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Buying shares on lay-by

Thursday 28th April 2005

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Warrants have been offered in New Zealand before, most memorably by the Australian-based Challenger, which offered warrants on Australian listed shares.

Challenger no longer exists and its warrants didn't exactly become a mainstream investment option. However warrants have been successful in Australia.

Warrants work by investors making a part payment for a share, that share is held in trust and any dividends and payments are used to help pay the balance of the share price.

Also there is an interest fee charged by the company offering the warrants.

Under ABN Amro's "rolling instalment warrants" scheme investors make an initial payment of about half the price of a share plus pre-paid interest for the next 18 months on the balance, and a capital protection and borrowing fee to ABN Amro.

A second and final payment can be made at any time. With the "rolling" warrants the loan can be reset every 18 months if the investor chooses to pay another interest instalment and defer repaying the loan capital.

ABN Amro has set the interest rate at 9% in its scheme.

Warrants are being issued on shares of the following companies: Auckland International Airport, Air New Zealand, Carter Holt Harvey, Contact Energy, Fletcher Building, Fisher & Paykel Appliances, Fisher & Paykel Healthcare, Infratil, NGC, Port of Tauranga, Sky City, Telecom, Waste Management, The Warehouse and Westpac.

Warrants themselves will be listed on the NZX.

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


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