I agree that the CSL SPP looks more compelling, and I have already sent in $20K for that, as I expect it to get scaled back and they have said they will scale back on the basis that no shareholder will end up with less of a percentage of CSL post-CR (which I assume includes both the insto and retail components of the capital raising) than they had pre-CR unless they applied for less shares than the number that would maintain their percentage ownership. They have reserved the right to extend the limit of the SPP to accommodate that scale-back method. On that basis, and considering that while this is a BIG CR by Australian standards (the biggest in Australian corporate history outside of the Telstra floats), it isn't going to double the CSL shares on issue, so I see no real point in applying for more shares than what would double my own CSL shares. I think I'll get scaled back even with my $20K application. That said, if the share price is up around $300 at the end of January, I'll probably send in an extra $10K to take my total application up to the maximum $30K, coz while I'm probably going to get it sent back to me as a refund, it would be relatively soon after I send it in, as the expected closing date for the CSL SPP is the first week of Feb. So no real harm done.

By contrast, I like Laserbond, but I'm not a current shareholder, so couldn't participate in that SPP even if I wanted to. It is certainly good to see a small company extending a capital raising to ALL shareholders at the same price, even though that clearly costs them more than a simple share placement to insto's and "soph's". Management at LBL are clearly valuing their ordinary retail investors and making sure they are not disadvantaged compared to their larger shareholders or potential larger shareholders. That's certainly commendable. The small discount suggests that they see no point in a larger one, as they are confident that their intrinsic value is higher and they are also confident of raising the required money at that price. That's also positive in that it is not as dilutive as it might otherwise have been to those who choose not to participate in the SPP.

I don't follow Laserbond closely enough to add much value, however I would say that the CSL SPP certainly looks like the safer option of the two if you have the chance to do either or both. The Vifor Pharma acquisition looks to be very complimentary to what CSL already do - different but similar - and gives them a strong foothold in Renal Disease and Iron Deficiency (Vifor are market leaders in Nephrology, Dialysis and Iron Deficiency) which is not too far from CSL's existing core competencies and market leadership in blood and blood products (CSL Behring) and vaccines (Seqirus, a much smaller business for CSL; Seqirus will only be 14% of the new business including Vifor). Vifor certainly provides further scale, global relevance and free cashflow, plus further research facilities and talent for CSL. And the market doesn't seem to think that the price that they are paying is too high either - it seems about right - fair to both parties - but the transaction benefits both parties also. Most healthcare analysts believe CSL should be trading well above $300 within 12 to 14 months on the back of this deal, with some valuing them post-Vifor-acquisition at over $360. Safer, but not the explosive growth that we MIGHT see with LBL of course. That's microcaps versus large caps of course, smaller moves with large caps, but that's smaller moves in both directions.

That's my 2c, FWIW. But probably not worth much, seeing as I don't hold LBL.

FWIW I have both CSL (I'm assuming based on Bear's post I might have roughly the same amount of CSL shares) and a tiny position in LBL. I was planning to participate in both - but with LBL I was only planning to participate near the minimum amount (which would increase my holding around 50-100%)

Bear - I didn't realise with an SPP you could deposit (BPay) multiple separate amounts at different times (up to the limit) - is that the norm (or special - e.g. for this CSL one) - I guess it makes sense - e.g. if you had a daily BPay limit anyway? Edit: I just looked at the online CSL SPP application form for instance (which you have to complete before they give you the payment details) and you're supposed to select your parcel size you're applying for up front - can you select anything and put in more afterwards for instance - or can you select the max and eventually put in less?

Actually if someone who really knows how all this stuff works - I think a separate informational article on SPP's (and Entitlement Offers) in general would probably be very valuable to a lot of people here - e.g. differences/similarities between SPP's and EO's, pro's and con's of SPP's/EO's, when to apply/submit money (is it best to go early or wait till last day, why, etc), are there any guidelines for an amount to participate (are you trying to maintain the same proportion - no dilution, etc), etc

Hi Remorhaz,

I found Trawling for Ten Baggers Podcast episode 4: Trading Halt! Talking Capital Raises with Ben Williamson very useful and it should answer most of your questions. One of the hosts is a Strawman user (although I haven't seen him post since the shift to premium). If you prefer the shortened version, you might find my Twitter summary useful:

https://twitter.com/mater_dura/status/1407936724861214724

My understanding is that it would be best to wait as long as possible to submit your money but to consider how long it will take funds to transfer. If you wait til the last day, will the company get your money in time?

This is what I have been doing so far for other SPP's/EO's (waiting till a few days before the close date) - however what if the SPP closes early for instance (e.g. would it not be better to put some proportion in early just in case?)

@Remorhaz, @CanadianAussie is all over this already for you, however just briefly, I have previously done multiple BPays into the same SPP, often adding more money as the share price has increased towards the end of the offer period and the gap between the offer price and the share price has therefore widened. CSL isn't special in that regard, it's a bigger SPP than most, but the rules are still the same.

Even if you nominate an amount on your electronic application form, that is really just to get the BPay details and it is the total they receive from you during the offer period that counts. There is no guarantee that all of your money will be used to purchase shares of course, but whatever they don't use to buy shares gets returned to you, usually via the account they pay your dividends into, i.e. using the EFT details you have already provided them for direct credit of dividends. For those companies who do not pay dividends and have not asked their shareholders for EFT details, they will usually return excess funds to you via cheque, which takes up to an extra week due to the delays with snailmail these days.

The main differences between EOs (entitlement offers) and SPPs (share purchase plans) are:

1. EOs mean you are ENTITLED to a certain number of shares, and if you apply for up to that number, you can NOT be scaled back, you WILL receive what you applied for. For those EOs that allow overs, i.e. applications for extra shares, scale backs may well apply to the extra shares applied for, but not to your base entitlement as detailed on the relevant form they provide to you. EOs are usually based on what you already hold, so the more shares you hold the larger your entitlement will be. There is usually a ratio used which they will disclose in their EO announcement.
2. SPPs on the other hand do not provide ANY entitlements, just the opportunity to apply for new shares up to a dollar limit (usually $30K). In a retail SPP with a $30K limit, everybody has the same right to apply for the same number of shares. However it is when the company receives applications for more than their target and they scale back applications that things can get interesting. I have seen so many scale backs done so many different ways. The worst ones are done on a FIFO basis (first in, first out) so they simply close the SPP early as soon as they have received applications that cover their target. Those are very rare these days. The best ones are structured like CSL's SPP where they are promising that if you apply for the shares, they guarantee that your proportional ownership of CSL will not reduce, i.e. you will receive enough shares to allow you to still own the same percentage of the company that you did before. In simple terms, if a company is worth $1b and is raising $200m, then they are expanding their size by 20%, and if you already owned 1000 shares, they would make sure you got at least 200 shares (20% of your previous holding) AS LONG AS you applied and paid for that many shares. If you applied for less or the $30K limit means that you can not apply for enough shares to maintain your previous ownership, such as if you already owned $500K worth of CSL, then you will own less of a percentage of the company after the raise, but otherwise you have the opportunity to maintain your previous percentage ownership. That is very fair, except possibly to larger holders. It is certainly very fair to ordinary smaller retail shareholders. I like this method A LOT!

There are other scale back methods. I have found that many smaller and mid-sized companies simply say that they will scale back at their discretion, so you don't get to find out about how they've scaled you back until after the SPP closes. A couple of scale backs with SPPs that I've participated in have rejected all applications from people who hold less than a certain number of shares, which is to stop people who hold just 1 share in the company specifically for the purposes of arbitraging SPP discounts from doing so. After all, they would prefer to look after their serious shareholders rather than those holding just 1 share to try to make a quick buck on every decent SPP that occurs. With many companies it is a bit of pot luck. You really don't know how they are going to scale back their SPPs, if they need to scale them back at all. It's great when they tell you up front how they plan to do it, like CSL have.

As far as timing, as long as there is zero chance of them closing the SPP early (something that is sometimes hard to find out), you are usually best waiting until a few days before the closing date of the SPP in case the opportunity occurs to buy the shares on-market even cheaper. Don't wait until the last day in case it takes 24 or 48 hours for them to receive your funds and you therefore miss out. Three days before the closing date is usually safe enough.

However, some SPPs, like the CSL SPP are going to charge you the LOWER price of two; in CSL's case the first being the offer price of $273/share and the second being a 2% discount to the volume weighted average price ("VWAP") of CSL Shares traded during the last five ASX trading days of the offer period, so the last 5 trading days up to, and including, the closing date (expected to be Monday, 7 February 2022). So you will pay whichever is lower. Because of this, I was happy to get my $20K in early because I'm going to pay a maximum price of $273/share, but less if the share price is trading below that price at the end of the offer period (for most of those last 5 trading days), so if markets turn pear-shaped at the end of January, and CSL is trading at $260 and stays below $273 through until Feb 7th, I won't be paying $273, I'll instead be paying a 2% discount to the average price during the first week of Feb.

That's why I will probably lob in another $10K towards the end of Jan or very early in Feb if CSL is trading well above the $273/share offer price, as I explained previously. If they're around the offer price or lower, it's probably not worth the trouble. If I got the $10K worth of shares in addition to the $20K I've already applied for, I would just sell the $10K worth at a higher price, because the $20K worth is actually what I want from a portfolio weightings perspective. I don't want my CSL position to be too much larger than the other major positions in that particular portfolio because I feel that some of those other positions have even more potential upside than CSL. It's just a question of portfolio balance for me. I like CSL a lot, but I currently like some other companies even more.

Hope that helps.

Edit: Additional: Regarding whether an SPP or EO is likely to close early. EO's almost never do, they run the full period. Most SPPs do also, but there are a small percentage that do close early, and they are usually smaller companies who are trying to save on costs, so they'll close early if they're already oversubscribed and they can save money by closing early and not accepting any further applications. There are other reasons for an early close, including that the share price has fallen substantially below the SPP offer price and they don't believe the SPP will therefore raise the required amount and sometimes they will actually cancel the SPP and return all funds to the applicants - this happens very rarely, but I have seen it happen.

The CSL SPP will NOT close early because none of those things apply, and they will give everybody a fair chance to apply in their own time - that's what the largest companies do. I would also be very surprised if the LBL SPP closed early because I think they value their ordinary retail investors (hence doing the SPP in the first place instead of a cheaper share placement) and I think they will want to give everybody the full period to make their investment decision. SPPs closing early is becoming far less common as time goes on because companies tend to get a fair bit of negative feedback when they do it, and they don't want that negative feedback and unhappy shareholders, so they will only close early if there's a pressing need to do so, and there usually isn't. Be wary however if a company stresses in their SPP announcement that you should get your applications in ASAP in case they close the SPP early - because if they say that, they have given you fair warning.

Edit: Additional: Another thing I forgot to mention is that if you use an industry super fund for your super and you are using their "Member Direct" or "Self Directed" or "Self Managed" options - or whatever the particular industry fund calls their option where you can choose which ASX300 companies you want to invest in with up to 80% of your super balance - subject to a heap of rules - they will NOT allow you to participate in SPPs - it's just too complicated for them and they don't do it - too much hassle. However they WILL allow you to participate in EOs when you have been issued with tradeable rights, so where your rights can be sold on-market or exercised (to buy more shares) instead. Basically, if a company actually issues something that shows up in their CHESS holdings then they will allow their members (who hold the underlying shares) to make a call on how they want to handle those, but otherwise, if there's nothing extra issued that needs to be dealt with, they will ignore the capital raising entirely. This may apply to other super funds other than industry super funds, such as eSuperfund and other low cost options, but you'd have to check with them. The difference is down to whether or not your name and mailing/email address is on the ASX-listed company's share register or your super fund's address/email is. If the shares are in your name (or your company's name or your super fund's name) AND your postal/email address is on the share register for those shares then you will receive the offer documents and be entitled to participate in whatever they are doing, SPPs or EOs. However if it is instead an industry fund or another type of fund manager that is listed as the registered holder of those shares, then it is entirely up to them whether they extend the offer through to their individual members.

As a practical example, I hold CSL shares in my CBUS industry super account, but I can not participate in the CSL SPP with those shares because CBUS isn't giving me that option. They never do with SPPs. I am participating in the CSL SPP because I also hold CSL in another RL portfolio that has my address as the registered address and I am the operator of that account. I'm just adding this info in case some people on here have their main investments through an industry super fund and they're wondering why they haven't received anything about these SPPs. You won't, because they don't allow participation.

Thanks for your replies @Bear, @Remorhaz and @CanadianAussie. Much appreciated! There’s a lot of useful information there about CSL, SPPs and EOs. I still haven’t committed to either offer yet. I think I will avoid the LBL offer and wait until next week before committing to CSL, but given the 2% discount to the 5 day average price I will most likely apply for the full $30K in each account. With a long term view I think CSL is a buy without any discount.

Today LBL closed at the 87c, the same as the SPP offer price. I think there’s a possibility it could trade below the offer price in coming weeks.

Cheers

Rick