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    ASIC warns small AMP investors
    By James Chessell
    June 11 2003

    AMP's uphill battle to convince its "mum and dad" shareholders to throw good money after bad got a little harder yesterday when the corporate regulator confirmed serious concerns about the troubled finance group's $500 million share purchase plan (SPP).

    Less than four days before the second leg of AMP's $1.7 billion capital raising closes, the Australian Securities and Investments Commission took the unusual step of both endorsing AMP's recent disclosure and warning shareholders about the "lack of detail" surrounding the company's planned demerger.

    At the regulator's request, AMP chairman Peter Willcox and chief executive Andrew Mohl formally confirmed "important issues" about the proposed demerger "remain to be resolved" and the "possible need and desirability for restructuring" last year's reset preference share issue.

    While AMP sources said there was nothing new in yesterday's announcement, ASIC's "discussions" with AMP led to further gloomy speculation about the health of the group and suggestions the retail offer would be undersubscribed.

    "The market needs more information," said one analyst, who asked not to be named. "All ASIC has done is raised a bunch of questions and affirmed that nobody has anything new about the demerger - how can can shareholders make a choice in a friggin' vacuum?"

    Rather than calm an edgy investment community, observers said the announcement would fuel rumours about the early conversion of AMP's preference shares and another equity raising. This was despite AMP's expectations that its equity raising will be enough for the demerger.

    AMP needs only about 10 per cent of its 960,000 smaller shareholders to fork out up to $5000 to leave underwriters UBS without a shortfall.

    With AMP shares closing 5c lower at $4.98 and the price set at a 5 per cent discount to the average price in the 15 days after the offer's end on Friday, retail investors should receive a big discount to the $5.50 paid by institutions.

    However, similar offers by Fairfax and IAG, whose registry also contains many retail shareholders who received their equity for "free", fell well short of expectations.

    One fund manager said that without a "decent prospectus" - because the issue is attached to an institutional placement shareholders receive a shortened document - and the uncertainty hanging over AMP's UK operations, he could name "any number of better ways" to invest $5000.

    ASIC's critics have criticised the purchase plan's structure while others have called on the regulator to guarantee the issue in the absence of a prospectus.

    But ASIC director Malcolm Rodgers said the regulator had requested the signed undertaking not to cover itself but to inform shareholders, adding it was "satisfied that AMP has provided as much information as it can to shareholders about the demerger".

    "There has been a lot of interest in this," he said. "This is unusual because of the recent history of AMP and unusual because this raising is being done in anticipation of a demerger where the details are yet to come out."

    Mr Willcox described his meeting with ASIC chairman David Knott as "constructive". "We recognise ASIC's responsibility to ensure a fully informed market, particularly given the SPP is under way."
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