Over the next 10 days, share purchase plans (SPPs) for the NAB, Ramsay Health Care, Lend Lease and Newcrest will close. Raising in excess of $1 billion from the retail market, shareholders face a binary choice: to participate and stump up the cash, or to throw the offer document in the bin.
The share purchase plans follow placements to institutional investors and are structured in accordance with the ASX listing rules. They have the following common features:
- Allow retail shareholders to subscribe for up to $30,000 of new shares;
- Shares are priced at the lesser of:
a) The institutional placement price; or
b) The weighted average trading price of the company’s shares on the ASX in the five days leading up to the SPP close, less a further discount of 2%;
- Fixed (initial) offer size;
- Available in fixed application amounts: $1,000; $2,500; $5,000; $7,500; $10,000; $15,000; $20,000; $25,000; or $30,000;
- Close on a nominated date/time;
- Payment in full required, usually by BPay (no application form required);
- Directors usually reserve the right to increase or decrease the offer size, and apply a scale-back on the terms they think appropriate in the event of over-subscription;
- New shares commence trading on the ASX about 7 days after the offer closes;
- Only Australian and New Zealand resident shareholders can apply; and
- Participation is entirely voluntary.
Here is our view on what to do.