AMP's new reset prefs up 3pc as shares slide

AMP's new reset prefs up 3pc as shares slide
By Anthony Hughes
October 26 2002





AMP's $1.15 billion reset preference shares made their market debut at a 3 per cent premium yesterday, providing some much-needed cheer for the beleaguered financial services group.

While as much as $10 billion has been wiped from the value of AMP ordinary shares in the past year, and income securities issued in 1999 have traded at a discount to their issue price, it was a different story for the resets yesterday.

The resets closed at $103.10, compared with the $100 issue price - broadly in line with expectations.

But an administrative error at the Australian Stock Exchange meant that the new securities started trading two hours earlier than anticipated.

The 13 trades that went through in the first three minutes after 10am, primarily through lead manager UBS Warburg, were cancelled and trade recommenced at noon.


The distribution rate on the reset prefs of 8.62 per cent a year, fixed until October 2007, proved a drawcard during the offer period - given the volatility of the sharemarket - and those investors wanting more than 500 resets were scaled back.

The success of the resets couldn't stop another dip in the ordinary shares, which fell 31c to $12.51 in a weak market. This was despite a confidence-building analysts' lunch on Thursday, hosted by new chief executive Andrew Mohl and chief financial officer Paul Leaming at the group's Circular Quay headquarters.

While Mr Mohl stuck to dis-closure rules and did not impart any new information, he indicated a strategic review was being undertaken and the results would be announced in the lead-up to a planned market briefing on December 4.

Mr Mohl is expected to take a close look at exiting non-core assets, including the banking operations and the Virgin joint venture, indicating to analysts there were no "sacred cows" except the AMP brand and Circular Quay building.

He also appears destined to make deeper cost cuts in both the British and Australian operations, according to some analysts.

The share price fall followed quarterly sales figures from rival Aviva showing continued weak demand for investment products in Britain.

The price fall was also despite Standard & Poor's decision to restore the A credit ratings on key AMP subsidiaries, after dropping them earlier this year in response to AMP's UK capital woes.

The resets improve AMP's capital strength as it undertakes a series of moves to meet minimum capital requirements at its UK-based Pearl arm, as sharp equity falls have reduced the value of assets available to meet policy holder liabilities.