Computershare executes textbook funding raising, putting Bank of Queensland board to shame

Two major listed companies recently announced capital raisings to fund acquisitions. One did it fairly and efficiently while the process adopted by the other was a disgrace.

Computershare executed a textbook capital raising.

It’s not often that one board of directors of a major listed company so utterly shames, humiliates and indeed damns the board of a fellow major company, almost in real time, the way that of Computershare has done to Bank of Queensland’s.

And in the process, also precisely shames, humiliates and damns our two fake regulators - ASX and ASIC - for sleeping through yet another episode in this disgraceful post-virus saga of the cosy club of financial insiders opportunistically ripping off retail investors to the tune of billions of dollars.

Computershare has executed a textbook – fair and, importantly, efficient – fund raising to pay for its acquisition of a US business.

Led by chairman Simon David Jones, Computershare is on the way to raising $835m via a pro-rata renounceable issue equally to all its shareholders – both the big-end of town institutions and the smaller retail and SMSF holders.

The issue is one share for every 8.8 shares held at $13.55 – that’s a 9.6 per cent discount on the last trading price of $14.99 and a 8.7 per cent discount on the so-called $14.84 “TERP” price (the price the shares would theoretically trade at after the issue).

‘Renounceable’ means that if you don’t choose to subscribe you call sell the ‘right’ to buy that share. So whether you subscribe or not, you will end up in exactly the same equity position, at least theoretically.

That is not the case with a “non-renounceable” issue. With those, if you don’t choose to participate, you get nothing for your “right” to a new share; the underwriters sell it - and any upside profit – to the instos.

A month ago, BoQ also announced a major acquisition, of the ME Bank. It chose exactly such a “non-renounceable” issue for funding.

The BoQ issue was one share for every 3.34 shares held at $7.35 – that was a 12.6 per cent discount on the then last trading price of $8.41 and a 9.3 per cent discount on the $8.11 TERP.

Retail/SMSF holders who didn’t or couldn’t subscribe lost money cold and were diluted, with the benefit auctioned to the instos.

What made it worse - far worse but all too common in this era of greedy insiders and fake regulators – BoQ also had a placement, solely to instos, at that discounted $7.35 price. That handed subscribing instos $36m of ‘free’ money (paid for by retail holders) upfront.

Computershare did not have a placement; just the fair and equal pro-rata issue. As the directors noted, “this structure is intended to deliver fairness to all eligible shareholders”.

Quite; and bravo.

They could have said – as I repeat – the alternative process adopted by BoQ (and so many others) is a disgrace which also disgraces ASX and ASIC.

Those two fake regulators have not only allowed cosy insiders to rip off retail/SMSF holders to the tune of tens of billions of dollars – through both this current post-virus period, but also after the GFC – they have actively facilitated and encouraged the rip-off.

BoQ added a third tier to the rip-off, giving retail/SMSF holders only a few days to subscribe.

Their documents were only dispatched on March 1 and they had to have their acceptances back by March 10 – leaving them at the mercy of a slow-delivering AusPost not just once but twice.

We know the mail has become super-slow because of the virus; it’s almost as if BoQ did not want retail/SMSF to subscribe.

If so, they got their wish: retail subscribed for only $336m of its $682m. But ‘smarties’ asked for – and got - a further $72m.

Again, in shaming, damning contrast, Computershare is giving its retail plenty of time. The documents will go March 31, they have until April 19 to subscribe.

Originally published as Computershare executes textbook funding raising, putting Bank of Queensland board to shame