IRD hitch delays $700m float

By GEOFF SENESCALL

Failure by the Inland Revenue Department to process a tax ruling is understood to have delayed ANZ Bank's $700 million float in New Zealand.

The share issue had been timed for the first quarter of this year. But it will now most likely take place around May or June. The IRD could not be contacted last night for comment. But one source blamed the delay on the IRD being under-resourced.

The ANZ is believed to have put its application into the IRD for a binding tax ruling on its new product in October last year. A deadline had been set for February to coincide with a March float.

However, it is understood that the IRD has said that it could not meet the deadline. Without a binding tax ruling, the ANZ was unwilling to proceed.

The problem in meeting the deadline has arisen despite Westpac Bank having paved the way last year with its float of New Zealand securities. ANZ is believed to be seeking a similar ruling so it can distribute imputation credits to shareholders from profits made in New Zealand.

The ANZ is issuing the New Zealand securities through a trust structure.

Unlike Westpac, its securities will be able to be exchanged into shares in the Australian company. This is expected to reduce the opportunity for arbitrage that might arise between the two securities.

Since listing, Westpac NZ shares have sometimes traded at a discount to their Australian counterparts.

ANZ has appointed brokers Merrill Lynch and J B Were and Son as co-managers of the float. The bank announced its intention in September last year, hot on the heals of Westpac's successful float.

No other major banks have jumped on the bandwagon.

At the time of announcing the float, ANZ said that it wanted to rebalance its ownership structure. New Zealand shareholders own around 3 per cent of the group, but local operations account for about 15 per cent of the profits.