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agree on the no news re GoI payment date, you would have thought that the BoD, bearing in mind the company is due 95% of the tax refund kitty for the Tax Act refunds, would have got some assurance from the FinMin re timing even if a vague February, March, etc rather just saying early 2022. i dont know if the BoD know this, but we are in early 2022.
but with the paltry numbers (so far) from the share buyback scheme, will the post tender share buybacks do anything for the SP ? is the BoD there to support the SP through buybacks or to optimise/maximise profits/value/balance sheet for the shareholders and the Sp will follow ?
It makes sense to support the sp for a period post tender offer - in an unloved investment segment - while looking for bargain basement priced oportunities to perhaps make supernormal returns. When the returns are returned to shareholders - the fewer the shareholders the higher the returns.
I think the post "spike"( ?) post tender offer invesment oportunity has improved.
The really disappointing no news is re the GOI payment date.
"spawny: The expectation with a tender offer is rather like the situation with a takeover. A price is established, current share price + value, then the market will react and either shareholders sell to buyers at a discount of a few percent right away, or accept the deal, or hold on the expectation that the tender deal will be priced in anyway. Institutions prefer to take profits at the time of their choosing, so rather than a single dollop of money, investors have several options to choose from. Long term holders simply hang on rather than having to use the divi to buy more shares, dealers can move in to buy at a price somewhere between the current price and the offer price, or people can accept the tender price from the company. This room for maneuver is more effective than a large divi which leaves investors with a potential tax bill. " This is a good summary of the situation.
Jhonnytaffa: I agree that it did say special dividend. But the thing about special dividends however they are delivered is that they are priced in only until they are paid. Say the special divi was 72p - and the share price the day before going ex-divi was, for example, £3. You would expect the SP to drop by at least 70p the day after to about £2.30 ish. This is no different really, it just provides the option to retain all the gain in the form of shares at £3 or surrender some of them for cash at £3. Some people will retain there full holding depending on how they view the prospects of the company and avoid at that stage any tax liability. That's IMHO of course.
Nah, I distinctly remember an RNS saying that part of the tax refund would be returned to SH's as a special dividend and part for reinvestment. Other posters on here are more on the ball with the actual figures but on current shares in issue it is about 72p per share. I'm sure CNE has committed to this in an RNS. What this does to SP after the divi is anyone's guess. I want the cash - not interested in a share buy back - last time that happened here a few years back the SP dropped.
This mechanism was used by Whitbread not so long ago, after they sold Costa and were left with a load of cash. The SP may rise when India cash is actually received. The market will calculate the value of a share with Capricorn holding $700m and the offer will be based on that so that the number of shares it cancels will leave the remaining shares near the same value as before the $700m was spent. This provides an option to shareholders -take cash now or stick with the company holding a proportionally larger chunk of it . The outcome at Whitbread was tender around £40 , more wanted cash than cash available - and then with the pandemic the SP crashed and a rights issue followed at £15 as I recall! But as theysay DYOR and GLA.
"spawny: The expectation with a tender offer is rather like the situation with a takeover. A price is established, current share price + value, then the market will react and either shareholders sell to buyers at a discount of a few percent right away, or accept the deal, or hold on the expectation that the tender deal will be priced in anyway. Institutions prefer to take profits at the time of their choosing, so rather than a single dollop of money, investors have several options to choose from. Long term holders simply hang on rather than having to use the divi to buy more shares, dealers can move in to buy at a price somewhere between the current price and the offer price, or people can accept the tender price from the company. This room for manoevre is more effective than a large divi which leaves investors with a potential tax bill. " This is a good summary of the situation.
Theosus, i dont disagree re SP, but it is (or will be) based on SP post receipt of the tax refund. whatever the SP is at the time is unknown so whether it is higher/lower/the same as right now i cant forecast. however each SH will have to take a view as to whether they tender the %age of shares that the Company will tender for and the price of the tender. the alternative can be for each SH to sell into the market and incur trading charges if the Sp is higher than the tender price .
wokinpark I don't read it that way at all.. "Capricorn has determined that, to provide flexibility to its shareholders, $500m will be returned by way of tender offer, whereby shareholders will be invited to tender some or all of their shareholding for purchase on terms that will be set out in a Circular to be posted to shareholders".. Its an offer to buy back shares from holders at a price yet to be determined.. But no doubt significantly higher than the current market price. So share buy back part from the markets and in part directly from holders.
if i am not mistaken, the tender offer tends to be a look back of say what the mid price has been for the last 30 trading days ( i assume this would be after the GoI money is in) and say it is xxp per share and we can tender for xx number of shares. it really is a share buyback but going directly to shareholders rather than buying from the market in drips and drabs, but in effect that is exactly what it is.
the tender offer is normally to all shareholders at xxp per share. they say we are buying back xx number of shares so out of the total number of shares in issue, say for this example it is 50%, if you hold 100 shares, you can tender 50 shares to be bought back by the company. if you do not want to tender, you say 0 for share tender. if you want all to be tendered (over and above) your shareholding , say 100 shares and if others are saying 0, you get all your shares bought back. normally it is a mixture of people who need the money and those who dont or want to stay in for a longer term.
So what about the Boards members who recently sold their holding down below that required of a Board member in order for them to settle their tax situation? Surely they will will need to be buying back rather than selling more into this latest offer?
Must admit it's all a bit confusing to me atm. I need to read into the implications of it for PI's. It seems to be easier for the II's to deal with situations like this, or am I missing something?