Product News 12/10 – Managers rush Telstra II deadline

There has been a rush of financial services groups launching products that allow investors in Telstra II instalment receipts to defer their final payment.

Macquarie Bank

Macquarie, ANZ, UBS Warburg and JB Were have all offered facilities that allow investors to defer the final payments on Testra II due on November 2. The receipts have been trading as low as $2.86 in recent weeks, down more than 30 per cent on its $4.50 listing price.

Most of the deferral products on offer loan the investor the second instalment amount for varying periods of time and allow investors to maintain dividends and franking credits.

Macquarie is offering three products, two of which defer payment for 18 months while the third gives investors almost three years to pay back a loan. None of the products require an upfront payment.

ANZ is offering instalment warrants which essentially lend investors the $3.05 due for the second instalment for 20 months, after which time they can pay off the loan (plus expenses) or sell the warrants to ANZ.

JB Were's Instalment plus product involves the repayment of the loan for the second instalment over eleven equal monthly payments. There is a range of repayment options.

UBS Warburg is offering two options. The first allows 12 to 18 months deferral of the second instalment and no upfront costs. The second is a selling option for the receipts eight days after the first instalment stops trading. UBS Warburg says the facility is designed to alleviate the effects of a fall in the price of shares associated with the close in trade of the receipts.

All of the products are designed for investors looking to hold telstra shares in the medium term.

Cotton off

Rural Funds Management (RFM) is to close its Agricultural Income Trust 1 early and has dropped the cotton farm component of the investment. The trust will now just develop two vineyards in the Barossa Valley and a further two in the Adelaide Hills. As a result of dropping the cotton project, the trust is now looking to raise $9.5 million compared $20 million as announced in the prospectus. The scheme will now close at the end of October rather than December. It is understood one of the reasons behind dropping the cotton project was due to a large private investor in the first trust that has substantial cotton investments and was looking for just wine investment schemes.

Wholesale for retail

Portfolio Partners is to launch two of its wholesale products on to the retail market. The Norwich Union subsidiary will market both the Norwich Union Portfolio Partners High Growth Shares trust and the Emerging Shares trust to retail investors for the first time. The High Growth Shares trust is an equities fund using short-selling techniques on a portion of the portfolio while the Emerging Shares trust concentrates on small cap stocks.

Getting physical

Property fund manager Teys McMahon has rolled out is 11th property syndicate which will bring its portfolio of syndication and strata investments to about $170 million. The group is seeking to raise $16.75 million for three fitness centres in Melbourne and Brisbane. The three commercial properties are home to Healthland Fitness International which has nine health and fitness centres in Australia. All three were purchased from the Ray Group.

Sector funds rush

JB Were has joined the rush into sector funds with two funds investing in the technology and biotech sectors. Both funds are to be managed by JB Were's international investment partner Wellington Management. The JB Were Global Technology Fund has about a quarter of its investments in the Internet sector and the remaining three quarters in IT services, communications equipment and hardware and semi-conductors. The JB Were Global Health and Biotech Fund has about half of its funds in pharmaceutical companies and the other half in health care, biotechnology and medical technology.