Conversion of AMP NZ Office Trust MCNs – frequently-asked questions

Is the conversion a recent decision?
No.  The convertible notes were issued in 2004 on the basis that they would mandatorily convert into ANZO ordinary units on 30 June 2007.

Do I need to do anything?
No.  Each of the steps in the conversion process will happen automatically and is mandatory – it will apply to every convertible note and subsequently to every new APTNB coded unit.

How does the conversion mechanism work?
The convertible notes will convert to units in ANZO on a dollar-for-dollar basis.  Each convertible note, with an initial face value of $1.00 will convert into $1.00 worth of Units on 30 June 2007 at the conversion price.

The conversion price will be calculated based on the lower of:

a) 2% discount to the volume weighted average price of the Units on the 30 business days prior to 18 June 2007, or

b) 92 cents per Unit. 

On the basis of current market prices the Manager anticipates that the conversion price will be 92 cents per Unit.

The table below illustrates the number of Units to be issued on conversion and their market value at a range of possible Unit prices based on a nominal holding of 100 convertible notes.

Can I convert my notes into cash?
No, the convertible notes will only convert to new ANZO units, which will be temporarily coded APTNB until after ANZO’s final quarterly distribution for the year ended 30 June 2007 is paid (expected to be late August or early September) and then will be re-coded as APT units.
However, ANZO convertible notes have traded on the NZSX throughout their three-year existence (in the same way as APT units) and the new APTNB coded units will also be traded on the NZSX. 

How can I trade my ANZO convertible notes/new units?
Simply instruct your sharebroker to sell part or all of your investment in ANZO.  Prices will continue to be set by the market (as they are for all securities traded on the Stock Exchange).

How can I check the market price of my ANZO investment?
Stock Exchange trading information can be found in most daily newspapers, on the Stock Exchange website and on a number of internet sites operated by sharebrokers and investment advisers.  The relevant codes are:

Why will there be two codes for ANZO units?
There will be a short-term difference in the income returns which have been paid to the two categories of unit holders.  Holders of convertible notes will receive an interest payment on 29 June 2007 (for the January to June 2007 period), at which time they will simultaneously convert to new APTNB coded units.
However, the distribution owing to holders of existing APT units for the same period will not be made until late August/early September when ANZO’s annual accounts have been audited and approved by ANZO’s Board.
The two codes for ANZO units will exist for three months to distinguish between the units which have already received their income in the form of an interest payment on the convertible notes (being the new units issued on conversion of the convertible notes – APTNB) and those which have yet to receive it (being the existing units – APT).

Will I notice any difference between my ANZO convertible notes and my ANZO units?
There is one important difference.  The convertible notes were a fixed-interest security – that is, interest was paid at a fixed rate of 8.5% per annum of the original issue price of $1.00.  However, ANZO units are entitled to dividend distributions, which are derived from ANZO’s earnings and can therefore be subject to variation depending on performance.
ANZO dividend distributions are made quarterly.  The chart below compares the income yields (income as a percentage of unit/convertible note price) received by holders of ANZO units and convertible notes over the past three years.
Also, dividend distributions are only made after the quarterly accounts for the relevant trading period are approved by ANZO’s Board.  This is usually four to eight weeks after the end of each quarter.