some thought for capital raisings

I see ASIC is looking at stopping the games that go on when companies raise capital. Not sure that CXY has any issues here except I do recall one raising that was rather "quick".

http://www.smh.com.au/business/tighter-rules-on-capital-raisings-20091004-ghv2.html

THE Australian Securities Exchange is considering tightening rules on capital raisings after investors have exploited a loophole during heavily discounted rights issues that often delivers them windfall gains at the expense of long-term shareholders.

The ASX is undertaking a broader review of procedures surrounding capital raisings. Australian companies tapped shareholders for a record $90 billion in the last financial year.

The money raised has allowed companies to bolster their balance sheets during a time of economic turmoil, but there are concerns that the structure of many of the raisings have benefited large institutional shareholders at the expense of smaller retail investors. The latter have had their shareholdings diluted, and in some cases have been shut out of new placements.

''Boards must realise the importance of retail shareholders … it is the right way to go to ensure there is adequate protection for the retail shareholders,'' said the chairman of the ASX, David Gonski.

Of particular interest is a process used by a string of companies ranging from Asciano to Wesfarmers which offered a window of several days between announcing a rights issue and the cut-off for shareholders to qualify. This allows new shareholders to take advantage of discounted capital raisings, mostly at the expense of longer-term investors.

Brickworks attracted new investors after it announced details of a share purchase plan late last month, but gave five days for shareholders to qualify for the issue. This let new investors move onto the registry, entitling them to buy hundreds of new shares, often at a 7.5 per cent discount to existing prices.

But Brickworks had to close the window earlier than expected when its shareholder base ballooned from just over 3000 to more than 10,000. This increase is expected to result in longer-term investors having their applications scaled back when the shares are allotted next month.

Others that have left a window open on rights issues and have experienced an increase in shareholder numbers include Wesfarmers.

However, Mr Gonksi cautioned against becoming too prescriptive over capital raisings. He said there should be enough flexibility for companies to move quickly to secure funds.

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