Note
BGL do not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.
Overview
On 13 March 2015, iiNet and TPG announced that they had entered into a Scheme Implementation Agreement to acquire the iiNet Shares that TPG does not own, by way of a scheme of arrangement (“Original TPG Proposal”).
On 6 May 2015, following the receipt of an alternative competing proposal from M2 Group Ltd (“M2”), iiNet and TPG announced that they had reached agreement on the terms of an improved proposal by TPG and had entered into a revised Scheme Implementation Agreement reflecting the improved proposal (“Scheme”). Under the Scheme, iiNet Shareholders will receive:
The Scheme Consideration as either:
- Option 1: Cash Consideration: $8.80 in cash per iiNet Share; or
- Option 2: Share Consideration: 0.969 TPG Shares per iiNet Share, subject to a cap.
A proportional scale back will apply if this cap is exceeded; and
- Discretionary Special Dividend: a Discretionary Special Dividend of up to $0.75 per iiNet Share in cash, which will be franked to the maximum extent possible.
TPG will provide a cash top-up payment to iiNet Shareholders to the extent that the Discretionary Special Dividend is less than $0.75 per iiNet Share. A key feature of the Scheme is the ability for iiNet Shareholders to elect before the Election Date to receive their Scheme Consideration in cash (“Cash Election”) or in TPG Shares (“Share Election”). The Discretionary Special Dividend is only payable in cash. In addition, an Australian tax resident iiNet Shareholder may receive some benefit from the franking credits attached to the Discretionary Special Dividend, subject to their personal taxation circumstances.
- ATO CR 2015/71 Income tax: iiNet Limited Scheme of Arrangement and Discretionary Special Dividend
- iiNet Scheme Booklet
This help covers the following scenarios:
Scenario 1 - Example for iiNet shareholder who elected Cash Consideration
- The fund held 1000 units of IIN as at 01 Sep 2015 and fund elected to receive cash.
- If you elected the Cash Consideration, you received $8.80 per IIN share, plus a Discretionary Special Dividend of $0.6914 per share, and Top-Up Cash Consideration $0.0586 per IIN share.
Instructions
Step 1 - Ensure you have received the Special Discretionary Dividend of $0.6914 per IIN share (This amount should be 100% franked). This can be entered as a manual transaction or use Transaction Matching.
Step 2 - Process a disposal of your IIN shares on 07 Sep 2015 for $8.8586 per share. This consists of the Top-up cash consideration ($0.0586) and cash consideration ($8.80).
Scenario 2 - Example for iiNet shareholder who elected Share Consideration
- The fund held 1000 units of IIN as at 01 Sep 2015 and fund elected to receive Shares.
- If you elected the Share Consideration, you received 0.5533 TPM shares for each IIN, and received $3.77 per IIN share (to compensate for the scale back). You should also have received a Discretionary Special Dividend of $0.6914 per share, and Top-Up Cash Consideration $0.0586 per IIN share. That is, you received 0.5533 TPG share plus $4.52 cash.
Instructions
Step 1 - Ensure you have received the Special Discretionary Dividend of $0.6914 per IIN share (This amount should be 100% franked). This can be entered as a manual transaction or use Transaction Matching.
Step 2 - Process a Demerger manually using the Corporate Actions Screen.
| Field | What to enter |
|---|---|
| Select Security to Process | IIN.AX |
| Select Corporate Action | Demerger |
| Ex / Balance Date | 06/09/2015 |
| Corporate Action Date | 07/09/2015 |
| Select New Security | TPM.AX |
| Units In Head security after demerger | Same as units on hand (in this example it is 1000) |
| Units In Demerged Security | units on hand x 0.5533 (in this example it is 533) |
| Head Security % |
47.09% Refer to CR 2015/71
i.e $9.18 x [$4.52 / ($4.52*0.5533 + $9.18)] = 47.09% |
| Demerged Security % | 52.91% |
Step 3 - Process a disposal for your remaining IIN shares on 07 Sep 2015 for $3.8286 per share. This consists of the Top-up cash consideration ($0.0586) and cash consideration ($3.77).