Overview
On 13 September 2016, BigAir Group Limited (ASX: BGL) and Superloop Ltd (ASX: SLC) announced that they had entered into a Scheme Implementation Deed whereby Superloop will acquire all of BigAir's shares via a Scheme of Arrangement.
Under the Scheme of Arrangement, BigAir shareholders will receive Scheme Consideration of either:
Option 1 - Scrip Consideration (All Superloop shares)
- 0.371 Superloop shares for each BigAir share held
Option 2 - Mixed Consideration (Cash and Superloop shares)
- 0.118 Superloop shares for each BigAir share held, and
- $0.70
BigAir shareholders who did not make a valid mixed consideration election received the scrip consideration as the default option. According to the ASX announcement on 29 November 2016, the holders of approximately 32% of BigAir shares elected to receive the mixed consideration. The remaining 68% Scheme Shareholders received the scrip consideration.
Class only automates the scrip consideration with implementation date 21 December 2016 as it is the default option. A worked example of applying mixed consideration is provided below.
Automated Processing: Scrip Consideration (All Superloop shares)
BigAir shareholders who did not make a valid mixed consideration election received the scrip consideration as the default option. Class only automates the Scrip consideration with implementation date 21 December 2016.
Below is an illustrative example for BGL shareholders who did not make an election or have elected scrip consideration.
Worked example: automated processing
A BGL shareholder elected to receive scrip consideration where 30,000 shares were held. In this scenario, they would receive 11,130 SLC shares.
Navigate to Fund Level > Investments > Browse Corporate Actions
- Click Action for this corporate action
- Click Create Target to create the SLC investment account
The number of SLC received = 30,000 x 0.371 = 11,130.
- Choose With Rollover Relief or Without Rollover Relief option as appropriate.
- Click Submit
Manual process: Mixed Consideration (Cash and Superloop shares)
According to the ASX announcement on 29 November 2016, holders of approximately 32% of BigAir shares elected to receive the Mixed Consideration. If the BGL shareholder elected mixed consideration, then you will not be able to use the Class corporate action templates. Instead, you would need to process this corporate action manually.
Worked example: manual processing
The BGL shareholder elected to receive mixed consideration with 30,000 BGL shares held then they should receive 3,540 SLC shares and $21,000 total cash consideration.
Navigate to Fund Level > Transactions > Investment - Corporate Action > Spin Off or Demerger
- Calculate the percentage of the BGL cost base applicable to the exchanged SLC shares
When partial scrip for scrip rollover relief for mixed consideration is chosen, the cost base of BGL applicable to the exchanged SLC shares is worked out as follows:
Cost base of BGL for scrip component: (Market Value of SLC shares as at implementation date * 0.118 SLC shares for each BGL share held) / (Market Value of SLC shares as at implementation date * 0.118 SLC shares for each BGL share held + cash received)
= $2.74 * 0.118 / ($2.74 * 0.118 + $0.70)
= 31.5952% -
Calculate the percentage of cost base of BGL for cash component
The remaining cash component will not be eligible for CGT rollover relief. It will be used to calculate capital gains/losses for disposing of BGL shares.Cost base of BGL for cash component: Cash received / (Market Value of SLC shares as at implementation date + cash received)
= $0.70 / ($2.74 * 0.118 + $0.70)
= 68.4048%
Market value of SLC as at implementation date, 21 December 2016, was $2.74. If a different implementation date is being used, update the market value in the formula accordingly.
-
Process the Spin-off event at Fund level for SLC shares received with the applicable BGL cost base to be transferred.
Navigate to Fund Level > Transactions > Investment - Corporate Action > Spin Off or Demerger
If Superloop Ltd hasn't been created in the fund, create the investment account first.
Enter the applicable information on the event:
Calculated BGL shares held x SLC conversion factor of 0.118
Cost base of BGL for scrip component: (Market Value of SLC shares as at implementation date * 0.118 SLC shares for each BGL share held) / (Market Value of SLC shares as at implementation date * 0.118 SLC shares for each BGL share held + cash received.
The scrip component will be eligible for scrip-for-scrip rollover relief, therefore the CGT is deferred to the subsequent sale. The original purchase date of BGL units will be used as purchase date for SLC units. - Take up the capital proceeds for disposing of BGL shares process the disposal
Navigate to Fund Level > Transaction > Investment - Sell > Listed Security Disposal
Enter the details of this event.
The remaining cash component will not be eligible for CGT rollover relief, it will be used to calculate capital gains/losses.
The amount of cash received = 30.000 * $0.70 = $21,000
