Non-renounceable offers where overs were completely banned

June 30, 2020

This last tracks the bad boy issuers who did non-renounceable entitlement offers where retail investors were banned from applying for additional shares, leaving the shortfall exclusively for under-writers.

Australian Finance Group (AFG), 2020: $60 million raising comprising a $15 million placement at a 17.3% discount of $1.15 followed by a non-renounceable 1-for-5.5 at $1.15 with certain insiders partially under-writing the retail offer. Retail can't apply for overs which is a bad thing, particularly with insiders under-writing the guaranteed shortfall. The retail offer was 78% subscribed with $10.1 million raised and an additional $2.96 million coming from the under-writers. With the shares at $1.70 when the retail outcome was announced, this ended up being heavily dilutive for retail investors when combining the impact of the placement, the size of the discount and the retail shortfall.

Oohmedia (OML), 2020:
emergency $167 million raising comprising a $39 million placement at 53c, plus a 1-for-1 entitlement offer for existing shareholders at the same price with no overs. The stock had last traded at 84c before the offer was launched. The accelerated component of the institutional entitlement offer was supported by 91% of institutional shares and raised $117 million. The $14m retail component finished 27% short with $4 million worth of stock going to the under-writers.

Southern Cross Media (SXL), 2020: $169m raising at 9c comprising a $47 million placement and a $121 million non-renounceable entitlement offer with no overs. The placement comprised a ridiculous 68% of the pre-raising shares. Institutions took up 92% of their entitlements to the $102 million entitlement offer. The $20 million retail offer finished 34% short with the $6.8 million shortfall going to the under-writers. See outcome announcement.

Super Retail Group (SUL), 2020: $203 million non-renounceable entitlement offer at $7.19, an 8% discount to the previous close of $7.81. Founder Reg Rowe agreed to take up his full $59.2 million entitlement (29.1%) and therefore won't be diluted. The $158 million institutional component (including Reg Rowe) was 95% subscribed with no disclosure on who got the $8 million shortfall. The failure to allow 10,000 retail shareholders to apply for additional shares in the $45 million retail offer, despite a specific written request to do so, has guaranteed a retail shortfall. Macquarie and UBS were the joint managers and under-writers, taking a fee of $2.05%, excluding the Reg Rowe component.