New Telecom investors can only watch and wait

A week, once described as a long time in politics, may turn out to be an even longer time span for anxious members of the public, now shareholders in Telecom. While 574,000 retail investors are now committed to buying the shares - they have been allocated at the £3.07p (#3.90) price per share - most will not be able to sell their shares for at least another week.

Institutional investors will be able to buy and sell Telecom shares from today. But most retail investors will have to wait until they receive their share certificates, or notification of their holding in the nominee account, before they can sell any Telecom shares.

Retail investors who already have a relationship with a stockbroker should be able to place sell orders from today. But generally stockbrokers say they will want to see evidence that potential sellers have ownership of the shares they want to sell, before they will accept an order.

Retail shareholders can expect to receive their share certificates - or the official statement of their holding through the nominee account - on or shortly after July 14th. Some 68 per cent of applicants sought share certificates, while the remainder opted for the nominee account.

Refunds to applicants who did not get the full amount applied for will start on July 14th with direct debits returning fastest to applicants' accounts.

Anyone who applied for up to £3,000 worth of shares on the priority application forms - available to those who pre-registered - will get the full amount they applied for. About 68 per cent of those who applied will thus get the full amount they sought.

The remainder will see their allocations scaled back, as detailed in the accompanying tables. Those who applied for the largest amount suffered the heaviest scaling back.

All of the non-priority applications - those coming from people who did not pre-register - were scaled back. Applications for up to £1,000 got 80 per cent of the amount applied for. Everyone who applied got some shares, AIB capital markets director Mr Colm Doherty said. The average application was for £6,700 worth. Just two per cent of applicants looked for the top allocation of £100,000. But in an allocation aimed at satisfying demand from smaller investors first, these priority applicants got just 17.51 per cent of the shares they applied for or £17,508.21 worth of shares.

Following the announcement of the share price and the allocations of shares to retail and institutional investors, conditional dealing in Telecom Eireann shares will begin from this morning. The share price will be quoted in Dublin, London and New York. Unconditional dealing starts on July 14th.

Conditional dealing means that any buy and sell deals are conditional on the listing of the shares actually taking place on July 14th. If for any reason the flotation was aborted between now and July 14th these conditional deals would become null and void. This could happen, for example, if there was a major collapse in world stock markets and the Government on the advice of the global co-ordinators to the flotation, AIB and Merrill Lynch, decided to call off the flotation.

Deals that take place in the conditional period - July 8th to July 14th - will fall for settlement (payment) within the normal period of five working days from the date of the deal, according to the Government's public relations advisers. But a number of stockbrokers told The Irish Times that all deals in the conditional dealing period will be settled on July 21st, a maximum nine working day settlement period.

The confusion apparently arose because of differences between brokers in London and Dublin over the settlement terms to be offered to institutional investors, resulting in different terms for retail and institutional shareholders. Brokers in London who are not expecting much retail activity over the next week were prepared to offer institutional investors the normal settlement period of five working days.

In Dublin it appears that brokers intended applying the same nine working day settlement period for both the retail investors which they deal with in the conditional trading period - mainly their regular clients - and the major financial institutions. This was on the grounds that retail investors will not have their share certificates until after July 14th.

But applying a nine day settlement to institutional investors would mean that the deals would be lost to London brokers offering five day settlement. While discussions were ongoing yesterday, most brokers said that a nine day settlement period will apply for retail investors trading during the conditional period and a five day period for institutional investors.

The nine day settlement period for retail investors will apply on a sliding scale: deals made today will be settled in nine working days, reducing to nine days for deals made on Friday and 8 days from Monday, down to five days from July 14th when unconditional dealings begin. The settlement date for all deals made by retail investors in the conditional period will be July 21st.