The Transurban Ltd (ASX: TCL) share price has resumed trade and is slightly lower this morning after the company announced an oversubscribed $500 million institutional placement.
What did Transurban announce this morning?
Transurban said that proceeds raised under the Placement and security purchase plan (SPP) also announced on Wednesday will contribute to funding Transurban's acquisition of the remaining 34.62% interest in M5 West for $468 million (excluding stamp duty and transaction costs of $47 million), and for general corporate purposes.
Transurban said its institutional placement was strongly supported by its existing security holders, and together with new investors, was well oversubscribed at the announced price of $14.70 per new stapled security. This represents a 3.48% discount to Transurban's closing price of $15.23 on Tuesday.
Transurban will issue 34,013,606 new securities under the Placement which will rank equally with ordinary securities from the date of allotment.
The Aussie infrastructure group said that the new securities are not entitled to the FY19 final distribution of 30 cents per security because the record date for that distribution was 28 June 2019.
All eligible institutional security holders who participated in the Placement and bid for their pro-rata share were allocated at least their pro-rata share based on their assessed existing holding in Transurban.
Transurban Chief Executive Officer Scott Charlton said "We are pleased to announce the successful completion of the placement and we thank our security holders for their ongoing support. We now look forward to launching the security purchase plan for eligible security holders on Thursday, 15 August 2019."
The settlement of the Placement is expected on Monday, 12 August 2019, with allotment expected on Tuesday, 13 August 2019.
As noted above, in addition to the Placement, Transurban will undertake a non-underwritten SPP, to be capped at $200 million, to holders of Transurban securities who meet certain eligibility criteria.
Foolish takeaway
Transurban shares have fallen around 1.3% lower this morning to $15.03 per share – 29% higher than at the start of the year.
The strong demand from existing and new shareholders for Transurban shares, albeit at a 3% discount, should buoy investors' confidence and could see the share price soar higher.
Despite the potential for ownership dilution, a pro-rata allocation of shares should limit the downside felt from the Placement but the real impact will be dependent on whether the Aussie group can use the funds to grow long-term shareholder value via its M5 acquisition.
