Verizon investors face deadline on low cost sale of shares

Dominic Coyle

More than 20,000 Irish shareholders in Verizon have taken advantage of a low cost dealing service to sell out of the company.

However, almost 90 per cent of the 202,000 investors who found themselves with Verizon shares because of an original investment Eir (the Telecom Éireann) still hold the stock.

And close to 55,000 of them hold only one or two of the shares.

Shareholders have until February 17th to avail of the low cost dealing service, under which they will pay 0.5 per cent of the face value of the deal, subject to a minimum charge of €17.

The US communications technology group and its share registrar, Computershare, are offering a special low cost dealing service to Irish shareholders following its decision to close the UK-based nominee account in which the shares are held.

In the six weeks since the offer opened, the take-up has been poorer proportionately from those with fewest shares – the group likely to be most adversely affect by impending changes in the management of their investment. As of Wednesday, the shares were trading at $46.84.

Verizon is moving management of all its shares to the United States in an exercise that could see Irish shareholders incurring significant extra costs.

Following the change, the cost of trading in the shares will be around $25 (€22.99) per order plus 12 US cents per share. Investors will also have to pay $25 to get the proceeds of the sale by cheque or $35 by wire transfer.

Getting dividends paid in euro under the new regime will cost shareholders $5 a time – or generally $10 a year. If the dividend is smaller than $5, it will be paid in dollars, leaving investors with a foreign exchange issue.

US withholding tax will also be deducted at source at a rate of 30 per cent on all dividends, and proceeds of share sales, unless investors complete a US Inland Revenue Service form, W8BEN, in which case withholding tax is halved to 15 per cent.

Shareholders will also need to meet US standards of documentation if they wish to sell their shares. All contact will be through Computershare’s US office.

Critically for Irish shareholders – many of whom know little about stock market investing and generally leave their holdings untouched for long periods – Computershare says US “escheatment” laws means that if there is no activity on the shareholding for three years, the state takes automatic ownership of the shares. Shareholders then have to go through a formal process to recover control of the shares or the proceeds from their sale.

Irish investors originally received Verizon shares in what was called a “return of value” following the $130 billion sale by Vodafone of its interest in the US company in early 2014. Under the scheme, Vodafone shareholders received a sum of cash plus one Verizon share for every 39 Vodafone shares held at the time.