The distribution is determined by a formula and they need to be up to date so its this formula:
The rate is the higher of 3 month bank bill rate or the 10 year swap rate at the commencement of any period plus 4.70% less the franking credits. If the company decides to not pay it with franking credits than the company has to pay the full rate.
In order not to be in arrears they have to have paid this for the past 12 months or have made a payment bringing it up to date ( i.e. paying a distribution for a full year in one hit)
In reality unless they had substantial surplus cash it wont help them - but it does allow an outsider to acquire on market and reduce his cost. as its not a voting share as regards ordinary shareholders meetings I am not even sure if you have to disclose changes in holdings even if you own above 5% of the hybrids.
So nice idea but covered.
ELD Price at posting:
20.0¢ Sentiment: None Disclosure: Held
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