Westfield Group – Demerger and Scheme of Arrangement

Demerger Summary:

  • Demerger Allocation – One share in OneMarket Limited (OMN) for every 20 stapled securities held in Westfield Group (WFD) on the record date (1 June 2018).
  • Demerger date – 7 June 2018
  • Record date – 1 June 2018
  • Cash received in CMA – Nil. Demerger dividend not received in cash, as WFD security holders received OMN shares.
  • Demerger dividend amount – $0.0677 per WFD stapled security. Demerger dividend is unfranked and comprises 100% conduit foreign income
  • Cost base of OMN – $1.354
  • Demerger roll-over relief – not available

Scheme of Arrangement Summary:

  • Scheme Allocation – Exchange of Westfield Group (WFD) stapled securities for Unibail-Rodamco SE stapled securities and cash.
    Cash consideration = $3.5153 per WFD
    Scrip consideration = 0.01844 Unibail-Rodamco SE stapled security per WFD (fractional entitlements were rounded down)
    Each Unibail-Rodamco SE stapled security was converted into 20 Unibail-Rodamco SE CDIs (URW) and listed on the ASX.
  • Scheme date – 7 June 2018
  • Record date – 1 June 2018
  • Cost base of URW – $14.67

What is the structure of an initial investment in WFD?

WFD represents an investment in a stapled security. Each WFD stapled security comprised of an interest in the following underlying assets:

  • one share in Westfield Corporation Ltd (WCL)
  • one unit in WFD Trust (WFDT), and
  • one unit in Westfield America Trust (WAT).

What is the structure of the new direct investment in OMN?

OMN represents an investment in a fully paid ordinary share.

What is the structure of the new direct investment in URW?

URW trades on the ASX in the form of CHESS Depositary Interests (CDIs) – where 20 CDIs represent one Unibail-Rodamco SE stapled security.

One Unibail-Rodamco SE stapled security consists of

  • one share in Unibail-Rodamco SE, and
  • one share in Newco BI.

This stapled security trades on the Euronext Paris exchange and the Euronext Amsterdam exchange.

What was the structure of the demerger?

WFD security holders received one OMN share for every 20 WFD stapled security held on the record date as part of the demerger (7 June 2018), fractional entitlements were rounded up. For tax purposes, the acquisition of the OMN shares include a demerger dividend amount (being a dividend paid on each WFD stapled security) of $0.0677 per WFD stapled security.

The cost base of each share in OneMarket Limited is $1.354, being the amount applied on behalf of WFD stapled security holders (20 multiplied by 6.77 cents).

What was the structure of the Scheme?

WFD stapled securities were exchanged for Unibail-Rodamco SE stapled securities and cash. Each Westfield Group stapled security received:

  • a cash amount of $3.5153 and
  • 0.01844 of a Unibail-Rodamco SE stapled security.

Eligible WFD stapled security holders received Unibail-Rodamco CDIs, which are traded on the ASX where 20 Unibail-Rodamco CDIs are equal to 1 Unibail-Rodamco SE stapled security. 

What was the implementation date of the demerger and scheme?

7 June 2018.

What does a WFD stapled security holder hold after the implementation of the demerger and scheme? 

A WFD stapled security holder will no longer hold their original investment in WFD. They will acquire OMN shares and URW CDIs.

What are the income and CGT consequences of the demerger?

WFD stapled security holders who are residents of Australia must include the dividend (being 6.77 cents per WFD stapled security held) in their assessable income.

The cost base of each share in OneMarket Limited is $1.354.

What are the CGT consequences of the scheme?

CGT event A1 happened when WFD stapled security holders disposed of WCL shares, WFDT units and WAT units.

What is the acquisition date of OMN shares and URW CDIs?

7 June 2018.

How will the demerger dividend amount be treated for tax purposes for investors? 

The demerger dividend will be treated as unfranked dividend and 100% foreign conduit income. Therefore, the demerger dividend will form part of a WFD stapled security holder’s assessable income.

The demerger dividend amount was $0.0677 per WFD held. This amount was not received as a cash payment.

Has the ATO issued any rulings relating to the off-market share buy-back?

The ATO has issued Class Ruling CR 2018/31 Sale of Westfield Group stapled securities to Unibail-Rodamco SE which was released on 4 July 2018.

How is the transaction reported by us? 

Demerger dividend amount

The demerger dividend amount was $0.0677 per WFD stapled security held. This amount was not received as a cash payment

Acquisition of OMN share

Demerger roll-over relief is not available, the acquisition date of the OMN share is 7 June 2018

Cost base of OMN share

$1.354

Scheme capital proceeds

Scheme consideration = cash consideration + scrip consideration

Cash consideraton = ($3.5153 x number of WFD)

Scrip consideration = Rounddown (0.01844 x number of WFD) x 20 x URW Market Value)

Acquisition of URW CDI

Wrap has not applied partial scrip for scrip roll-over relief for WCL shares. The acquisition date of the URW CDI is 7 June 2018.

Cost base of URW CDI

$14.67