Tnt Option Profits Frozen
Two large brokerage houses, Macquarie Equities and Ord Minnett, said they were cooperating with the Australian Securities Commission (ASC) probe into TNT options trading just before the surprise bid made by Dutch group Koninklijke PTT Nederland NV (KPN).
The ASC said the Federal Court had frozen about A$10 million made from trading of options to buy TNT shares by two clients of Macquarie Equities and one from Ord Minnett. The brokers said they had not been financially involved in the transactions and were only trading for their clients.
There is sufficient concern about recent acquisitions and then sales of options and that must raise the issue of something like insider trading or other market behaviour of the kind that we get interested in, ASC chairman Alan Cameron said. he said the watchdog was investigating the timing of the trades as well as the fact that the options were virtually worthless without the generous A$2.45 per share cash bid by KPN, which was announced on Wednesday.
The offer values the struggling Australian-based transport and logistics company at A$2.0 billion.
The options were well out of the money and that is one of the circumstances that is exciting our attention, he said.
Because it was options trading, the amount of the purchases therefore was not very significant, probably less than a couple of hundred thousand dollars, Cameron said.
But the profit is very significant because of the nature of the takeover offer that has now been announced, he said.
The ASC said its investigations would continue until at least next Thursday, when the matter would again be heard by the Federal Court.
Australias Corporations Law treats insider trading as a criminal offence and provides for jail sentences on conviction.
Market sources said the options trading now under scrutiny occurred in the past three weeks and was based on call (buy) options that had been virtually untraded as their conversion price was well above the prevailing TNT share price.
That scenario changed on Wednesday when KPN, a giant postal and telecommunications group unveiled its offer.
The bid, which had been accepted earlier that morning by TNTs board, was 50 per cent higher than TNTs closing price on Tuesday and was warmly welcomed by investors and analysts.
KPN told the Australian Stock Exchange on Friday that it had been buying shares in TNT for about A$2.40 per share and held a stake of 9.9 per cent.
Brokers said KPN would probably continue to buy TNT shares until it reached the limit of 19.9 per cent. Then it must launch a takeover bid if it wants to buy more KPN stock.
A TNT spokesman said the company had no comment on the ASC investigation. KPN executives, who are in Australia examining TNT operations, were not available for comment.