wesn conversion, page-6

I don't know when the exact date of issue was, but your link said the scheme of arrangement was approved by shareholders on Nov 7th 2007. As the S&P/ASX 200 Industrials Index is likely to average less than 6,500 for the two month period prior to each potential lapse date for the foreseeable future, that would suggest that Wesfarmers can delay the conversion until the max of 8 years after issue. Assuming the date of issue was Nov 2007, that would indicate that they can hold off until Nov 2015.

I don't see any reason why they would convert sooner than they are forced to, unless they see the share price rising above $34.49 and then expect it to fall back again. Their max conversion cost is 1.25 WES shares, which occurs if the WES price is below $34.49 and proportionatly diminishes to 1 to 1 between $34.49 and $43.11. Above $43.11 it is just 1 to 1. So the higher the share price the less it will cost them. So, IMO, the only reason to act sooner rather than later is if they have a temporary rise in the SP somewhere above $34.49 (and the more the better) that they expect to not last and see no possibility of another rise to that temporary point before Nov 2015.

One thing I have noticed though is that over the last few years, the difference between the SP of WESN over WES has risen to over $1 about a week ago, though it has fallen back to $0.70 since. A few years back the premium was often under 20 cents and on occasions even negative. The main reason given then for the low delta was the unattractiveness of WESN due to their comparatively lower liquidity.