re: bhp buy-back clarification With such an ignorance of the rationale and potential benefits of such buy backs I would strongly recommend you father changes his financial adviser. (lol)
At the full 14% discount (which will be the final price) the buy back has differing benefits for investors with different tax situations.
Assuming a market price of $25.00, the buy back would be at $21.50.
For a super fund in the pension phase the return would be $2.10 capital, $19.40 full franked dividend AND $8.31 refund of franking credits (when the funds tax return is lodged), giving a total return of $29.81.
Tax paying investors would need to consider the value of the (potential) $19.40 capital loss to determine whether this would offset the lower-than-market sale price.
These type of buy backs are extremely popular - hence only about 15%-30% of shares tendered will be accepted.
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