The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Fernie has invested in Cobham. Why you might ask! Well - the divi is brilliant, profits are still coming in and the SP has nearly halved in value over the past 3 years.
There are issues with this company that, if not chronic, then are at least systemic that a mere change of CEO will not in itself resolve. This change at the top has all the elements of corporate redundancy. I will watch this for a while yet.
Very nice news indeed....in for a few myself
Glad to have been able to help. kenj
Hey, finally I understood it all. Thank you so much! :)
The COBN shares are your rights. You can either sell these, or use them to buy your rights issue shares. After 17th Jun the COBN shares will cease to exist, so they cannot go up or down in value. Instead they will be converted to fully paid COB shares by whoever owns them. It is possible, rather than likely that the sp could drop towards 89p after the RI. Alternatively, it may never go below 130p. And where it goes after that is anyone's guess too. If I knew all this I would soon be rich. I believe that your safest option would be to take up your rights. To do this you pay the broker 89p for each COBN share you own, and then they will be converted to COB shares. So assuming you buy all your rights, you will then own 9000 COB shares.
I've got 3000 COBN shares for which they offering me £1500 at the moment. If I take up RI I'll lose this £1500 offer and have to pay around £2700 for these new shares, I'm I right this time :) ? Plus after 17th of June sp most likely (not necessarily) drop to near 89p... correct?
Oh, thanks for your patience kenj. It sounds really complicated. So if I believe sp rises sometime in the future, is it the best thing to take up RI by letting my broker know. And if one day sp goes up significantly, I can sell both COBN and COB shares out ?
Linas1976, You have misunderstood what I said. "Unless you can answer both of these questions with a definite Yes, then sell your RI shares." As you have answered YES, then I meant take up your rights. The COBN shares are your rights, so you cannot sell them all and also take up your rights. Once you have sold them, you have relinquished your rights. Assuming you have around 6400 shares, your 3200 allocated RI shares will cost you £2848 to purchase (not £1500 as stated in my earlier post). The £1500 is what you can sell the COBN shares for, if I understood your post correctly. Often after rights issues the sp falls to near the offer price. In this case 89p. If this were to happen you would be better off selling your COBN shares and using that cash, plus the money set aside to purchase your rights, to buy back in at the fallen price. (If you could be sure that this would happen you could sell all your COB shares as well, and buy them back later.) However, the sp might no drop below 130p, and then may start to rise. In this case you would still be sitting on a heavy loss and have missed the opportunity to lower your average price, by buying the RI shares at the discounted price of 89p. You could also decide to sell say half of your COBN shares and take up the rights on the remaining half. There are various options including a cashless take up of your rights, called Tail Swallowing. Google Rights Issues and you will find many articles explaining the whole process.
Thank you so much for your help. You right, my average is around 300p and I can answer YES to both of your questions. You recon I should sell my COBN shares and contact my broker to apply for my RI? I'm sorry I really don't understand about this RI thing :(
Linas1976, I cannot tell you what to do, as I get things wrong just like anyone else. But, I will offer you a few pointers. 1. Do you have a spare £1500 to invest? 2. And if so, are you prepared to invest even more money in this company? Unless you can answer both of these questions with a definite Yes, then sell your RI shares. As regards the new contract, while every contract win is good news, will it raise the sp significantly? It rose a little this afternoon, after the news was released, but the rise was hardly spectacular. I have far fewer shares than you, and bought at 156.5p, so my average will not change much whatever I do. You on the other hand have a average of, I guess around 300p, which you could reduce to 230p by taking up your rights. Long term, I would expect the sp to rise, but there is a real danger that the sp could fall following the RI, before hopefully starting to recover. In your position, assuming you still have faith in Cobham, I would shell out the £1500 and take up the rights, which will significantly lower your average. But, it's your money, so it's your call. Good luck Kenj
Kenj, can you give me an advice, please :) ? Some time ago I invested significant amount in here. Now my holding is 50% down. Plus I've got this rights issue COBN shares worth £1500. What would you do with this RI, bearing in mind that new cobham contract mentioned below and that I don't need money soon. Thank you!
If you want to take up your rights, then you will have to tell your broker, and ensure that there is sufficient funds in your account to pay for the new 89p shares. The COBN shares will cease to exist on 17th June. If you do nothing then your rights will lapse and usually you will be paid whatever the COBN price is on the conversion date. However, this relies on what price the broker can sell the unwanted rights at. So if you do not want the new shares it is usually safer to sell the rights (COBN) shares yourself.
Thank you! Do I have to take any action in order to take rights issue? And if I don't do anything, will these cobn shares stays for ever in my portfolio like all others so once (if) sp rises let's say 50p I can sell them?
Linas1976, Yes both COB and COBN shares can be sold separately. COB shares are currently listed at 136p and COBN shares at 47p. This gives a joint worth of 136p + 47p /2 = 159.5p. I usually take up Rights Issues, but have seen the value of so many shares fall immediately after a RI, that I have decided to sell my Nill Paid Rights. I will look to buy back in if the sp falls later. This is not advice, both the COB and COBN prices could just as easily rise as fall. Shares are anything but predictable.
does anyone know if it's worth taking up the rights issue? Is everyone with shares going to take the new ones up, or is it better to jump ship now?
Cobham is pleased to announce that it has been awarded a contract by Airbus to supply its new digital RAIMS, Radio and Audio Integrated Management System, for the A320neo aircraft family. This major contract is worth several hundred million USD over the period.
My Cobham shares split in two cob and cobn. Can they (cobn) be sold normally like cob shares? And do they fluctuate up and down along cob? They still the same company?
Thanks Kenj. It's clear now
Masil2, The share price has dropped to around the average price that the shares would be worth after the Rights Issue. This is a 1 new share at a cost of 89p, for every 2 shares you currently own. Not 2 for 1, as in the previous post. So assuming you had bought 3000 shares for £4862 at an average cost of 162p prior to the announcement. You would now be offered 1500 new shares at 89p each, costing £1335. Hence you would then own 4500 shares at a total cost of £6197, giving an average price of 137.7p. This is pretty close to the current trading price to buy shares that no longer convey the new rights.
Having experiencing a profit warning and technical problems, Cobham is conducting a rights issue. This, as I understand, will be in the nature of a 2 for 1 offering, to existing shareholders, at the price of 89p per share. If you are a current shareholder, you will have received an email from the company which will be followed by a letter containing the new offer details.
Confusing. Can someone be able to shed some lights?
1st of June
any information on when they are going to announce rights issue price
Nice rise today