NAB sticks to $750m issue cap
Sydney Morning Herald
Monday August 17, 2009
NATIONAL AUSTRALIA BANK will resist the temptation to lift the $750 million limit on its latest capital raising from small investors, despite a huge demand for the retail equity offering.The bank has generated great interest in its share purchase plan, which allows existing small shareholders to subscribe for as much as $15,000 of new stock.A final tally of applications will be made after this Friday's closing date. NAB will make public the details of likely allotments by the end of the month.The offer, announced on July 22 following the bank's successful $2 billion institutional placement, is set to be pricedat $21.50. That represents a 29 per cent premium on NAB's present share price.NAB closed at $27.75 on Friday after a strong performance over the past four weeks.It rose $1.90, nearly 7.5 per cent, in the wake of Commonwealth Bank's $4.4 billion profit result last Wednesday. That result suggested the big factor blighting the sector's next set of earnings €“ the provisions for bad debts €“ could be on the wane.NAB initially opted to cap the retail shareholder offer at $750 million to stimulate investor interest, having witnessed the stunning response to ANZ's cash call over June and July.Its fellow big four rival had sought just $350 million from its retail base but was overwhelmed when 178,000 shareholders €“ representing 40 per cent of the total €“ submitted applications for stock worth $2.2 billion.ANZ chose to accept every bid and took the entire amount of cash offered. Its new stock was priced at $14.40 a share, and investors piled in after the existing equity traded at a premium throughout the offer period. Its shareholders are now sitting on a paper profit of $6.30 €“ a 44 per cent gain.A NAB spokeswoman declined to comment on the response to its offer so far, given that it does not close for another five days.But BusinessDay understands the bank intends to stick by its statement in the share purchase plan document sent to shareholders that it will not scoop up any more than the planned $750 million."NAB will scale back applications if they exceed [that figure] in aggregate," the bank said at the time.NAB is seeking the additional money to strengthen its balance sheet, cover any increase in provisions for bad debts and set aside money for any further acquisitions following its recent purchases of the life insurance company Aviva Australia and the broking firm JBWere.Last week it also set aside about a quarter of the $2 billion proceeds from its institutional placement to pay a possible $524 million tax bill in New Zealand after losing a long-running case brought by the Inland Revenue Department. NAB is appealing the ruling.
© 2009 Sydney Morning Herald