NSW: Luck saved government in TAB sale Auditor General

AAP General News (Australia)
12-23-1998
NSW: Luck saved government in TAB sale Auditor General

By Catharine Munro, State Political Correspondent

SYDNEY, Dec 23 AAP - Sheer luck had allowed the New South Wales government to achieve its
target price in the sale of its betting agency, TAB Ltd, the state's Auditor-General said
today.

Assistant Auditor-General Tom Jambrich said the reserve price of $1.80 a share for the sale
of the TAB would not have replaced the revenue in taxes the government was losing from the
sale of the agency.

"Good fortune was with them because the share price turned out to be $2.05 and $2.10," Mr
Jambrich told AAP after releasing an audit of the sale of the TAB in June.

The TAB sale was overwhelmingly oversubscribed by investors, creating higher demand for the
shares and pushing the share price up.

But if there had not been too many buyers for the shares on offer, the government might not
have been able to fulfill its promise to Parliament, Mr Jambrich said.

The sale, which grossed $1.04 billion for the state Labor government, represented only a
"reasonable" return to taxpayers and the sale price was "conservative", according to the
report.

Since they first traded on the Australian Stock Exchange on June 22, the shares have risen
to a high of $3.55 each. TAB was yesterday valued on the Stock Exchange at $1.6 billion.

Mr Jambrich said NSW Treasurer Michael Egan had promised Parliament in his second reading
speech before the legislature voted on the sale that the TAB would not be sold if the
government could not make the transaction "revenue neutral".

Revenue neutral means that the sale income covers the tax the government stands to lose by
no longer owning the business.

"The Treasurer in Parliament in the second reading speech assured a revenue neutral sale,"
Mr Jambrich said.

"Then they floated when the reserve price wouldn't have achieved that."

The Auditor's report said the direct costs of the float were $47 million, 4.5 per cent of
the equity value of the sale.

"This percentage is higher than that in most comparable floats, although it includes some
costs associated with industry reform."

AAP cm/sb/it

KEYWORD: TAB

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