C&W Optus said the complicated deal involved largest shareholder, Cable and Wireless Plc, investing an extra A$1.45 billion in the group to slightly increase its controlling interest to 52.8 per cent.

Second largest shareholder Mayne Nickless Ltd would shed its 25 per cent stake through an entitlement offer of its 556.9 million C&W Optus shares to its own shareholders to raise net proceeds of A$1.083 billion for Mayne Nickless.

An initial public offer (IPO) of 375 million new shares and 95 million existing shares owned by fund managers AMP and National Mutual would raise about A$1 billion.

In total, Cable and Wireless and retail and institutional investors would inject about A$2.5 billion in new equity into the Australian group.

C&W Optus said after therestructure and the IPO and entitlement offers of 1.027 billion shares, its total 3.596 billion shares would be worth about A$6.65 billion at the maximum retail price set of A$1.85 a share.

Cable and Wireless chief executive Dick Brown said C&W Optus was now one of his group's three core global businesses.

"The group's decision to subscribe for additional shares and exercise its options is a clear indication of its confidence in C&W Optus as a strong and growing investment," Brown said in a statement.

An adviser to the IPO later told reporters telecommunication floats were the only major capital raisings still able to proceed in volatile global markets because of their growth potential.

C&W Optus forecast in its prospectus earnings before interest, tax, depreciation and amortisation (EBITDA) of A$1.004 billion in 1998-99, up 25.7 per cent on a year earlier.

It also forecast a pre-tax profit of about A$115 million in 1998-99 (July-June), compared with a A$41 million loss in 1997-98.

Theseprospectus forecasts imply an EBITDA to maximum retail price multiple of 7.5 times, C&W Optus said.

This makes it more expensive than the 5.8 times EBITDA multiple implied when the Australian government sold a third of Australia's largest telecommunications group Telstra Corp Ltd on November 17 last year.

Telstra's share price has more than doubled since then, with its current EBITDA to price multiple rising to about 10.8 times, making the Optus float look cheap by comparison.

C&W Optus is scheduled to float on November 17, a year to the day after the Telstra float.

Mayne shareholders in particular welcomed the announcement of the long awaited IPO, which the logistics and health care group has been trying to get off the ground since 1996.

Several attempts to float Optus have been thwarted by the problems with its pay television and local call networks, and litigation by fellow shareholders.

Mayne Nickless' share price jumped as much as 5.6 per cent or 50 cents to A$9.30 after the floatannouncement, but eased back to A$9.00 by the close.Mayne said it planned to use the sale proceeds to pay back debt, buy back its own shares, make a capital return and invest in healthcare.