AMP begins the hunt for new capital
AMP Limitedhas announced the terms of the $500 million demerger capital raising being mounted via a Share Purchase Plan (SPP) which kicked off today and is scheduled to close on 13 June.
However the structure of the capital raising, first announced on May 1 to facilitate AMP’s recently announced strategic demerger, provides little scope for adviser involvement being aimed at existing Australian and New Zealand shareholders.
The SPP has been underwritten by UBS Warburg up to $500 million. The maximum amount that can be raised through the offer is $750 million.
Ordinary shares under the SPP will be offered at $5.50 (the price at which institutional investors subscribed for shares under the placement), or a 5 per cent discount to the average market price of AMP shares calculated over a 15 day trading period after the close of the offer.
The capital raising has begun with a mail-out to around 900,000 shareholders in Australia and New Zealand, with AMP Limited’s chairman, Peter Willcox using a covering letter to argue that the tight timetable for the capital raising is justified by the lack of certainty about market conditions moving forward.
“We wanted certainty. We knew the current market conditions and the likely price we could achieve. We don’t know what market conditions will be like later in the year, so we chose to immediately proceed with the capital raising and not let the markets control the process,” Mr Willcox said in the letter.
“We have set what we believe is a very tight deadline to complete the separation of AMP’s businesses. To start cleanly separating the businesses, we had to immediately begin raising additional capital. By doing this now, we believe we will be better able to meet all our deadlines so we can separate the businesses by December 2003.”
Mr Willcox says in the letter that AMP’s policy is to pay dividends in line with the group’s sustainable earnings.
“As AMP has already announced, volatile global investment markets, along with weak investor sentiment, impacted full year 2002 financial results,” he said. “These two factors continue to impact our 2003 earnings and on 1 May 2003 we announced lower first quarter results for the group.”
He said the AMP Board would consider the payment of dividends in light of the group’s sustainable earnings following the release of the 2003 half-year results in August.
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