TAG options on Brierley shares

Press, 22 April 1986, Page 24

TAG options on Brierley shares

By

SIMON LOUISSON

in Wellington Investors will soon be able to buy a type of Brierley Investment, Ltd, option. The Wellington property company TAG Corporation is about to launch a company which will offer investors the innovative “BIL-Llnk units.” The option in some ways resembles a futures contract. Details of the scheme will not be available until the prospectus of the company, Options Associates, Ltd, is released next week. The purchases of a BILLink unit will allow the investor to purchase one Brierley share including accumulated benefits at a predetermined and fixed exercise price on March 31, 1989. Application will be made to the Stock Exchange to list the BILLink units,, the value of which is expected to follow closely movements in the BIL share price. Unit-holders will be able to sell their units until

March 31, 1989. Option Associates has already purchased two million Brierley shares, making it one of the larger BIL shareholders. Analysts said the units would give investors the potential to earn a higher return than by buying BIL shares. Unlike margin trading, the downside risk was limited. Figures have not been released yet, but purchasers will be able to buy a unit for less than the BIL share price and so “gear up.” Because the price will be fully underwritten there will be no compulsion on unit-holders to exercise their right of purchase in 1989. The investor therefore stands to benefit from the upward movement of the shares with the downside risk limited to the amount of the initial outlay. The TAG Corporation’s chairman, Mr Peter Wise, believes the scheme is unique. “It will give investors the opportunity to obtain greater growth potential than if their funds were

applied directly to the purchase of shares,” he said. He says the scheme arose through analysis of leading shares which in recent years have consistently outpaced interest rates in their over-all appreciation in value. Provision has been made for the scheme to be self-funding. Investment analysts assume that TAG, which will manage the scheme, will take out futures contracts based on the share index (expected to be introduced this year) to cover any downside risks. The Link units will be available through an arrangement with AMP Financial Corporation and Perpetual Trustees. Last year, TAG launched a similar type of scheme called TAG Property Link shares. BIL-Link units will be available to the public as well as TAG shareholders. The scheme is independent of Brierley’s capital structure. BIL executives were only made aware of the scheme last week.