This morning, leading Australian law firm, Slater & Gordon Limited (ASX: SGH), announced the successful completion of the institutional component of its capital raising, to fund the acquisition of the UK-based Quindell Plc's Professional Services Division for $1.2 billion.
Last week, Slater & Gordon announced it would conduct a two-part capital raising worth $890 million and take on $375 million of bank debt to fund its largest acquisition ever undertaken.
Today, the legal eagle said it had successfully raised $608 million from institutions, with 80% of those eligible taking up their right to buy 95.5 million new shares at $6.37 apiece. Slater & Gordon shares closed at $7.55 prior to the announcement.
The institutional shortfall (which gives investors the right to participate in an auction for the leftover shares which eligible investors didn't buy) was completed on Wednesday, at a clearing price of $7.50.
The clearing price represents a $1.13 premium to the offer price of $6.37, meaning, those eligible institutional shareholders who didn't take up their entitlements to buy new shares, will receive $1.13 for each entitlement they 'sold'.
The new shares bought during the offer – and subsequent shortfall – will be issued and start trading on the ASX on Tuesday, 14 April 2015.
The retail component will open at 9am (Melbourne time) on Thursday, 9 April 2015 and is expected to raise $282 million at an issue price of $6.37. Shareholders can subscribe for up to two new shares for every three they already own.
As above, eligible retail shareholders who do not take up their entitlements will have those entitlements to new shares auctioned at a retail shortfall book build on Thursday, 23 April 2015. Any premium above the $6.37 offer price will be returned to those shareholders.
Should you take part in the retail offer?
As a Slater & Gordon shareholder, I'll likely take part in the retail offer, provided the market price of the shares don't drop below that level (which is unlikely) during the offer period. Indeed there is no guarantee that the retail shortfall book build will result in any meaningful premium being returned to eligible shareholders. However, as with every investment decision, you shouldn't feel rushed to buy new shares. However if you're confident in Slater & Gordon's long-term growth strategy and outlook, it makes sense to take part in the offer.
