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Bank of Queensland share price drops 8% after raising $250 million

The Bank of Queensland Limited (ASX: BOQ) share price has returned from its trading halt and is tumbling lower.

In morning trade the regional bank’s shares are down 8% to $7.90.

Why was the Bank of Queensland share price in a trading halt?

On Monday Bank of Queensland requested a trading halt whilst it undertook a fully underwritten $250 million institutional share placement. These funds were to be raised at an issue price to be determined by way of a variable price bookbuild across $7.69 – $7.78 per new share.

This morning the bank revealed that it has successfully completed the institutional share placement. It raised the funds at the very top of its price range at $7.78 per new share, which was a 10% discount to the last close price.

This will result in the issue of approximately 32.1 million new shares. These new shares are expected to settle on November 28 and then be issued and commence trading on the ASX on November 29.

The bank’s managing director and chief executive officer, George Frazis, was pleased with the outcome of its institutional share placement.

He said: “We are pleased with the strong support we have received from investors. The funds raised will further increase BOQ’s buffer above APRA’s “unquestionably strong” benchmark and provide BOQ with additional capacity to support implementation of our strategic transformation.”

What now?

The bank will now push ahead with a non-underwritten share purchase plan aiming to raise approximately $25 million.

Today’s release advises that a share purchase plan booklet will be sent to eligible shareholders on or around December 3. Eligible shareholders will be able to subscribe for up to $30,000 of shares. These will be issued at the lower of the placement price or the five-day VWAP up to the closing date, less a 2% discount.

Also in the news today is rival Westpac Banking Corp (ASX: WBC). The banking giant’s shares are pushing higher after announcing the exits of its CEO and chairman following the money laundering scandal.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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