Newcrest Mining Limited (ASX code: NCM) have released the scheme Booklet for the proposed Scheme of Arrangement with Newmont Overseas Holding Pty Ltd a wholly owned indirect subsidiary of Newmont Corporation to acquire 100% of the shares in NCM.

The scheme is still subject to shareholders and court approvals.

If this Scheme is approved, Newcrest Shareholders will receive 0.40 Newmont shares for each Newcrest share held on the Scheme Record Date. Newcrest (conditional on the Scheme becoming Effective) declared a fully franked Special Dividend of USD $1.10 per Newcrest Share.

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

NCM Special Dividend Implications for ETOs

Dividend timetable NCM ETOs

Effective Date

From the special dividend effective date (ex-date) Wednesday, 18 October 2023, all trading in NCM will be on an adjusted basis.

This standard method of adjustment will be processed on Tuesday 17 October 2023 after market close. ASX will calculate and perform the following 3 adjustments on open positions.

Foreign Exchange Rate

NCM has yet to detail the methodology or the USD/AUD FX rate. If the FX rate is published prior to close of business on the 17 October 2023 ASX Clear will apply this FX rate for the USD special dividend conversion, if the FX rate is not available ASX Clear FX rate will be the average USD/AUD exchange rate for the 17 October between 10am to 4:12pm.

Contract Size

Theoratical 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 = USD $0.00)

                  SD = amount of special dividend per share (SD = USD $1.10*FX Rate)

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. If the theoretical new contract size falls above 102, then the new contract size will be truncated down to the nearest whole number

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 equalisation 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 $1.10*FX Rate/(cumVWAP – $0.00 – $1.10*FX Rate) 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.

Scheme of Arrangement Termination Implications for NCM ETOs

According to the terms of the scheme, NCM shares will cease trading after the scheme becomes effective.  ASX has consulted ASXCL and has determined to terminate all NCM ETOs contracts by cash settlement at the intrinsic value with the NCM reference price to be ASX closing price for NCM on Thursday, 26 October 2023.

Option positions held at the close of business on Thursday, 26 October 2023 will be closed out and cash settled at the intrinsic value. Takers will be credited and writers debited. The intrinsic value method is equivalent to the expiry of the options effectively brought forward to the last day of trading of the underlying security. ASXCL will settle these cash amounts on the next business day – Friday, 27 October 2023.

Exercise Restriction

An exercise restriction will be placed on NCM ETOs on NCM shares last day of trading on the ASX - Thursday, 26 October 2023.

Listing Restriction

To mitigate the number of termination in NCM ETO contracts, a listing restriction on NCM ETOs has been applied, with the latest expiry month being December 2023.

No further NCM series will be listed.

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.

After the completion of the adjustment, ASX will undertake a collateral review to identify specific cover accounts that do not have sufficient units lodged to cover their positions.  The identified accounts will have their specific cover reclassified as general cover and be required to meet margins on these positions.

A further notice will be issued after close of trading, Tuesday, 17 October 2023 which will list the adjusted series.

Scheme of Arrangement – Termination:

Participants to be aware of the adjustment method ASX NXM ETOs contracts for the proposed Scheme of Arrangement.

Effective Date

A further ASX Notice will be released after the closing of trading on Thursday, 26 October 2023 outlining the termination prices for NCM ETOs.

Need more information?

Issued by

Greg Fitzpatrick, Senior Manager, Clearing Operations

Contact information

William Ward

clearing@asx.com.au