From the website of the Australian Securities and Investments Commission (ASIC)
ID: 2462913 • Letter: F
Question
From the website of the Australian Securities and Investments Commission (ASIC) (www.asic.gov.au), find a company which has issued a prospectus for the purpose of raising additional funds (shares or debentures) from the public in the current year (calendar or financial). Find a copy of that prospectus online (they are usually on the company’s website, linked via ASIC’s website).
Required
Report to the class on the nature and details of the prospective fundraising, and the reasons why such funds are being raised.
Explanation / Answer
A.
A rights issue is an issue of new shares to existing shareholders, based on their proportionate holdings of existing shares. Only if the terms of the rights issue are renounceable will new shareholders be able to acquire shares in Transurban.
A private placement is an arrangement whereby shares are sold to new or existing institutional shareholders who have negotiated to buy a block of newly-issued shares in the company. There is no requirement for the placement to be proportional among existing shareholders.
B.
The issue is one of control. In a rights issue, shareholders normally hold the same proportion of shares after the issue as before. Not so in a private placement. New or existing institutional investors may privaely acquire enough shares to reduce the control of other existing shareholders and therefore increase their own control. It appears from the article that CP2 was more interested in being part of a private placement with Canadian pension funds so that its influence over Transurban would rise, rather than being part of a rights issue where its influence would remain at approximately 15%..
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