AAP
Qantas shares sharply lower
August 23, 2002
QANTAS Airways Ltd shares were sharply lower in early trade.
Qantas this morning said it had successfully completed the institutional part of its $800 million capital raising, with strong support.
Qantas shares were four per cent, or 20 cents lower, at $4.49 just after the open.
The fall was expected given the stock was ex-dividend and now ex-rights, following the institutional entitlement offer, an analyst said.
"The price it is trading at now is the ex-rights price, which on a one-for-eight you would obviously expect it to be down," he said.
"I wouldn't watch the share price probably for the next two hours or so and then wait for it settle down, because there is a lot of business being done in terms of people who didn't get the right allocation suddenly wanting to buy some more, people who got stuff which they wanted selling it for a small profit."
Qantas had allocated shares on the basis of a pro-rata entitlement of one share for every 8.2 shares, at an issue price of $4.20.
"Most of this morning you are going to have a very volatile Qantas share price as those people who suddenly find out what their allocation is decide what they are going to do with it," the analyst said.
He expected the stock would eventually close about $4.50.
Earlier Qantas chief executive Geoff Dixon said there had been strong support for the institutional offer. "We are very pleased with the strong support demonstrated by institutional investors for the capital raising and our growth plans," Mr Dixon said.
Settlement of the institutional component had been underwritten and was expected to be completed on September 5.
Qantas said strong bidding from both existing shareholders and new investors led to "significant excess demand" for the British Airways entitlement and other renunciations.
The second part of the entitlement offer, to retail investors, will be at the same pro-rata ratio of one for 8.2, at the same issue price of $4.20.
Depending on retail participation, Qantas expected to raise up to $800 million through the offer.
The retail component is due to open on September 9 and close on September 27.
ABN Amro Morgans Ipswich manager Tony Russell said Qantas shares were falling because of the dilution of the share price and the discounted entitlement issue price.
"Keeping in mind there are now more shares on issue, there is a dilution there in the price," Mr Russell said.
"At $4.20 that is also a reasonable discount to where they have been trading," he said.
AAP
Last edited by Wirraway; 23rd Aug 2002 at 01:39.