Companies which did pro-rata entitlement offers


February 26, 2011

Major Australian companies which raised capital since January 2008 exclusively through pro-rata entitlement offers that treated shareholders equally.

Rio Tinto $US15.2 billion: raised in June 2009 through a strictly pro-rata 21-for-40 renounceable rights issue as is required by British law. The Australian shortfall saw 7.86 million shares auctioned off at the offer price of $28.29. Institutions bid $48.50, so non-participants collected $20.10 per right.

Santos $3 billion: raised $2.06 billion from institutions and underwriters and $937 million from retail investors through a 2-for-5 entitlement offer at $12.50 a share in June 2009.




Alumina $1.876 billion: raised $910 million through a renounceable 5-for-19 offer at $3 a share in September 2008 which saw retail investors who didn't participate receive a 35c premium courtesy of the institutional bookbuild. Backed this up with a $976 million raising through a 7-for-10 offer at $1 a share in May 2009 which included an excessive scale back of retail investors who applied for extra stock and no compensation for those who didn't participate. Went from best practice to okay but at least there was no placement.

Amcor $1.611 billion: 4-for-9 entitlement offer at $4.30 a share in August 2009 with institutions raising $1.2 billion and the balance coming from retail investors. However, failed to offer renounceability so retail investors could apply for the shortfall at $4.30.


Australand $936 million: $461 million renounceable rights issue at 60c completed in September 2008. Singapore Government stepped up with $300 million as major shareholder but not much other support. No premium from the bookbuild for investors who declined to participate. Followed up with a $475 million 7-for-10 entitlement offer in August 2009 at just 40c a share, which included $80.3 million from retail investors and $15 million from under-writers. The second offer accepted $100,000 in "overs" with no renounceability.

Incitec Pivot $902 million: 5-for-13 entitlement offer at $2.50-a-share in late 2008 but the focus was very much with the $819 million raised from institutions rather than the $83 million from retail investors, which was well short of the $351 theoretical maximum. The retail offer wasn't under-written.

Orica $899 million: the offer in August 2008 was a one-for-eight at $22.50 a share. Allowed retail shareholders to renounce into a bookbuild but only returned them 10c a share, a very skinny premium.

ConnectEast $871 million: revealed a one-for-one offer at 55c in December 2008 which saw professional tollroad investor and main underwriter CP2 finish with 27% of the company. All retail applications asking for additional shares over and above the entitlement were satisfied before CP2's underwriting kicked in. Came back with another $421 million 1-for-2 raising at 33c in August 2009 with no ability for retail to apply for extra.


FKP $474 million: the troubled Queensland property player announced a $150 million 5-for-14 entitlement offer at $1.50 in October 2008 and then came back with a $324 million 1-for-1 entitlement offer at 40c in mid-2009.

SP Ausnet $405 million: completed a 1-for-4 entitlement offer at 78c a share in June 2009 raising $333 million from institutions and $72 million of the $80 million sought from retail. Good disclosure revealed that 54% of investors participated and the ability to apply for "overs" was important.

Macquarie Airports $345 million: proposed a $345 million 1-for-11 raising at $2.30 in September 2009 to fund purchase of management contract.

Gunns $334 million: raised $333 million from institutions through an accelerated 7-for-10 entitlement offer at $1.50 a share in August 2008 but then only an additional $1.4 million came through the door from the retail offer given the stock had tanked with the whole market after Lehman Brothers collapsed.

Sigma Pharmaceutical $297 million: 1-for-3 entitlement offer at $1.02 a share in September 2009 which had no placement component and a bookbuild to compensate those who don't participate.

Billabong $291 million: completed a 2-for-11 entitlement at $7.50 a share in June 2009 which had no placement component and a very generous acceptance of "overs" from retail investors.

Paperlinx $185 million: a 2-for-5 entitlement offer at $1.25 a share in October 2008 which has been a disaster for investors.

Bunnings Warehouse Property Trust $150 million: 1-for-3.06 entitlement offer at $1.50 a unit in May 2009 with no placement component. Retail applied for $53 million in "overs" but this still left a $26 million shortfall for institutions.

APN News & Media $99m: completed 1-for-5 entitlement offer at $1 a share in June 2009 which the controlling Irish shareholder did not participate in.

Peet $77 million: 1-for-3 entitlement offer at $1.10 a share in May 2009 with no placement component.