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CML - Coles Myer Share Buy-Back

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freelancer

freelancer

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Coles Myer Share Buy-Back

Hi everyone...

Recently recieved in the mail an invition to participate in CML's share buyback what do you guys think. I believe they are selling off their Myer department, is this a good time to maybe get out?

"Coles Myer expects to buy back shares at a discount of at least 5% to the market price"

Do you guys believe this is worth it. They justify it by saying that the after tax return to some shareholders from participating may be greater than the after tax return from selling their shares on the ASX.

I would really appreaciate any comments/feedback.
 
Re: Coles Myer Share Buy-Back

I think you will benefit more from the buy-back if your income threshold is at the lowest level. try the calculator on their website.

freelancer said:
Hi everyone...

Recently recieved in the mail an invition to participate in CML's share buyback what do you guys think. I believe they are selling off their Myer department, is this a good time to maybe get out?

"Coles Myer expects to buy back shares at a discount of at least 5% to the market price"

Do you guys believe this is worth it. They justify it by saying that the after tax return to some shareholders from participating may be greater than the after tax return from selling their shares on the ASX.

I would really appreaciate any comments/feedback.
Click to expand...
 
Re: Coles Myer Share Buy-Back

jet-r said:
I think you will benefit more from the buy-back if your income threshold is at the lowest level. try the calculator on their website.
Click to expand...

Thanks for the reply jet-r

Just another thing. Do you think CML has more growing to do, or when Myer is sold off will CML share price go down?

Thanks
 
Re: Coles Myer Share Buy-Back

No i wasent aware that it had already been sold....Thanks for that.
 
Re: Coles Myer Share Buy-Back

freelancer said:
No i wasent aware that it had already been sold....Thanks for that.
Click to expand...
I thought buy back option closed on July 7. am trying to decide whether to sell. I presume that CML will be trying to turn the screws on the little investor - moi- and am trying to interpret all the 14% - 5 % deductions. Or final price tender. Any advice?
Muggins
 
Re: Coles Myer Share Buy-Back

muggins said:
I thought buy back option closed on July 7. am trying to decide whether to sell. I presume that CML will be trying to turn the screws on the little investor - moi- and am trying to interpret all the 14% - 5 % deductions. Or final price tender. Any advice?
Muggins
Click to expand...

Like you, I am trying to decide if I should sell all of my CML shares (less than 1,000 shares). Yes, the buy-back option closes on 7th July - forms must be received by cob this date. I am in the low tax bracket so the buy-back will give me some benefits in selling via buy-back. I have been thinking of getting rid of CML shares for a while - bought them at the same time as WOW and WOW has done so much better. If I sell them in the open market I have to pay CGT, so the buy-back is a better option for me.

I have a "silly" question - for anyone who has participated in buy-backs before: Should I submit to sell all my shares at the final tender price? Or, should I submit them at a tender discount?
 
Muggins expects that the 'final tender' price will be screwed down by CML at the last minute. Do you think they will buy at 5% discount? Which seems the best option for sellers. 14% discount sounds like a poor return. Do you think they are so keen that they will buy all offers at any discount?
 
muggins said:
Muggins expects that the 'final tender' price will be screwed down by CML at the last minute. Do you think they will buy at 5% discount? Which seems the best option for sellers. 14% discount sounds like a poor return. Do you think they are so keen that they will buy all offers at any discount?
Click to expand...

Well, I think CML will certainly try to get the final tender price as deeply discounted as possible. But, if not many shareholders want to sell at the 14% discount then they won't meet their buy-back targets. Maybe my strategy would be to spread my shares across the 5% to 8% discount and at the final tender price. Tax wise, the buy-back is still better for me than selling in the open market.
 
hello,

you only have a tax issue when you sell on market or buy-back

CML would be a long term hold for me, as disposed of Myer, there role is now for supermarkets and discounts shops to excell.

sure still behind WOW but catching up I believe

thankyou
robots
 
Can anyone tell me approx how much it costs to sell shares through the stock exchange? If CML are only buying $11 shares at $3 it doesn't add up to sell to them. I only have 510 shares to sell but that seems a big beat down. I'll hang on to them if I'm going to get fleeced.
 
muggins said:
Can anyone tell me approx how much it costs to sell shares through the stock exchange? If CML are only buying $11 shares at $3 it doesn't add up to sell to them. I only have 510 shares to sell but that seems a big beat down. I'll hang on to them if I'm going to get fleeced.
Click to expand...

Hi muggins

I will have a go at replying to your question - BUT, I am not giving you a tax advice, so do not rely on it. Like all lawyers and accountants would say, you should seek professional advice!

If you have an account with a discount internet stock broker such as comsec, then it would cost you between $20 to $30 to sell a parcel of shares up to $10K in value. However, the tax implication of selling in the market is that the difference between your purchase prices and the sell price (eg now $11.36) will be a capital gain or loss to you.

However, if you sell your shares via CML buy-back then the capital gain or loss will be the difference between the sale price (the greater of $3 and the "deemed market value" - this will be calculated based on an ATO formula in the buy-back booklet) and your purchase prices. It is kind of complicated to explain it all here, but you should read the buy-back booklet. However, the tax benefit for people in the low income tax brackets is the that the difference between the $3 and the buy-back price will be considered to be fully franked dividend. If you don't pay tax then you will get back the imputation credit on the fully franked dividend.

CML is not buying $11 share at $3 - the buy-back price will be a range of prices based on either a final tender price or discounts varying from 5% to 14% of the tender discount. You will have to tender for the prices you want to sell - and this is where it gets tricky. You can also specify the minimum price you will sell back (from $9.70 to $7.60).

Other forumites may contribute further to this reply, or correct me where I am wrong.
 
muggins said:
Can anyone tell me approx how much it costs to sell shares through the stock exchange? If CML are only buying $11 shares at $3 it doesn't add up to sell to them. I only have 510 shares to sell but that seems a big beat down. I'll hang on to them if I'm going to get fleeced.
Click to expand...

Hi Muggins

I was a bit silly :eek: - just realised that there is a buy-back calculator in the CML site. Check it out and do all the calcs based your price, share and tax position. I did it and will make a decision this week if I would participate in the buy-back or sell in the market.

http://www.colesmyer.com/Investors/ShareholderServices/OffMarketBuyBack2006/calculator.asp
 
Obliged! and will study the form tonight and make a decision more knowledgably thanks to you lot!
 

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