Works Finance (NZ) Limited (WKS) Bonds

[Newman]

Hi Gary,

I just checked out the old prospectus, which you can get from the companies office web-site. Either Works Finance can agree a new interest rate with holders and repurchase or exchange for shares to holders who don't like the rates offered, or they can basically walk away and leave these as preference shares with an annual reset of 3% above one year swap rate or they can repurchase.

The Direct Broking website shows "The Step-up Rate applicable on 15 June 2012 will be the 1 year swap rate plus a margin 4.05% p.a." I think this number is correct because on the step-up date the new rate would be 1 yr swap + step-up addition (2%)+ initial margin. The intial margin was close to 2% as the current interest rate (9.80%) was 5yr SWAP + initial margin when the rate was set in 2007. Thus the new rate from June 2012 would be around 7%, not too bad if WKS010 is bought at 79 cents now. Further, WKS010 could be converted to shares in June 2012.