Telstra turns down Solution 6 options

Telstra has declined to exercise options and increase its stake in accounting software company Solution 6 holdings.

The telecommunications giant said the decision to let the offer lapse on November 1 was a "corporate decision and a fairly self explanatory one" when the price of the options are significantly higher than Solution 6's market price of 97 cents. Telstra had the choice of purchasing the shares for $3.50 each or $1.19 (the volume weighted average of the last 10 days of trading).

Solution 6 said Telstra's declining to exercise options is no indication of a backing away from their commitment, a sentiment echoed by Telstra's general manager of corporate relations for retail, Michael Herskope.

"The message from Telstra senior management is that the relationship is very strong, to the point where there is renewed vigour and interest to pursue synergies between the two companies," said a Solution 6 spokesperson. Much of the goodwill between the companies is attributed to Solution 6 CEO Neil Gamble, who has tight and long-standing relationships with a number of Telstra's senior management.

Had Telstra exercised its option on the 10 million shares, its stake in Solution 6's fully diluted capital would have risen from 19.76 to 25 per cent. Having declined the offer, Telstra has lost its right to maintain a fully undiluted share until August 2004.

Telstra still has another cache of 800,000 options which expire on December 31, exercisable at $9.75 or a volume weighted average price.

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