Q: this is a more technical question but CSU just announced today that some existing shareholders can elect to buy debentures. Can you help us understand what that means and also how will this be offered to us: through our brokers?
5i Research Answer:
Brokers will credit ALL shareholders with 'rights', which will allow subscription to CSU inflation-linked debentures. For every 3.03 rights, shareholders will be allowed to buy $100 in debentures (with payment). The debentures are the same as CSU's existing debentures, and offer an interest rate based on the CPI index plus 6.5% (in a deflation scenario the interest will never go below 0%). The bonds can only be redeemed by the company with five years' notice. Once they are issued the rights will have an expiration date (not known at this time, it will be announced in the prospectus when issued). If interested, one will need to contact their broker and instruct them to exercise their rights (and provide payment).