Thursday 10 September 2009

NAB SPP Scale-back Refund Cheque Received

Unfortunately National Australia Bank decided to limit the recent retail investors SPP offer to the $750m, so out of my $15,000 application for new shares only $4,343 was allotted to purchase 202 shares at the offer price of $21.50. The remaining $10,657 was refunded via a bank cheque which arrived a couple of days ago. With the NAB share price currently around $28.75 the SPP still produced a $1,464.50 paper profit (ignoring any dilution effects on the value of my existing NAB shareholding) but not as much as I'd hoped for when I sent in the full $15,000 for my maximum SPP entitlement. With the market recovering and NAB shares trading well above the issue price, most retail investors took up the offer in full it seems. It's a bit annoying that NAB scaled back the offer so severely (the pro-rata issue was 28.82%), especially since they have already diluted the retail investors ownership via the quite large institutional offer. NAB included an explanatory letter trying to justify why they did an SPP rather than a rights offer, and also why they chose to scale back the SPP. They bank's excuse for scaling back the offer rather than accepting the full amount provided by their shareholders ("... the depressing effect doing so can have on return on equity, dividends and the share price") is unconvincing given the dilution effect of the large institutional share placement and the fact that they'd done a previous SPP last December. If they seek to raise any more capital in the next one or two years it will prove that they have little regard for their "mum and dad" retail investors.

ps. It's also annoying that the NAB "bank cheque" still hasn't been cleared in my credit union account several days after I deposited it. I have a 0% balance transfer offer that expires today that I want to pay off in full - every extra day until the cheque clears and I can pay off the CC balance will cost me around $10.

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