Santos successfully completes $300 million off-market buy-back

Santos completed its off-market share buy-back of $300 million in July 2007.

The outcomes of the buy-back are as follows:

         

Size    $300 million
Market Price    $14.1349 
Buy-back discount 14%
Buy-back price $12.16
Capital component $2.79 
Fully franked dividend component  $9.37 
Tax value $13.22
Shares bought back 24.7 million 
Percentage of issued ordinary capital 4.1%
Scale back  60.87%  

 

The 14 per cent buy-back discount enabled Santos to return surplus capital in an efficient manner, improving earnings per share and return on equity.

Santos’ Chief Financial Officer, Peter Wasow, said “We are delighted with the strong demand shown in the buy-back which has allowed us to buy back 4.1 per cent of our issued capital at the maximum discount of 14 per cent. The successful completion of the buy-back will deliver additional benefits to shareholders through improvements in our capital structure while allowing us to continue to invest in our growth businesses.”

Due to the strong demand for the buy-back, a 60.87 per cent scale back of tenders is required. Shareholders who tendered their shares at a 14 per cent discount and/or as final price tenders, will have a priority allocation of 500 shares bought back before the scale back is applied. As a result of the 60.87 per cent scale back, successful shareholders will have 39.13 per cent of their shares tendered in excess of the priority allocation bought back. No tenders were excluded on the basis of a minimum price condition.

To ensure that registered shareholders with small holdings are not disadvantaged, the scale back has been structured so that successful shareholders who tendered all of their shares at a 14 per cent tender discount and/or as a final price tender and who would be left with 200 shares or less as a result of the priority allocation and scale back, will have all of their shares bought back in full.    

For shareholders who have successfully tendered their shares, $9.37 of the buy-back price is treated for Australian tax purposes as a fully franked dividend. For Australian capital gains tax purposes, the deemed capital proceeds are $3.85, being the $2.79 capital component plus $1.06, being the excess of the Tax Value over the buy-back price.

Payment for shares bought back will be credited to nominated bank accounts and cheques will be posted to shareholders by 9 July 2007. Shares that have been tendered into the buy-back but not bought back are expected to be released to shareholders during Monday, 2 July 2007.

Key dates for the Buy-Back1

EventDate (2007)
Cut-off date for Buy-Back franking entitlements under the 45-day rule2 15 May
Shares quoted ex-entitlement to participate in the Buy-Back on the ASX3 17 May
Determination of eligible shareholders entitled to participate in the Buy-Back (Buy-Back Record Date) 23 May
Distribution of Buy-Back documents to shareholders completed 4 June
Tender period opens 12 June
Tender period closes at 7.00pm (Eastern Standard Time) 29 June
Determination of the buy-back price and scale back (if any) with details posted on Santos’ website at www.santos.com and lodged with the ASX 30 June
Details of buy-back price and scale back (if any) available on the ASX 2 July
Dispatch/crediting of buy-back proceeds to participating shareholders completed 9 July

Notes:

1. While Santos does not anticipate any changes to these dates and times, it reserves the right to vary them. Any change in date or time will take effect from the time it is authorised by the Board and will be publicly announced as soon as practicable following the Board’s authorisation. Santos may also decide not to proceed with the buy-back.

2. Shares acquired after this date will generally not qualify for franking entitlements in the buy-back under the 45-day holding period rule.

3. Shares acquired on the ASX on or after this date will generally not confer an entitlement to participate in the buy-back.

Adjustment to Tax Value 

Santos announced on 22 June 2007 that following discussions with the ATO it has varied the methodology for calculating the Tax Value.

The Tax Value is relevant to Australian resident shareholders participating in the Buy-Back as it impacts the deemed disposal price for Australian tax purposes of shares sold into the Buy-Back. 

Having regard to current market conditions, it has been agreed with the ATO that the adjusting index for the purposes of calculating the Tax Value will be changed from the S&P/ASX 200 Index to the S&P/ASX 200 Resources Index and hence the Tax Value will be determined in accordance with the following formula:

   $12.25 x    Closing level of the S&P/ASX 200 Resources Index on 29 June 2007
                                                            4,906.0 

The tax calculator available on this website has been updated to reflect the revised methodology for calculating the assumed Tax Value using the formula above. As this change may affect the outcomes of the tax calculator, shareholders who have previously used the tax calculator to estimate the indicative after tax proceeds from participating in the Buy-Back should revisit their calculations.

Details of the current implied Tax Value are available via the Santos Limited buy-back enquiry line on 1300 366 075 (within Australia) or +61 3 9415 4612 (from outside Australia).

Market Price

The Market Price for Santos’ off-market share Buy-Back (as defined in the Buy-Back booklet) is $14.1349. On this basis, the tender discounts are equivalent to the following tender prices (rounded to the nearest cent):

 

Tender discount Tender price
14% $12.16
13% $12.30
12% $12.44
11% $12.58
10% $12.72
9% $12.86
8% $13.00

 

Further information

If you have any further queries in relation to the Buy-Back, please contact our dedicated enquiry line on 1300 366 075 from within Australia and on +613 9415 4612 from outside Australia.

Details about the ATO’s class ruling is available via the ATO's website at www.ato.gov.au.

If you are in any doubt as to the action you should take, you should contact your financial, taxation or other professional adviser immediately.

Important notice:
Not for distribution or release in the United States or Canada

The information contained in this website does not constitute, of form part of, any offer or invitation to sell, or any solicitation of any offer to purchase any securities in any jurisdiction, nor shall it or the fact of its release be relied on in connection with any contract thereof. No indications of interest in Buy-Back are sought by this website. Shareholders who are (or nominees who hold Santos Limited shares on behalf of or for the account of persons who are) in the United States or US persons (within the meaning of Regulation S under the United States Securities Act 1933), residents of Canada or who are otherwise excluded foreign persons will not be eligible to participate in the Buy-Back described in this website. ADRs and restricted employee shares may not be tendered into the Buy-Back. Buy-Back documents, including the booklet describing the terms of the Buy-Back and tender forms, when issued, will not be distributed or sent into the United States or Canada.

Forward looking statements

This website contains forward looking statements, including statements regarding the implementation of the Buy-Back and its effects on our business and securities.  The results and effects of the Buy-Back may differ materially from those expressed in, or implied by, these forward looking statements.  Factors that could cause or contribute to such differences include the number of shares bought back, the Buy-Back price and the general trading and economic conditions affecting our business.  We do not undertake any obligation to revise these forward looking statements to reflect any future events or circumstances.