Qantas share purchase plan falls short by $428m

Melbourne lockdowns and further flight restrictions have put a drag force on Qantas Airways' (ASX: QAN) planned $500 million share purchase plan (SPP), which came up 86 per cent short while shares traded below the original offer price.

The iconic company announced a $1.9 billion capital raising on 25 June to help fund its COVID-19 recovery plan, comprising a roughly $1.4 billion fully underwritten institutional placement and the balance to come from the SPP capped at $500 million.

Of that SPP cap sum Qantas has only managed to raise $71.7 million, with the new shares on issue purchased by 8,660 eligible shareholders.

In mid-July the SPP closing date was extended by an extra fortnight, but in the end it meant little as a second wave in Victoria would soon rear its head and the national trend of eased restrictions started to move in the opposite direction.

"As distinct from the underwritten Placement, the timing of the SPP coincided with a series of tightened border restrictions across Australian states and territories, sparked by a COVID-19 outbreak in Melbourne and small clusters elsewhere," the company said today.

"While the Qantas Group's recovery plan anticipates some uncertainty associated with the pandemic, the timing of these events and their implications for travel demand had an obvious impact on the Qantas share price and the take-up of the SPP offer by eligible shareholders.

"Qantas confirms that all valid applications by eligible shareholders were accepted in full for the amount validly applied for. Qantas expects to issue approximately 22.5 million new fully paid ordinary shares.

When the equity raising was announced Qantas was offering $3.65 per share, representing a 12.9 per cent discount to the previous trading price. But the extension of the SPP included the option of the volume-weighted average price of shares over a five-day period, minus a 2.5 per cent discount.

As a result, the new shares will be issued at $3.18 per share on 12 August, and are expected to start trading on the ASX the following day.

QAN shares were up slightly by 0.75 per cent to $3.345 each at 10:21am AEST.

Updated at 10:22am AEST on 10 August 2020.