Australian (ASX) Stock Market Forum

So what happens when you buy an installment warrant?

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Sir Osisofliver said:
Sheesh guys, this was covered in the other thread.

This ISN'T a warrant. It is NOT a derivative. It is a partly paid STAPLED security. Instead of floating the company at $3.00 the decision was made to float at $1.00 and staple the remaining capital raising in 2 $1.00 INSTALMENTS at a later date.
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This is so not the definition of STAPLED security. By stapled they meant that several securities are contractually binded together to be traded as a single security. E.g. When trading Mirvac shares you are trading a development company stapled to serveral property trusst, similarly Westfield.

You can have a single payment in a float for a stapled security, or you can have any normal FPOs with payment on an installment basis. T2 and T3 were floated as installment receipts, but never was Telstra a stapled security. The two should not be confused with each other.

Extract from the BrisConnection PDS. Each Stapled Unit comprises one unit in BrisConnections Investment Trust and one unit in BrisConnections
Holding Trust, stapled together to form a single Stapled Unit. The Issue Price is payable in three equal instalments:
 
skyQuake said:
Agree that this is not a warrants - Here exists obligations whereas you can simply let a warrant lapse.
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Actually, not all warrants can just be lapsed - need to read product disclosure PDFs to find out what happens at maturity. In some cases, by not closing out or not exercising the put holders option it it's available, you are obligated to pay the next instalment.
 
sails said:
Actually, not all warrants can just be lapsed - need to read product disclosure PDFs to find out what happens at maturity. In some cases, by not closing out or not exercising the put holders option it it's available, you are obligated to pay the next instalment.
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I am more confused than when I asked the question, but it is all fascinating stuff.

I am so sticking to stuff with 3 letters now though... Or even 2. (CFDs)
 
Sunder said:
I am more confused than when I asked the question, but it is all fascinating stuff.

I am so sticking to stuff with 3 letters now though... Or even 2. (CFDs)
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Sounds like a good plan, Sunder... Generally pays to stick to what you know and take the time to learn about a new product before trading it. There are traps for the unwary in some of these products :eek:
 
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