Friday, 7 March 2008

Symbion takeover offer accepted

I finally accepted Primary Healthcare's $4.10 takeover offer for my Symbion stock. The offer had become unconditional and with the Symbion board of directors unanimously recommended the revised offer and Primary's control reaching over 85% it seemed inevitable that they would reach the 90% required for a compulsory takeover of any residual hold-outs. Since that would result in receiving the offer price of $4.10 (reduced to $4.05 due to the dividend recently paid out by Symbion), there was not point in not accepting.
I had thrown out my previous offer acceptance forms, so I tried phoning the Primary Healthcare info line to order a new acceptance form last week. However, the number was on voicemail, so I didn't end up ordering a new form. One arrived in the mail on Monday anyhow, sent to all Symbion shareholders who hadn't accepted by the time the latest offer deadline extension was announced.

The listed stock price was around $4.10-$4.11, so I thought about selling my holding on the market rather than sending in the acceptance form, but since my Symbion shares are held in my Leveraged Equities margin loan account I'd have to sell them via the registered broker - Tolhurst. Since they aren't a discount broker this would have meant brokerage fees of around $75, which would have knocked about 3c per share off the realised sale proceeds. I looked into changing my registered broker to an online broker, but the only one that Leveraged Equities has arrangements for online trades of margined stock is Morrison. Although the rates seemed competitive on first glance (similar to Comsec and other online brokers), the fine print of the account application form revealed that you have to use their IRESS trading application with a significant monthly fee, or else use their 'HTML' trading platform (similar to Comsec and others) which costs $500pa (unless you maintain an account cash balance with them of at least $5,000!). I could have investigated further to see if the CMT account linked to my Leveraged Equities account could have maintained the requisite $5,000 balance, in which case the interest rate paid on the $5,000 would have been OK, but I decided it was all too hard. I was especially put off by the Morrison application forms having a clause that, once you assigned them as your principle broker on your leveraged equities account, they had to agree in writing to any request to change brokers in future.

So, in the end I faxed the Primary Healthcare offer acceptance form to Leveraged Equities yesterday. I should receive the $11,664 payment from Primary within two weeks of the offer deadline. Now that I've accepted the offer I hope the deadline doesn't get extended yet again!

One thing I'd forgotten is that by accepting the takeover offer instead of selling the stock I'd lose the margin value of these shares from my leveraged equities account immediately the offer paperwork was processed by LE, but I wouldn't receive the payment funds for several weeks. D'Oh! - this made my margin utilisation shoot up from 81% to 88% overnight.

Hopefully there market won't drop significantly before the payment from Primary Healthcare is processed, otherwise I'll have to find some cash to reduce the LE margin loan balance.

Once the funds arrive from Primary I'll use the money to reduce the LE loan balance. I'm slowly reducing the stock holdings within my LE account due to the lack of online trading with this account. These days I make any stock fund purchases on margin using my St George margin loan account, and any direct stock investments (or the CDF ETF) using my Comsec margin loan account, which can be traded online.

Copyright Enough Wealth 2007

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