PR ploy nets Westpac a tidy profit

By Nick Stride

Friday 30th November 2001

Hedge fund manager Elliott Management appears to have sold its holding of WestpacTrust shares, pocketing a tidy profit.

New York-based Elliott, which built up a 5.1% holding from late January, last week hired public relations consultants to publicise its criticism of Westpac for failing to act to close the discount at which the New Zealand-class shares have traded to the bank's Australian head shares.

On Wednesday broker UBS Warburg crossed a 3.4 million share parcel. While other explanations are possible, the evidence points to Elliott, which last declared a 3.15 million holding, as the seller. It was the only substantial shareholder.

Since January the shares have climbed steadily from around $15 to $18.

The discount has also moved in Elliott's favour, partly as a result of its public relations activities, from over 10% before it approached the media to about 5% on Wednesday.

Westpac chief financial officer Philip Chronican last week rejected Elliott's accusation the bank had allowed the discount to persist through inertia. He said the Australian election, and a rewrite of business tax, had delayed a planned approach to the Australian Tax Office to discuss making the New Zealand-class shares exchangeable with the Australian shares.

Local sharebrokers are treating Westpac's protestations with a pinch of salt.

One said preserving the benefit of dividend imputation credits for New Zealand-class shareholders resident here was something Inland Revenue, not the ATO, would have to approve.

ANZ Bank had last year secured IRD approval to issue New Zealand-class shares exchangeable with the Australian head shares, he said, and there was no reason Westpac should not do the same.

Westpac had used the proceeds of the New Zealand issue to buy back shares in Australia but had consistently refused to include the New Zealand shares in its buybacks.

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