A: Thanks for the question.

TPG Telecom (TPM) is conducting a $50m share purchase plan following the completion of a $300m placement to institutions that was used to reduce debt following the acquisition of iiNet.

The purchase price will be the lesser of:

a) $10.40 (the same price paid by the institutions); and
b) a 2% discount to the weighted average on market trading price of TPM shares next week (week ending 4 Dec).

With TPM shares trading today at $10.55, the purchase price (a maximum of $10.40) is relatively attractive.

Taking a longer term view, TPG is a well run company and on the basis of the strong institutional support for the placement (only a 3.9% discount in somewhat soft market), I would be inclined to back the company and participate in the SPP up to the max. One note of hesitation – it has had a pretty good run this last 12 months, and the analysts feel it is fairly fully priced. According to FN Arena, broker sentiment is neutral at 0.0 (scale -1.0 is most negative, to +1.0 most positive), with a target price of $9.84.

Bottom line – apart from the potential for a trading profit, my participation would probably depend on my exposure.