Mayne Report - 10 lively stories
February 2, 2010
This week's edition of the Mayne Report was emailed out to subscribers earlier today and included stories with the following headlines:
Big protest against Orica directors and pay
Tabcorp and the corruption of placements
Punters offered $358m stag profit on $2.66 billion Wesfarmers retail offer
Babcock salary rorts and our accumulated losses
Time for Boral chair Ken Moss to go
Woolies infiltrates Australia Day as Queensland moves on kids in venues
Macquarie commissioned by ghost group to fund a white elephant
Macquarie Office and other capital raising plays
The growing $2 billion-plus discount to NTA club
Will a journalist be charged?
Rich List bigger and better than ever
Following the worldwide destruction of capital, the Mayne Report rich list has undergone a major review. Current share holdings and the peak and trough values of those holdings is a new addition, giving a clear insight into the astronomical losses that have occurred.
We have italicised some names which indicates that their current worth has fallen below our cut-off point of $10 million. Check out who has lost the most, and in some cases, who has bucked the trend and increased their wealth, on Australia's most comprehensive rich list.
The free story this week is on Wesfarmers:
Retail punters offered $358m stag profit on $2.66 billion Wesfarmers retail offer
After Wesfarmers released details of what should finish up as the biggest capital raising in Australian history, I fired off the following email to the company's spindoctors and investor relations people:
Dear Mark, Tanya and Anna,
Could you please pass on in the strongest terms to the board that small Wesfarmers shareholders such as myself would like the opportunity to apply for more the pro-rata allocation at $13.50 to take up shares that are not acquired by other eligible retail shareholders.
If you are not giving small shareholders the opportunity to sell their rights, you should at least give other small shareholders the opportunity to take them up.
Macquarie Office is the model. Check out the details of their recent offer. We were able to take up the 20c one-for-one entitlement and then apply for more and this helped them achieve the $508 million raising. See the final announcement here.
If you really are short of capital then you should give your loyal retail shareholders an opportunity to write out a bigger cheque. It's perfectly legal and Macquarie has shown how it can help, so why not ask your existing shareholders for additional capital, especially seeing as you going outside your existing shareholder base to raise $900 million in a placement to third parties.
Regards, Stephen Mayne
Small Wesfarmers shareholder
PS. I'll be writing about this in the next edition of The Mayne Report. See the latest edition.
The following reply came back which raised out hopes enormously.
From: Anna McPhee
To: Stephen; Mark Triffitt
Cc: Tanya Rybarczyk; Paula Piccinini
Subject: RE: Wesfarmers treatment of small shareholders
Stephen,
Thanks for your email. The Retail entitlement offer will be offered under the same terms as the Institutional entitlement offer and shareholders such as yourself and your readers may subscribe for New Shares in excess of your Entitlement.
Allocation will be subject to availability and you may only be allocated part of the number of Additional New Shares you apply for, or not at all. Information explaining the Retail offer will be sent to shareholders in time for them to review and participate before close of 23 February.
Regards
Anna McPhee
General Manager, Corporate Affairs
Wesfarmers Limited
All this media commentary predicting a 20% take-up of the retail offer is completely inaccurate because the wealthier mums and dads will see the quick profit that is available from buying additional shares at $13.50 when the stock closed last night at $15.82.
Strangely, the ability to apply for additional shares has been significantly underplayed in the 37 page retail offer document as the first mention isn't until page 23.
Indeed, on page 9 Wesfarmers produced this: "The Retail Entitlement Offer is not underwritten. By way of example, based on the assumption of a 15 per cent take-up from retail shareholders, the Retail Entitlement Offer would raise approximately $0.4 billion."
Hang on a minute. If shareholders are being offer stock at $13.50, they would be mad not to take up their full entitlement AND apply for a stack more, given that the shares closed at $15.82 last night. Sure, you don't get the 50c interim dividend but based on the current easy profit of $1.82 a share or 13.5%, Wesfarmers should be banking on the entire $2.66 billion retail component being taken up.
Whilst I only own 7 Wesfarmers shares and will be offered 3 new shares in the offer, I'll turn to various financing and loss underwriting sources and send off a cheque for as much as possible if it remains well in the money.
The offer closes on February 23 so the strategy involves waiting until the last day before doing a BPAY transfer and then hoping the market doesn't crash before the shares are allotted on March 4.
If the retail punters do indeed apply for a much larger allocation than the 15% predicted by Wesfarmers, this will leave the institutions further underweight such that they would then have to buy in the after market.
The maximum 197 million shares that are being offered to us retail punters were last night showing a paper profit of $358 million. Small shareholders of Australia, let's get together and grab it, turning this Wesfarmers capital raising into the biggest in Australian history at $5.6 billion.
And whilst Wesfarmers paid about $200 million in underwriting fees for the institutional component, us retail investors will stump up the money for free, provided it remains in the money.
Latest chat with Libby Gore on ABC radio
Have a listen to the regular Wednesday afternoon chat with Libby Gore on 774 ABC Melbourne discussing falling inflation and all things financial.
There have been other list updates also. Our list about the biggest one day share tanks in history and the list of companies trading at big discounts to NTA.
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
Big protest against Orica directors and pay
Tabcorp and the corruption of placements
Punters offered $358m stag profit on $2.66 billion Wesfarmers retail offer
Babcock salary rorts and our accumulated losses
Time for Boral chair Ken Moss to go
Woolies infiltrates Australia Day as Queensland moves on kids in venues
Macquarie commissioned by ghost group to fund a white elephant
Macquarie Office and other capital raising plays
The growing $2 billion-plus discount to NTA club
Will a journalist be charged?
Rich List bigger and better than ever
Following the worldwide destruction of capital, the Mayne Report rich list has undergone a major review. Current share holdings and the peak and trough values of those holdings is a new addition, giving a clear insight into the astronomical losses that have occurred.
We have italicised some names which indicates that their current worth has fallen below our cut-off point of $10 million. Check out who has lost the most, and in some cases, who has bucked the trend and increased their wealth, on Australia's most comprehensive rich list.
The free story this week is on Wesfarmers:
Retail punters offered $358m stag profit on $2.66 billion Wesfarmers retail offer
After Wesfarmers released details of what should finish up as the biggest capital raising in Australian history, I fired off the following email to the company's spindoctors and investor relations people:
Dear Mark, Tanya and Anna,
Could you please pass on in the strongest terms to the board that small Wesfarmers shareholders such as myself would like the opportunity to apply for more the pro-rata allocation at $13.50 to take up shares that are not acquired by other eligible retail shareholders.
If you are not giving small shareholders the opportunity to sell their rights, you should at least give other small shareholders the opportunity to take them up.
Macquarie Office is the model. Check out the details of their recent offer. We were able to take up the 20c one-for-one entitlement and then apply for more and this helped them achieve the $508 million raising. See the final announcement here.
If you really are short of capital then you should give your loyal retail shareholders an opportunity to write out a bigger cheque. It's perfectly legal and Macquarie has shown how it can help, so why not ask your existing shareholders for additional capital, especially seeing as you going outside your existing shareholder base to raise $900 million in a placement to third parties.
Regards, Stephen Mayne
Small Wesfarmers shareholder
PS. I'll be writing about this in the next edition of The Mayne Report. See the latest edition.
The following reply came back which raised out hopes enormously.
From: Anna McPhee
To: Stephen; Mark Triffitt
Cc: Tanya Rybarczyk; Paula Piccinini
Subject: RE: Wesfarmers treatment of small shareholders
Stephen,
Thanks for your email. The Retail entitlement offer will be offered under the same terms as the Institutional entitlement offer and shareholders such as yourself and your readers may subscribe for New Shares in excess of your Entitlement.
Allocation will be subject to availability and you may only be allocated part of the number of Additional New Shares you apply for, or not at all. Information explaining the Retail offer will be sent to shareholders in time for them to review and participate before close of 23 February.
Regards
Anna McPhee
General Manager, Corporate Affairs
Wesfarmers Limited
All this media commentary predicting a 20% take-up of the retail offer is completely inaccurate because the wealthier mums and dads will see the quick profit that is available from buying additional shares at $13.50 when the stock closed last night at $15.82.
Strangely, the ability to apply for additional shares has been significantly underplayed in the 37 page retail offer document as the first mention isn't until page 23.
Indeed, on page 9 Wesfarmers produced this: "The Retail Entitlement Offer is not underwritten. By way of example, based on the assumption of a 15 per cent take-up from retail shareholders, the Retail Entitlement Offer would raise approximately $0.4 billion."
Hang on a minute. If shareholders are being offer stock at $13.50, they would be mad not to take up their full entitlement AND apply for a stack more, given that the shares closed at $15.82 last night. Sure, you don't get the 50c interim dividend but based on the current easy profit of $1.82 a share or 13.5%, Wesfarmers should be banking on the entire $2.66 billion retail component being taken up.
Whilst I only own 7 Wesfarmers shares and will be offered 3 new shares in the offer, I'll turn to various financing and loss underwriting sources and send off a cheque for as much as possible if it remains well in the money.
The offer closes on February 23 so the strategy involves waiting until the last day before doing a BPAY transfer and then hoping the market doesn't crash before the shares are allotted on March 4.
If the retail punters do indeed apply for a much larger allocation than the 15% predicted by Wesfarmers, this will leave the institutions further underweight such that they would then have to buy in the after market.
The maximum 197 million shares that are being offered to us retail punters were last night showing a paper profit of $358 million. Small shareholders of Australia, let's get together and grab it, turning this Wesfarmers capital raising into the biggest in Australian history at $5.6 billion.
And whilst Wesfarmers paid about $200 million in underwriting fees for the institutional component, us retail investors will stump up the money for free, provided it remains in the money.
Latest chat with Libby Gore on ABC radio
Have a listen to the regular Wednesday afternoon chat with Libby Gore on 774 ABC Melbourne discussing falling inflation and all things financial.
There have been other list updates also. Our list about the biggest one day share tanks in history and the list of companies trading at big discounts to NTA.
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.