PERTH (miningweekly.com) – The share price of oil and gas major Santos fell by more than 28% on Thursday after the company failed to meet its A$2.5-billion institutional entitlement offer.
Santos closed the 1-for-1.7 accelerated pro rata renounceable offer with an 86% uptake, raising around A$1.17-billion.
The company told shareholders the institutional offer shortfall bookbuild had attracted strong demand from both existing shareholders and other institutional investors, clearing at A$4.60, which represented a premium of 75c to the offer price of A$3.85 a share.
Eligible institutional shareholders who elected not to take part in the entitlements and ineligible institutional shareholders would receive 75c a share for each entitlement sold in the shortfall bookbuild.
Santos this week announced plans to reduce its debt by some A$3.5-billion, including the A$520-million sale of its interest in the Kipper gasfield, offshore Victoria.
Besides the entitlement offer, Santos also announced a A$500-million private placement.
“The successful uptake of the institutional offer is a clear sign of confidence in the package of capital initiatives Santos announced this week to strengthen our balance sheet and restore long-term value for shareholders,” executive chairperson Peter Coates said on Thursday.
Meanwhile, the retail component of the entitlement offer, which was expected to raise A$1.35-billion, would open on November 17 and close on November 30.
Santos shares were trading at a low of A$4.24 a share on Thursday, down from a high of A$4.55 a share.