CNU - Chorus

[Merc]

Chorus have just announced that they are issuing more shares to Crown Fibre Holdings.

I am puzzled - where do these extra shares come from?

My, obviously faulty, thinking is:
- A company lists with 100 shares at $1 each.
- If a shareholder buys 5 shares they do so in the knowledge that they then own 5% of the company
- If the shares go up or down in value the shareholder still own 5% of the company
- If a Rights issue happens then the shareholder has a choice of taking up the Rights (thus retaining their 5% stake) or not taking them up thus reducing their percentage ownership (say to 4%)
- Takeovers happen when one shareholder goes out and buys some of the other shareholders' shares and then uses their percentage for a compulsory purchase of the remaining shares

But if extra shares suddenly "appear" and get sold to others then the Shareholder's percentage immediately reduces and the shares - and % of dividends - are worth less to boot.

????? Can anyone explain this to me in language I can understand???

[peat]

These shares being issued are not ordinary CNU shares, they are CFH securities. It is all part of the original plan that the Govt would fund the roll-out by purchasing these shares. They are preferential in terms of repayment but have no dividend until 2025 and no voting rights. See the annual report pg 17 for more detail
http://www.chorus.co.nz/file/17479/C...2013-FINAL.pdf

[winner69]

NBR reports a big talking Aussie fund manager is going to put the govt on notice

I say just sell the shares that you are obviously underwater on and be a man .....no point blaming others for not understanding the risks . If he can't stand the heat go somewhere else.

Mind you I didn't read the whole story why he really pissed off

[Harvey Specter]

NBR reports a big talking Aussie fund manager is going to put the govt on notice

I say just sell the shares that you are obviously underwater on and be a man .....no point blaming others for not understanding the risks . If he can't stand the heat go somewhere else.

Mind you I didn't read the whole story why he really pissed off

Depends. If he bought based on Amy Adams comments a few months ago, the they have clearly backtracked and mislead the market. If he didn't rely on that, all's fair in the sharemarket.

[Merc]

These shares being issued are not ordinary CNU shares, they are CFH securities. It is all part of the original plan that the Govt would fund the roll-out by purchasing these shares. They are preferential in terms of repayment but have no dividend until 2025 and no voting rights. See the annual report pg 17 for more detail
http://www.chorus.co.nz/file/17479/C...2013-FINAL.pdf

Thank you. I'm quite relieved that my current 0.0003% ownership of the company will not be reduced further

The timing of the announcement made me think it was a Government bail out.

Normally would the issue of other types of securities affect the price of the normal shares?

And also, some years ago, before I was paying too much attention to shares, AIR dropped like a stone and the Government stepped in with a bail out and added significantly to their share holding. From memory the shares had dropped to something like 10c. How did they do this? Did they buy up lots of shares or was it done through something like a Rights issue?

The BNZ bailout was another one. Could they do it again with CNU?

[peat]

Normally would the issue of other types of securities affect the price of the normal shares?

And also, some years ago, before I was paying too much attention to shares, AIR dropped like a stone and the Government stepped in with a bail out and added significantly to their share holding. From memory the shares had dropped to something like 10c. How did they do this? Did they buy up lots of shares or was it done through something like a Rights issue?

The BNZ bailout was another one. Could they do it again with CNU?

IT would depend on the nature of the securities. This issue of CFH securities was fully outlined though so presumably it would have all been taken into account by the market.

See the AIR thread for some info about the govt bailout. I discussed it a little in there somewhere. You'll have to do your own research for BNZ.

They can bail out CNU but would get lots of flak re corporate welfare.

[Nigel]

http://www.nzherald.co.nz/business/n...ectid=11164287

Is the end of the 'government intervention' possibility? i.e. is Chorus now officially screwed?

[Mista_Trix]

http://www.nzherald.co.nz/business/n...ectid=11164287

Is the end of the 'government intervention' possibility? i.e. is Chorus now officially screwed?

Wow it really just keeps getting worse for them.

[jamiec26]

My belief is that the ernest and young report will be totally independent as its mandate.
It must come to a conclusion that comparative country pricing cannot account for all the factors that must be taken into account to enable fair pricing.
It would be in the interests of all to arrive at a fair price by negotiation and certainly in the best interests of chorus and national to reach a settlement before the election.
Cunliffe is a loose bigmouth cannon who wont be trusted by chorus.
National might gain a few votes if it negotiates a reduction on todays copper prices

'I've been thinking (probably dangerous thinking). On the 5/12 there are a few outcomes, I can't think of every possible one. But most of them lead to a favorable outcome...

CNU can afford 5-7% div yield. - SP goes up.
CNU is screwed - GOVT prop it up - SP goes up.
CNU can shouldn't pay a div - already reflected in SP? - future network monopoly. SP growth and div return in future
And a bad option - CNU defaults on contract conditions and lose the roll out!

At the end of the day the GOVT can't let 75% of the broadband roll out fall over. At the moment the SP would have to be close to be considered most of the bad outcomes. Because of this I'm thinking I should buy a little more or am i way off?

[Harvey Specter]

http://www.nzherald.co.nz/business/n...ectid=11164287

Is the end of the 'government intervention' possibility? i.e. is Chorus now officially screwed?

@ years of uncertainty ahead where the 'cooper tax' will now be received by the retailer, not chorus.

Hopefully Chorus will now slow down its roll out and target higher demographic areas that are more willing to pay for a better qualify product as it seems clear that all that most people want is cheaper cooper.

If I had asked people what they wanted, they would have said faster horses

- Henry Ford (maybe. No proof he actually said this)