Statement of Receipts and Payments of the Consolidated Fund and ...

(c) Victorian Equity Trust
The liability under the Victorian Equity Trust (VET) arrangements is included in Table B.l
under Capital Works Authority net debt. VET was listed on the Australian Stock Exchange in
June 1988 to enable a number of public authorifies to gain access to equity financing through the
sale of equity units to the public. Under the arrangement, the VET held equity units in State
Electricity Commission of Victoria (SECV), Melbourne Water (MW) and the Gas and Fuel
Corporation of Victoria (GFCV) and capital stock of the Porfiand Smelter Unit Trust (PSUT) and
received dividends from these authorities. The net proceeds raised were used by the SECV,
MW, the GFCV and the PSUT to reduce debt levels or to fund new capital works investment.
Holders of units in the VET had a right in June 1992 to require the Victorian Economic
Development Corporafion (VEDC) to purchase units offered to it at a price which took into
account, among other things, the level of the All Ordinaries Index (AOI) on 1 June 1992. In
1991-92, the Government entered into a hedging agreement with Macquarie Bank Ltd to limit the
VEDC's exposure to increases in the AOI above 1650.
In the 1991-92 Budget Strategy, it was indicated that the Government was considering
options regarding the future of the VET, with a preference that VET continue. Subsequently, the
decision was made to wind up the VET. The repayments associated with the winding up resulted
in an increase in debt of $712 million in 1991-92.
In March 1992, unitholders nominated for sale to the VEDC 503.5 million or 99.89 per
cent of units including the Treasurer's units. The All Ordinaries Index on 1 June 1992 was
1674.4. As a result the price paid was $1.42 per unit, which resulted in a total payment to
unitholders on 16 June 1992 of $714.91 million. Of this, $3.05 million was paid by Macquarie
Bank Ltd under the Hedge Agreement. The remaining $711.9 million was raised by the VEDC
through a facility provided by VicFin. Consistent with previous agreements between the VEDC
and the Treasurer, the Capital Works Authority (CWA) assumed this debt and the VEDC
transferred the associated asset (retail units) to the Treasurer.
The Treasurer has now acquired the remaining 0.11 per cent, or 540 700 units for
$748 100 and is now the sole unit holder in the VET. The value of the VET units held by the
Treasurer as at 30 June 1992 has been assessed as $536.4 million (See Table B.8).
Negotiations are now taking place with the authorifies for them to repurchase their equity
units from the VET Trustee. The VET will then be wound up. The amount of such payments
will reduce the level of debt. A final distribufion will then be made by the VET to the
Consolidated Fund, and used to retire CWA debt.
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