One way is to use "Strypes" (structured yield product exchangeable for common stock), a new financial product developed by Merrill Lynch which would allow him to "monetise" a Fairfax security while retaining the option of buying it back, perhaps in three to five years. Using Strypes, the seller continues to hold the original stock, reap dividends and vote it at meetings, while paying a coupon interest rate to the holders of the convertible stock. Buyer and seller also have a formula to share the ups and downs of stock price movements.
Strypes would satisfy Hollinger's need for cash reserves following its major Canadian expansion while retaining control of Fairfax. The plan was revealed last week by Hollinger in a filing to the U.S. Securities and Exchange Commission. Major Fairfax newspapers include the Sydney Morning Herald, the Age in Melbourne and the national daily Australian Financial Review.
Copyright July 1996 Crain Communications Inc.