Westpac Banking Corp (ASX: WBC) this morning announced that shareholders who elected to participate in its share purchase plan (SPP) can withdraw their applications.
On November 4 Westpac asked investors to tip in another $2.5 billion into the business.
The plan was to issue $2 billion worth of shares to institutional investors at what was then at a 6.5% discount to the last November 1 closing price of $27.08.
Retail investors were also invited to apply for $500 million worth of shares at the $25.32 price provided to institutions. Or the volume weighted average price ("VWAP") of Westpac shares traded on the ASX during the five trading days up to December 2 less a 2 per cent discount.
Given Westpac shares last closed at $24.81 it appears retail investors will be offered the shares cheaper than $25.32. Notably, this will not Westpac's powerful institutional backers.
Of course the SPP was announced prior to the shock November 20 announcement that Westpac was subject to a major regulatory investigation by AUSTRAC.
The AML regulator's claims against Westpac are so serious that both the CEO and chairman have announced they will leave the bank partly under pressure from powerful institutional investors.
The bank is probably giving retail investors the option to withdraw or reverse their participation in the SPP as it's now open to a massive class action alleging it misled the market in not disclosing the AUSTRAC issues at the time of the SPP.
As such if it offers investors the option to abandon the SPP any potential class action has less members.
Westpac agreed the move "following discussions with ASIC".
Worryingly for Westpac shareholders ASIC is reportedly already looking into whether Westpac should have disclosed the AUSTRAC issues at the time of the SPP.
The bank is an an atrocious mess that could get worse if institutional or retail shareholders seek compensation from it over the potential disclosure failures.
