Asciano (AIO), 2009: a $1.58 billion institutional placement at $1.10 twinned with a $769 million entitlement offer and followed by a $100 million SPP, which was heavily scaled back. This was the biggest ever placement combined with an entitlement offer and required shareholder approval for $1.35 billion of it.
Boart Longyear (BLY) 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.
Reece (REH), April 2020: The plumbing supplies giant has shown how to do it, becoming the first issuer to ever follow an institutional placement with an entitlement offer that was also twinned with an SPP for retail. The detail is all spelt out here but this is very bold for a capital raising because it sets the precedent which says: “any company which does an institutional placement should also do an SPP on the same terms, regardless of whether there is an entitlement offer thrown into the mix as well.” Normally, after a placement, retail will get a token SPP or there will be an entitlement offer if the situation is more pressing, just like occurred so many times during the GFC. But we never get both. Asciano is the only issuer I can think of that did a make-good SPP after a placement/entitlement combo but it wasn't at the time same. Here is the 2009 SPP outcome announcement explaining how the Asciano offer was scaled back from $290 million to $100 million but retail shareholders had still successfully topped up after the earlier dilutive placement and entitlement offer. Tellingly, then Asciano chairman Tim Poole is now deputy chair of Reece. The $600 million Reece package involved a $368 million placement at the fixed price of $7.60, which was a 12.5% discount to the last closing price of $8.69. There was also a 3-for-55 non-renounceable entitlement offer at the same price to raise $232 million and the $42 million institutional component was more than 99% subscribed. The three Wilson brothers were collectively in for their full $170 million slice of that, coming in through the $190 million retail offer. The Wilsons were diluted down from 73% to 67% by the placement and a little further by the SPP. The 4,894 eligible Reece retail shareholders had a theoretical maximum take-up of $147 million in the SPP which wasn't capped. In the end, 1,991 of them applied for $47 million worth of SPP shares with an average application of $23,600 and a healthy take up rate of 40.6%. The $20 million retail entitlement offer (ex Wilsons) also had unlimited overs and the scale back formula saw all applicants receive a minimum of $15,000 worth of additional shares, although it was not disclosed how many shareholders participated in the entitlement offer, which finished 64% subscribed as $12.8 million came through the door, along with an extra $10 million in applications for additional shares. See outcome announcement. Stock finished 2023 at $22.39 so investors have done well.
Transfield Services (TSE), 2009: Initially announced a 1-for-1 at $1.25 along with a $59 million placement with Macquarie giving the advice and sharing the under-writing with ABN Amro. Pulled in $204 million through the the accelerated component and then went easy on the $102 million retail offer which wasn't under-written and banned overs. It only raised $63 million falling $49 million short. See transcript of capital raising exchange at 2009 AGM, after which an uncapped SPP was announced in August 2010 priced at a 5% discount to the pre-announcement VWAP over 5 days. It ended up raising $85 million at $3.13.
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