UPDATE (07/01/2019) - Participants are advised that a listing restriction will be applied for BHP on Wednesday, 9/01/2019. The listing restriction will be lifted on Thursday, 10/01/2019. The September 2020 and December 2021 ETO series will be terminated. 

On 17 December 2018, BHP Group Limited (ASX Code: BHP) announced a special dividend of USD$1.02 (fully franked). The special dividend’s record date is Friday, 11 January 2019.

Indicative timetable impacting BHP ETOs

Effective Date

All trading in BHP ETO contracts will be on an adjusted basis effective on the ex-date, Thursday, 10 January 2019.

This standard method of adjustment will be processed on Wednesday, 9 January 2019 after market close. ASX will calculate and perform the following 3 adjustments to your open positions.

Please Note: The USD dividend figure will be converted to AUD using the exchange rate listed on the RBA website on Wednesday 9 January 2019.

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 = $0.00)

SD = amount of special dividend per share (SD= $1.02*).

* Converted to AUD on adjustment day 9 January 2019

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 USD$1.02/(cumVWAP - 0.00 – USD$1.02) 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 09 January 2019 which will list the adjusted series.

Need more information?

Issued by

Brendan Laird, Senior Manager, Post Trade Operations

Contact information

Stevi Inkiriwang
1800 623 571
cad@asx.com.au

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