WP’s ‘successful’ shafting

WORLEY Parsons has triumphantly announced the successful completion of the retail component of its humungous share issue.

Pity it has been somewhat less than successful – actually, downright disastrous for its shareholders, both the retail ones and arguably even more so the institutional ones.

The $2.9 billion issue, and the associated $4.8 billion US acquisition that it largely financed, as of yesterday had neatly ripped 15 per cent off the value of every pre-existing holding and of the entire Worley company itself.

A holder who held 1000 Worley shares going into the big announcement three weeks ago had an investment worth $17,840. At yesterday’s close it was worth $15,210.

If that shareholder had subscribed for his or her entitlement in the issue, he/ she would have bought another 680 shares at a cost of $10,580. That extra parcel was worth $10,343 immediately yesterday.

They should think of the $237 extra loss on the $2639 lost on the basic stake as that holder’s contribution to the “successful completion” of the offer. Retail holders were actually lucky.

They got a couple of weeks to see what the market did to Worley shares on the news of the deal and the issue.

The insto holders had to make their $1.8 billion decision in the dark, the day after the announcement. They mostly took up their entitlements – the take-up rate was 90 per cent.

And when the Worley share price fell as low as $13.74, they were looking at the loss of as much as $220 million on the

$1.8 billion they had just subscribed, either directly or by sub-underwriting that 10 per cent shortfall.

Plus of course the much bigger sums they were also losing on their basic holdings.

At that trough, the holdings of all the core holdings had been sliced a tingling 23 per cent.

They can all – insto and retail holders and directors and both prime underwriters and subunderwriters – breathe one big collective sigh of relief that the share price has come significantly back from those depths.

For that, they can thank the Saudi-Lebanese-Dubai Dar Group for taking up its full $660 million entitlement as Worley’s biggest shareholder.

The announcement ‘just in time’ that it would do so last Wednesday sent the Worley share price rocketing.

It not only saved all the other shareholders from big losses; it meant the subbies only had to pick up $530 million of shortfall from the retail part of the issue instead of more like $1 billion-plus if Dar had passed.

I guess that would have made for a somewhat less successful “successfully completed” offer.

As I’ve written: who knows, the buying of Jacobs might be the making of Worley; the low share price of the last few weeks might fade into distant memory.

But if so, retail holders might then be reasonably upset at the company for “persuading” them not to subscribe.

That’s in the distant future; right now there is around $700 million of Worley shares acquired by the subbies that they didn’t really intend to get, hanging over the market and the share price.

Worley also needs to tell holders and the market generally whether it did any ‘deals’ with Dar to persuade it to take up its entitlement. Indeed, it needs to tell if it did

Hullo? Hullo? Could someone check to see whether anyone is awake down there at ASIC and ASX?