Letter sent to Orica re 2024 SPP

March 26, 2024

Below is the text of an email sent to Orica's PR and investor relations managers late on Sunday, March 17, 2024, lobbying for an expansion of its $65 million share purchase plan, which closed on March 18. Sadly, the outcome announcement stuck rigidly to the $65m cap, even after $100 million in applications were received. There was a minimum allocation of $1000 worth of shares for all 5,700 applicants and a pro rata allocation based on size of holding after that.

Hi Andrew and Delphine,

Hope all is well at Orica.

I was wondering if you could please forward this email to all relevant Orica decision makers on the forthcoming SPP allocation decision and outcome announcement.

Firstly, I should say at the outset that it would have been better if this raising was done as a PAITREO that treated all shareholders equally.

Instead, you went with the placement-SPP model and unfortunately, the proposed SPP component is too small at just 14% or $65 million of $465 million.

Given that Orica has around 35,000 shareholders, the theoretical maximum in SPP applications is $1.05 billion. So, if just 6.2% of the total shareholder base apply for the maximum 30k, that will soak up the entire $65 million.

As a rule of thumb, every SPP should anticipate at least 10% participation and the placement-SPP split should also reflect the situation before the raising was announced, in order to prevent any dilution between the classes.

If retail shareholders owned 20% of Orica before the raising then the SPP should be a least 20% of the capital raising which would be $100 million out of $500 million.

It would be great if Orica was to join this list of almost 50 examples of companies which completely uncapped their SPP in the face of strong demand and in order to avoid imposing any form of scale back.

In terms of the upper limit of such a move, you could go to $400 million and match the size of the placement. This would lift the overall raising to $800 million, which would still be below the $1 billion spend on the proposed acquisition.

The other alternative is partially lifting the cap but still imposing a scale back, as has been done previously by this long list of companies.

If there is going to be a scale back, there should be a minimum allocation such as 100 shares for all applicants, in order to reduce the number of holders with an unmarketable parcel.

After that, I would suggest a pro rata allocation based on size of holding. Alternatively, you could favour your smaller and poorer retail shareholders by scaling back based on size of application like the companies on this list.

Whatever you do, please spell out the scale back formula clearly in the SPP outcome announcement, preferably with a table similar to what QBE produced in this 2009 announcement.

Finally, in terms of the outcome announcement, please follow the best practice demonstrated by companies on this list. For the avoidance of doubt, here are some words to demonstrate how it might read.

“The Orica SPP was open to 35,345 eligible shareholder and the company received applications totally $213.5 million from 15,256 holders.”

I would appreciate an acknowledgement that this email has been received and forwarded to the relevant parties and look forward to seeing the outcome of the SPP announced to the ASX later this week.

Please note that I am not presently an Orica shareholder but intend to buy some shares ahead of the 2024 AGM in order to participate, including by asking some questions about the handling of this capital raising.

Thank you for your consideration.

Kind regards

Stephen Mayne
Freelance Journalist
Shareholder Advocate


Rather than saying the email had been forwarded to the decision-makers as Metcash did after this similar email was sent a few weeks earlier, Delpine only replied that with this perfunctory note the next morning:

Good morning Stephen,

Acknowledging receipt of your email, and we will take your recommended options into consideration.


Delphine Cassidy
Chief Communications Officer