Among the BHP de-merger loose ends is how Australian shareholders are to access accumulated franking credits
Among the BHP de-merger loose ends is how Australian shareholders are to access accumulated franking credits. These could be worth as much as the newly demerged company itself. The balance of assets suggests that the ongoing profits from 'Limited' will exceed those from the dual listed 'PLC'. Paying the same dividend to both PLC and Limited shareholders implies the dividend capacity of PLC will set the limit to what can be paid. That leaves an ongoing build up in unutilised franking credits at the Australian end and a multi billon dollar suboptimal outcome for Australian investors. With the most profitable Australian assets staying with BHP, streaming the franking credits to the new company will be too hard. The dual listing structure seems to have outlived its usefulness and may now be an impediment to shareholders gaining access to an important source of value.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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