The Bank of Queensland Limited (ASX: BOQ) share price is pushing higher on Monday.
At the time of writing the regional bank's shares are up 0.3% to $7.39.
Why is the Bank of Queensland share price heading higher?
Investors have been buying the bank's shares this morning following an update on its share purchase plan.
The share purchase plan was aiming to raise $25 million in conjunction with its fully underwritten $250 million institutional placement.
According to the release, Bank of Queensland's share purchase plan was extremely well supported. So much so, the bank received applications for approximately $90 million from shareholders. These remain subject to final reconciliation and clearing of payments.
The issue price per new share under the share purchase plan will be $7.27 per share. This represents a 2% discount to the VWAP of its shares traded between December 16 and December 20.
As a result of the strong support for the share purchase plan received from shareholders, the bank has decided to accept all valid applications from eligible shareholders in full with no scale back to be applied.
This means that the bank expects to raise approximately $90 million under the share purchase plan, significantly more than its original target.
The release explains that the final amount and number of shares to be issued will be announced on or around December 30, once the reconciliation process is complete.
After which, the bank expects the new shares to be issued on January 2, before they commence trading on the ASX on January 3.
Why is Bank of Queensland raising funds?
Bank of Queensland is raising funds to strengthen its balance sheet, provide an increased buffer above APRA's unquestionably strong Common Equity Tier 1 (CET1) capital ratio benchmark, and create additional capacity to implement its strategic priorities.
The offer was expected to add approximately 80 to 88 basis points to its Level 2 CET1 capital ratio. But this is likely to be higher now that the share purchase plan isn't being scaled back.
