money is exercised, the intrinsic price and hence cash adjustment is zero.

3.     Pre and post adjusted positions will be the same unless there is a position adjustment factor applied to the open position associated with the adjustment.  For rights style use the start of day position (i.e. exclude any UA trading activity), for non-rights style use the (end-of-day) position prior to the adjustment.

4.     Cash adjustments will also apply to LEPO positions.

5.        For short positions, the result of the cash adjustment formula should have its sign reversed (multiply by -1). For non-LEPO positions the truncation approach ensures that the seller (writer) is always debited and the buyer (taker) is credited.  Because the LEPO strike is usually returned to 1c after the adjustment, the holder of a short LEPO position may be credited and long position may be debited.

Refer to table below for adjusted strike and contract size

Need more information?

Issued by

Greg Fitzpatrick, Senior Manager Clearing Operations

Contact information

Clearing Operations
clearing@asx.com.au