Prices of Seven Group TELYS4 (ASX code: SVWPA) convertible preference shares jumped on the news Seven Group would be offering holders an option to convert their holdings into ordinary shares. The offer was announced prior to the commencement of trading on Wednesday and after the hybrids closed at $82.00 on Tuesday afternoon.
Seven Group had previously announced in August 2016 an offer to buy back up to 10% of the TELYS4 on the issue “subject to market conditions”. At the time, the price of the preference shares was $67.00. It hovered around $70 for much of the rest of 2016 and then gradually rose into the low-$80s over the course of 2017. Seven Group did not act on this proposal. In hindsight, it should have acted immediately in 2016.
The new proposal gives TELYS4 holders the opportunity to receive 4.60645 ordinary shares for each TELYS4. If the vote is passed, all holders will have their holdings converted, save for those which opt for selling 50% of their holding for at least $88.00 per TELYS4. These holders will have 50% of their holdings converted, with the balance to be sold through their own broker or through the Seven Group-appointed sale-facility broker.