But a different story at struggling transport infrastructure owner Asciano Group.
The shares took the expected pounding yesterday as big investors cashed in some of their placement shares and took easy profits.
Asciano told the ASX (http://imagesignal.comsec.com.au/asxdata/20090617/pdf/00961157.pdf) yesterday that had increased the size of its capital raising to $2.35 billion, following the successful completion of its institutional component where it saw higher than expected demand.
Asciano said it had raised $1.922 billion committed from institutional investors, including $341 million from an entitlement offer, $231 million from an unconditional placement, and $1.35 billion from a conditional placement.
The fully underwritten retail component of the offer will raised around $428 million, with up to another $192 million coming from a placement with Asciano chief executive officer Mark Rowsthorn.
That means the company raised an extra $350 million.
Some in the market saw it as a vote of confidence in Asciano, others as a trading opportunity from big shareholders looking for a killing, which many then took yesterday.
The news of the higher funding didn’t stop the wave of selling as big investors who got their shares at $1.10 each (compared with the market close of $1.83 before the issue was announced) bailed out and took easy profits.
The shares ended down 31.7% at $1.25. a fall of 58 cents on the day.
Re-setting at the issue price, or close to it is a function of many capital raisings, but not all.
It does seem to feature more from the struggling companies with a questionable outlook and where the discount is substantial.
For an institution taking the shares at $1.10 and selling them around $1.25 to $1.30 gives a pretty good return.
It’s why 109.66 million shares were traded yesterday (of course there has to be a buyer, so the identities of anyone soaking up Asciano shares in the sell off might be interesting).
Asciano chairman, Tim Poole said in a statement that the group had raised the amount targeted from the capital raising in view of the level of demand for new securities, and from the likely impact that the extra amount would have on the group’s overall position.
"Having assessed all of the relevant factors, the Board believes that it is in the interests of Asciano and its security holders for the issue size to be increased,” Mr Poole said.
Mr Poole said Mr Rowsthorn intended at this stage to take his full entitlement in the offer, which would allow him to "maintain, but … not increase, his current 10.92 per cent holding in Asciano”.
There have been suggestions that Mr Rowsthorn might sell some of his existing holding to generate cash to take up his entitlement.
Asciano said net proceeds from the capital raising would be used primarily to reduce net debt, which stood at $4,738 million at May 31.
"If the $2,291 million in net proceeds raised were applied to reduce May 2010 debt maturities, Asciano’s level of debt maturing before 2012 would be reduced to $509 million,” the group said.
"However, while Asciano intends to apply the majority of the net proceeds to debt reduction, it is anticipated that a small proportion of the proceeds may be applied to the cost of restructuring Asciano’s current interest-rate swaps.”
Asciano said it was continuing talks with its banking syndicate, members of which had been "supportive and constructive throughout these discussions”.
"Following completion of the equity issue, Asciano intends to negotiate a restructure of the existing facilities concurrent with the repayment of a proportion of the outstanding debt,” the company said.
