Excessively large placements twinned with entitlement offers

January 14, 2024

The following list provides examples of companies which twinned a selective placement with a pro-rata entitlement offer where the placement was more than 20% of the total. We prefer pro-rata and hate selective placements so this should be seen as a shame file of bad practice, although not as bad as this list of standalone placements where there wasn't even an SPP offered.

Asciano, 2009 (67.2%): a $1.58 billion institutional placement at $1.10 twinned with a $769 million entitlement offer to raise $2.349 billion but this was followed by a $100 million SPP as a sop to retail after huge rilution. This was the biggest ever placement combined with an entitlement offer and required shareholder approval for $1.35 billion of it.

Bendigo & Adelaide Bank (42.3%): a $300 million raising at $6.75 in August 2009 which included a $127 million institutional placement, $52 million from the institutional entitlement offer and $121 million from the retail entitlement offer.

Bank of Queensland (42%): $340 million raising in August 2009 comprising a $143 million institutional placement at $10 a share plus a $197 million 1-for-9 entitlement offer at the same price, with retail contributing $121 million or 61%.

Boart Longyear (45.8%) 2009: Should have gone bankrupt in September 2009 but instead the board launched a massive $US635 million capital raising at 27c comprising a $US291m two stage placement and a $US341 million entitlement offer with Macquarie joining Goldman Sachs JB Were, RBS and Merrill Lynch as under-writers. A whopping $US478 million came through the door from institutions in two days. The offer was priced at a 32% discount to the previous close of 44c and the $US157 million retail offer had unlimited overs but finished $A117 million short so the 4 under-writers really earnt their undisclosed fee. By this stage, the 17,000 retail shareholders already owned 46% of the business (the overall entitlement offer was $US341 so insto component was 54% or $US184m) but were massively diluted by the placement and the shortfall. The board then produced an after the event SPP at 27c to offset the dilution which brought $US118 million through the door but was heavily scaled back to $US75 million with everyone getting 65% of what they applied for. This lifted the overall capital raising to $US710m but it was still a dog.

Suncorp (37.2%): emergency $1.046 billion raising in February 2009 at $4.50 a share which included a $390 million placement, $465 million through the institutional entitlement offer but retail only took up $191 million of a possible $502 million. Therefore, the dilution was heavy indeed and retail is owed an SPP worth about $700 million.

CSR (35.8%): did a $125 million placement in December 2008 at $1.40 a share and a one-for-four entitlement offer at the same price as part of an overall $349 million raising. Retail investors are clearly owed an SPP worth about $100 million.

Wesfarmers (20%): $900 million placement to two institutions at $14.25 as part of $4.5 billion capital raising in early 2009. The rest was a 3-for-7 entitlement offer at $13.50, although retail investors only took up $1.7 billion of their $3 billion entitlement so the dilution has been enormous, especially with Wesfarmers shares now well north of $30.