The T3 prospectus was finally lodged with the ASX just after midday and we’ve all now got 518 pages of detail to plough through.

The key news is the final structure of the offer and the government has really laid on the bells and whistles for existing shareholders to try and get the Telstra share price back above $4 for the first time in seven months.

The one-for-five entitlement offer in T2 will be one-for-two in T3 and even someone like me who only owns 150 shares will be guaranteed a minimum allocation of 3,000 shares.

Retail investors will be given a 10c discount to what institutions pay, plus they will receive a one-for-25 bonus share if they hang on for 18 months and cough up the second instalment. All up this amounts to a 7% discount for shareholders that stick around, but Nick Minchin said taxpayers would cover the cost if it lifts the sale price by just 3c.

First-time investors are guaranteed a minimum allocation of 2,000 shares and will be entitled to the retail discount all the way up to an allocation of 200,000 shares as part of the government’s plan to really target high net worth individuals.

The first instalment is $2 and the size of the second instalment will be determined by an institutional book building exercise which will be priced on 20 November, the day T3 instalment receipts start trading.

The market has been fundamentally uninformed for the past few weeks and the government has sneakily hinted at features of the sale that contributed to a 40c recovery since the low of $3.43 in early August.

Today we got the facts but even the trading this morning was ridiculous as the stock ranged between $3.81 and $3.89 before being suspended at $3.86 shortly before the briefing began – a 3c rise on Friday’s close.

The stock immediately dropped 5c to $3.81 after trading resumed this afternoon and that might well be because the government has reserved the right to substantially increase the $8 billion sale if demand permits.

As expected, the Future Fund is banned from selling its remaining one-third stake in Telstra for two years, but there’s some interesting exceptions.

From May next year, David Murray’s team could flog at least 3% of Telstra to a corner-stone investor provided it agreed to the same lock-up arrangements and the price was higher than what institutions pay for T3.

This feature could well help drive the price higher given the crazy private equity takeover binge we’re seeing at the moment.

Today’s launch featured just 30 minutes of questions and was dominated by the Geoff Cousins fiasco. When John Durie asked Donald McGauchie about the saga, Nick Minchin refused to let him answer the question saying “this is a government press briefing”, even though McGauchie was wheeled out to give a formal presentation just a few minutes earlier.

What a farce!

Peter Fray

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