Westpac ups profile with new listing

By Richard Braddell

WELLINGTON - WestpacTrust's Australian parent, Westpac Banking Corporation, aims to expand its local brand visibility through an $800 million issue of "New Zealand class" shares that should list on the New Zealand Stock Exchange in about two months.

WestpacTrust's 1.3 million customers and 6000-plus staff will be among those offered "generous" preferential entitlements in what will be one of New Zealand's largest capital issues.

Under the still-to-be-detailed structure, shares will be offered in a local company, WestpacTrust Investments Ltd.

The issue will be structured so that the value and dividends of New Zealand class shares will be determined by the performance of Westpac Banking Corp shares, even although the local listing will be priced in New Zealand dollars and local investors will be able to access the imputation credits generated by WestpacTrust.

WestpacTrust reported a $171 million net profit in the first half of its 1999 financial year.

The capital raising reverses the near disappearance of bank stocks from the New Zealand bourse in recent years.

But while the capital raised is widely expected to be used for a share buyback in Australia, WestpacTrust's managing director, Harry Price, said that the strengthening of relationships in New Zealand, both among its staff and with external groups, was the key reason for the issue.

Among benefits will be more efficient use of imputation credits, in both New Zealand and Australia, since Australian shareholders will be wasting less of group profits on non-imputable New Zealand earnings.

All going well, the issue should substantially step up the proportion of the Westpac group that is in New Zealand ownership.

At present, Westpac's New Zealand shareholder base is a meagre 2 per cent of group capital, while WestpacTrust represents 17 per cent of group assets and profits.

The proposal still requires approval from Westpac shareholders, who will vote at a special meeting in Sydney on September 2, and clearance from the New Zealand Stock Exchange.

Mr Price said the offer provided an attractive investment opportunity, given falling fixed interest returns.