T3 Team To Take Field Unchanged

The Age

Tuesday September 26, 2006

JESSE HOGAN TELECOMMUNICATIONS REPORTER, with BLOOMBERG

THE trio of investment banks that has spent 10 months working on the third Telstra share sale will not be made into a quartet, with the Federal Government opting against recruiting another bank before the T3 offer begins.

ABN-Amro Rothschild, Goldman Sachs JBWere and UBS were appointed as joint global T3 co-ordinators in November last year, but there had been speculation the Government was considering adding another bank to the team to help spruik the stock overseas.

Finance Minister Nick Minchin confirmed the Government had formally considered the expansion, but had decided the three banks were "more than capable" of ensuring the $8 billion of Telstra shares would all be sold.

Only three investment banks were used for the T1 and T2 share offers. ABN-Amro and JBWere were also involved in those offers - the latter before its merger with Goldman Sachs - although Credit Suisse First Boston has been replaced by UBS for T3.

At Telstra's current share price of $3.56, $8 billion represents just over a third of the 51.8 per cent of the telco still owned by the Government. The remaining Telstra shares would be transferred into its independently run Future Fund, although the shares will not be able to be sold for at least two years.

The T1 and T2 sales raised $91.2 million and $34.2 million respectively in investment banking fees. If the banks' share of the T3 proceeds was 0.2 per cent, as it was for T2, they would collectively receive about $16 million in fees, due to the limitedsell-off.

Former Merrill Lynch executive Greg Bundy, now executive chairman of merger advisory company InterFinancial, said another appointment "would only make the bottom line for the banks even worse".

As well as the retail arms of these investment banks, eight additional brokers have been selected to sell the shares.

E*Trade, Shaw Stockbroking, CommSec, Wilson HTM, Ord Minnett, Patersons and Citigroup Wealth Advisers will sell shares in Australia, with Daiwa to run a limited share sale for Japanese investors.

Senator Minchin told a UBS conference in Melbourne the Government's intention to have Telstra's board of directors as "strong and sale-ready as possible" was the reason for its nomination of former Optus Vision CEO Geoff Cousins to the Telstra board.

While Telstra directors said they could not support Mr Cousins until they had established his independence, their defiance is unlikely to stop the appointment because the Government - usually a passive shareholder - will exercise its majority shareholding at the November annual meeting.

Senator Minchin said Mr Cousins had been nominated because of his "robust experience" and because he "is also a man who understands government".

"Telstra is the most regulated company in Australia, and for the board to have someone who has a good understanding and relationship with government is a plus for him and the board," he said. -- With BLOOMBERG

KEY POINTS

? ABN-Amro Rothschild, Goldman Sachs JBWere and UBS remain as the T3 team.

? Fees could be $16 million, down from $91.2 million for T1 and $34.2 million for T2.