International Warrants

Gain exposure to the overseas listings of certain Dual Listed Companies, with an ASX-listed investment

 

Features and benefits

Macquarie International Warrants are ASX-traded warrants, which offer investors the opportunity to gain exposure to the overseas listings of certain Dual Listed Companies, including the LSE-listed Rio Tinto Plc (RIO UK) and BHP Billiton PLC (BHP UK).

Key Benefits:

  • The opportunity for investors to potentially take advantage of any spread differentials between BHP and RIO AU and BHP and RIO UK.
  • Receive an amount in AUD equal to the value of any dividends which occur in relation to the Reference Share.
  • Potentially benefit from any gains in the Reference Share over the term of the Warrant (subject to potentially adverse movements in the relevant exchange rate).
  • Receive many (but not all) of the financial benefits of a direct investment in the underlying share.
  • Ability to sell the Warrant on the ASX prior to the maturity date.

At a glance

Security and term

Macquarie International Warrants are quoted on the ASX and have a term of approximately five years:

Maturing 31 October 2014:

  • ZBHWMA (Underlying Reference Share BHP Billiton Plc)
  • ZRIWMA (Underlying Reference Share RIO Tinto Plc)

Maturing 10 December 2014:

  • ZBHWMB (Underlying Reference Share BHP Billiton Plc)
Transaction and structure The exercise or strike price will be set at AUD0.01, and the Warrants are expected to trade at approximately the AUD equivalent of the price of the relevant underlying UK-listed Reference Share
DLC spread

Macquarie Investment Warrants provide the opportunity for investors to potentially take advantage of any spread differentials between BHP and RIO AU and BHP and RIO UK

For example, a reduction in the spread may imply that, for example, BHP (UK) would rise in price relative to BHP (AU) or that BHP (AU) would fall in price relative to BHP (UK). Purchasing a Macquarie International Warrant over BHP (UK) or RIO (UK) gives investors the opportunity to gain in relation to any increase in the price of BHP (UK) or RIO (UK) (subject to movements in the applicable exchange rate)

More detailed information about DLC spreads can be provided on request

Pricing Investors should contact Macquarie for firm Warrant pricing
Settlement T+3 settlement. Similar to stock positions
Distributions
  • Receive any amount in AUD equal to the value of any dividends which occur in relation to the Reference Share
  • Investors will not be entitled to franking credits or other foreign income tax offsets
Maturity At maturity, Macquarie International Warrants will be physically-settled, which means that investors will be entitled to receive a number of ASX securities (the Deliverable Shares). The Deliverable Shares are likely to be the ASX-listed BHP Billiton Ltd (for BHP UK) Warrants and RIO Tinto Limited (for RIO UK Warrants). The number of Deliverable Shares received will depend on the AUD equivalent of the volume weighted average price of the UK Reference Share on each of the five averaging days following the maturity of the Warrant (Final Value) and the price of the AU listed Deliverable Share following the determination of the Final Value of the Warrant. For example if an investor holds five BHP UK Warrants worth $A20 each and BHP AU is trading at $A25, they will be delivered four BHP AU shares. Note that investors will be provided with the opportunity to sell out of their International Warrants on market before maturity

 

How do they work?

Upfront During the investment At maturity
  • You can purchase International Warrants on the ASX.

 

  • Receive any amount in AUD equal to the value of any dividends which occur in relation to the Reference Share.
  • Potentially benefit from any gains in the value of the Reference Share (subject to, among other things, adverse exchange rate movements).
  • May be able to be sold on the ASX on or prior to its maturity date.
  • International Warrants are physically settled (which means that investors are entitled to receive a number of ASX securities from Macquarie) (the Deliverable Shares).
  • The number of Deliverable Shares received will depend on the AUD equivalent of the volume weighted average price of the UK Reference Share on each of the five averaging days following the maturity of the Warrant (Final Value) and the price of the AU listed Deliverable Share following the determination of the Final Value of the Warrant.

 

Risks

The risks of investing in Macquarie International Warrants is outlined in the PDS, below is a summary of some of the risks:

  • Performance risk: the adverse performance of the relevant reference asset decreasing the value of your investment;
  • Foreign exchange risk: As the Reference Share for a Warrant will be a security which is traded on an international securities exchange, it will usually trade on that exchange in the local currency of that exchange (for example, a Reference Share traded on the London Stock Exchange will normally have its price denominated in Great British Pounds). As the Final Value of your Warrant and any payments you receive in relation to your Warrant will be denominated in Australian dollars (eg, any Distribution Amount or any Corporate Action Amount), you will be exposed to movements in
    1. the currency of the Reference Share (eg, the Great British Pound or GBP) and the AUD; and
    2. if paid in a currency different to the currency of the Reference Share, the currency of any dividends paid in relation to the Reference Share (eg, United States Dollars or USD) and the AUD.
  • Counterparty risk: The value of your investment in a Warrant depends on, among other things, whether Macquarie can, and does, perform its obligations in respect of that Warrant.
  • Early termination: Macquarie may terminate your Warrant prior to the original Maturity Date on the occurrence of an Extraordinary Event.

You should only:

  • consider investing in Warrants if you have experience in securities, options, foreign exchange transactions and investments in securities generally; and
  • reach an investment decision after carefully considering, with your adviser, the suitability of investing in Warrants in your particular circumstances;
  • invest in Macquarie International Warrants after carefully reading the PDS and any SPDS relevant to the Warrants you want to invest in.

Contact us

Call Macquarie

1800 080 033

or
Speak to your
financial adviser

Fax

02 8232 6158


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