Deutsche Telekom is expected to announce today that retail investors who apply early for shares in the latest share offering will get a discount of about €3 per share off the offer price on June 19th. The offer price will be set on that date following an assessment of market demand.
Retail and institutional investors can start to apply for shares in the global offering from tomorrow.
Some 200 million Deutsche Telekom shares are being offered on world markets to raise about €11 million. The discount for early applicants, together with a one share bonus for every 10 shares held until December 31st 2001, is aimed at encouraging a big take-up of shares by retail investors.
To qualify for these incentives retail investors have to apply for shares between May 31st and June 9th. Potential retail investors can get application forms from NCB Stockbrokers which is handling the retail offering in the Irish market or from branches of Ulster Bank. Because share prices can fall as well as rise, potential investors should seek independent advice before making an investment. Because of the risk involved in all share dealing, investors should not borrow to buy shares.
In the Irish market NCB is handling the retail offer. Known as DT3 - it is the third public offering of Deutsche Telekom shares since the company was floated in 1996 - the share price will be set following a book-building exercise between May 31st and June 16th. This will involve assessing the extent of retail and institutional demand for the shares.
Share allocations will be made on June 17th and the price will be announced when trading starts on June 19th.
NCB said yesterday that £1,500 (€1,904) was the minimum order it would accept from retail investors. Kreditanstalt fur Wiederaufbau (KfW), the German government agency arranging the sale, has set a minimum retail order level of 25 shares per investor. At yesterday's closing price of €62.42 this would equate to an investment of €1,560.50 or about £1,230.
According to NCB its £1,500 limit was set as the monetary amount closest to 25 shares plus a margin to allow for any increase in the share price between now and the flotation date. It said shareholders will get extra shares - in addition to the minimum 25 shares - if the £1,500 level is greater than the cost of 25 shares at the flotation price.
On its commission charges NCB said it would charge buyers 0.5 per cent on the monetary amount purchased with a minimum charge of £20. This compares with a commission charge of 0.75 per cent and a minimum charge of £40 in the DT2 offering in which some 3,500 retail investors bought shares.
Neither Deutsche Telekom or Kreditanstalt was able to provide any indication yesterday of the charges brokers in other European markets will make for dealing on behalf of retail customers.
In addition to the commission charges, Irish retail investors will have to pay a custodian charge of up to £10 per annum because their shares under the terms of the offering have to be held by custodians such as a bank. This means that buyers will not receive share certificates.
But NCB insisted yesterday that buyers would be able to sell shares through other brokers if they wished by issuing an instruction to NCB to transfer the shares to other brokers.
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