primaus - TIMPB has a maximum conversion of 4 TIM per 1 TIMPB. The actual number depends on the original face value of TIMPB ($2.00 - but I think they make a small adjustment) so for any value of TIM less than 50 cents you get 4 shares. Higher than 50 cents then the number reduces. You are also guaranteed a minimun number of TIM of I think about 0.90 (would have to refer to the prospectus since I haven't thought this would be an issue for awhile) so you get a benefit from a TIM share price rising above about 2.00.
Similar situation for TIMG but the face value of TIMG is $100 and they set a maximum conversion of 400 TIM per 1 TIMPG. So for any value of TIM less than 25 cents you get 400 TIM. I haven't looked at the minimum conversion for TIMG so I don't know where that stands.
In addition to all this, TIMPB and TIMG pay a dividend. For TIMPB it is 6.75% fully franked. For TIMG it is the 6 month bank swap rate plus 2.75% (I don't think it is franked). Any if the whole company goes belly up, you will probably get squat. The chance of this happening is greater than zero, but I am not sure how much. The current prices of all these look to factor in a reasonable likelihood.
These things are confusing. I don't think it is the terms in a normal sitution that make it difficult but what happens in an abnormal situation that is harder to understand and then try to work out a way to price it.
I currently hold a little TIM, a bit more TIMG and I am still thinking about TIMG. I won't buy unless I am comfortable with the terms and that I am certain I fully understand them. I think that is hopefully one lesson that Briconnections taught us.
TIM Price at posting:
9.7¢ Sentiment: Hold Disclosure: Held
