Telecom works to trim cost of AAPT purchase

30 Jun, 2000 03:24 AM2 mins to read

By Geoff Senescall

Telecom is poised to secure control of the third largest phone company in Australia by lifting its stake to about 50 per cent.

But to save money, it must come up with a way to circumvent an Australian corporations law known as the "four-month rule."

Holding just under 20 per cent in AAPT, Telecom is understood to be close to finalising plans to bid for a larger holding.

The speculation is that Telecom will aim to pay closer to the 480Ac a share at which AAPT stocks are trading, than the 570c it paid to buy its initial stake last month.

Under Australian law, Telecom must pay the highest price it paid for shares it already owns if it makes a partial or full bid within four months of its first purchase.

Telecom has been investigating ways to avoid this requirement and is believed to have its lawyers' nod.

It first bought into AAPT on May 17, when it surprised the market by paying 570c a share for a 9.9 per cent stake.

At the time it was seen as a white knight for AAPT, which was trying to fend off a 500c a share bid from Australia's second-largest phone company, Cable & Wireless Optus.

But Optus' designs on AAPT were short-lived. At the beginning of this month the Australian anti-monopolies authority refused to clear its $A1.5 billion bid.

In response, Optus said it would not sell its 10 per cent stake.

Telecom then increased its stake in AAPT through buying another 10 per cent at 500c a share, taking it to just under the 20 per cent level at which Australian takeover laws are triggered.

Telecom has bank credit lines of $2 billion to fund a full takeover of AAPT. But in the absence of a competing bid from another party, it is happy to settle at just 50 per cent, given its good relationship with AAPT's board and management.

AAPT's next largest shareholder is AAP Information Systems (AAPIS), with 17.3 per cent.

The big shareholders of AAPIS are John Fairfax Holdings and News Corp. Last month Optus' chief executive, Chris Anderson, was quoted as saying AAPIS wanted to sell.