Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier Street, Dublin 2, or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.

Eircom

We are Eircom shareholders, and are interested in buying some more shares if the price remains at current levels. As there is talk of KPN's secondary offering in September being at a discount, should we buy now or wait until then?

Mr G. & Ms A.R., e-mail

There is never any right answer to queries like this because whichever approach you adopt, you are taking a gamble. Will the price of Eircom rise sufficiently in advance of any secondary offering to justify your buying the shares now? If I knew the answer definitively, I would be making a living as a private investor.

The best you can do is weigh up the probabilities. The Eircom share price has been underperforming for a long time now. The stock overhang from the investments of KPN and Telia, both of which want to abandon Eircom, has had a large part to play in this underperformance. It was the announcement of the impending sale of stock by both companies that initially put Eircom's share price on the slide. Uncertainty over when they would move to sell the shares has done little to help the stock. A subsequent profit warning has done little to encourage potential investors.

In addition, there was the issue of bonus shares which would further dilute the value of the existing holdings. Of course, those shares have now been issued and are no longer an element going forward.

Adding to the plus side for the shares is the fact that Telia has now agreed to lock in its stake until January 2001 at the earliest. This has prompted KPN to proceed with the sale of its shares.

KPN owns 21 per cent of the company. Putting that amount of any public company on the block is going to affect the price. That is why the shares will have to be offered at a discount to the going price at the time. It is thought likely the discount will be between 5 and 10 per cent of the current price.

Of course, KPN will want to at least break even on the deal. Analysts estimate the price at which it effectively bought its stake at between €2.45 (£1.93) and €2.55 per share. With the price currently hovering between €2.70 and €2.80 per share compared with a launch price of €3.90 and a high of €5, a 10 per cent discount would see the shares offered at between €2.43, and €2.52.

If the price falls between now and September, the Dutch telecoms company may decide to delay its sale, but it is in a difficult position if it does so. First, all prospectuses outlining the offer would have to be reprinted to take account of Eircom's latest interim figures. It would also be running perilously close to the end of the Telia lock-in period, increasing uncertainty in the market. The market hates uncertainty and it inevitably pushes prices down - the last thing KPN would want.

In essence, it seems the price of the secondary offering will be no lower than €2.45 and is unlikely to be much higher than €2.60, although there are no guarantees on the upper figure. If that proves the case, the current price would seem to suggest that one would be better off to sit and wait for the secondary offer, although there is no guarantee you will get shares in that offer - even though it is expected to be open to both institutional and retail investors.

Who gets what will depend on demand. While many suggest now is the time to buy Eircom, a large portion of the first-time investors who put their money into the company at its flotation are nursing sizeable losses and may be slow to put good money after bad.

Bacon report

As a firm of property consultants near to the Donegal border, we can be involved in a number of transactions in the Republic. Could you please advise as to the position of a purchaser buying a holiday home, say in Donegal, but having their principal private residence in the United Kingdom.

Mr B.S., e-mail

I see from your e-mail that you are, in fact, based north of the Border. Unfortunately, the determining factor for property owners under the latest Bacon proposals, as contained in the latest Finance Act 2000, is the location of the property and whether it is the owner's only property or not.

After June 15th last, any property bought in the Republic and not the principal private residence of the owner will be subject both to the 9 per cent rate of stamp duty and the 2 per cent anti-speculative property tax for the first three years of ownership. It does not matter whether the principal private residence is in the State or elsewhere.

This element appears already to have impacted on emigrants looking to buy property here before it gets even more expensive with a view to returning home later, but there is little they can currently do about it as long as they own property elsewhere.

There are some exceptions to the rules relating to people buying property for rental. This includes certain types of holiday homes although there are stringent conditions in this area, including registration with Bord Failte. Those people looking to buy a holiday home to be kept vacant apart from occasional visits from themselves and friends/family will be hit by the new rules.

Pensions

I have a question concerning the pension schemes. Apparently, there are talks about bringing down from five to two years the period necessary to avail of a company pension. Any signs of that happening soon?

Mr D.B., e-mail

It depends on what you call signs. The intention to reduce the period of service from five to two years for inclusion in company pension schemes has been well flagged but the legislation which will bring it into force has yet to find its way onto the Oireachtas legislative schedule.

It is now likely to get a first reading when the Dail resumes in October, but few people are betting against it getting on the statute books before the end of the year. So, our best guess . . . 2001, sometime.

It is worth noting that people who have paid into an occupational pension scheme but who leave the company before becoming eligible for inclusion in the scheme receive their contributions back, minus the tax that they would not have paid when the contributions were made initially.

As one reader, Mr L McN, has suggested in the case of a previous query from someone in precisely such a position, the best way to mitigate the inequitable position would be to contribute the legal maximum of 15 per cent of any new salary to a new pension scheme in the current tax year and in subsequent years, until the returned payments have been used up. This could be done into the main scheme in the case of a defined contribution scheme or by way of additional voluntary contributions if the scheme is defined benefit. It's not ideal but, as of now, it's the best on offer.