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QBE: Shareholder purchase plan update

QBE Insurance Limited (ASX: QBE) have announced details of how many shares existing shareholders will receive under the $150m Share Purchase Plan (SPP). QBE announced on 28th March 2012, that it had received applications from 75,000 shareholders for much more than the $150m.

If you thought that meant the offer was going to be scaled back a lot – you’d be right. I’ve reproduced the table below from QBE’s announcement showing how many shares each shareholder will receive, based on their holdings as at 27th February 2012.

Number of shares on record date

“Potential allotment”

20,000 or more

1,402 (maximum allocation)

16,813

1,402 (maximum allocation)

10,000

834

5,000

417

2,000

167

1,000

17

50

4

20

2

10

1

The scaleback will be undertaken on the basis that each eligible applicant will be limited to a potential allotment of 8.34% of the value of their shareholding on the record date. If you held less than 10 shares, you’ll receive none under the SPP.

Shares will be allotted to shareholders on Wednesday, 11th April 2012, and refunds will start flowing back to investors the same day. Shareholders wishing to sell their shares can do so from Thursday 12th April 2012.

Investors will be sent an allotment notice and refund advice on Friday 13th April 2012.

The Foolish bottom line

Having applied for the maximum of $15,000, I was looking forward to receiving a very nice short term capital gain, but alas it’s not meant to be. At least I’m quite happy that not all of QBE’s 160,000 shareholders applied for shares.

Given the 32% increase in QBE’s share price over the SPP issue price of $10.70, it’s likely that some shareholders may elect to sell their shares on Thursday, 12th April. I’ll be hoping for some share price weakness and to pick up some more shares then.

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Motley Fool contributor Mike King owns shares in QBE. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool’s disclosure policy.

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