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Well I've just taken the plunge and bought my rights issued shares.
If the share price in the market next week drops below the subscription price in the rights issue then this will be a major bummer.
But after researching online in practice it seems to be very rare for this to happen, but if it does then Tui may decide to cancel the right issue process as other companies have in a similar situation, and maybe try again but with a different price structure.
I for one will try not to think about Tui for a while now!
Looking at the latest trades made has made me decide to log off and pray to him upstairs lol
https://www.lse.co.uk/ShareTrades.asp?shareprice=TUI&share=TUI-AG
Tawes57 - this is copied from the TUI website
Investors holding depositary interests in the Company’s shares (“DIs”) on 29 March 2023 will be credited with pre-emptive subscription rights (“DI Pre-Emptive Rights) that will allow them to acquire additional DIs representing New Shares. Investors may exercise their DI Pre-Emptive Rights from and including 30 March 2023 (after being credited with them) up to 10:00 (BST) on 17 April 2023 (the “DI Subscription Period”).
Hi Hexam
My understanding was that the value of selling the rights is the difference between the TERP and the price of the rights
You dont simply sell at the £4.88 rights value because the rights are nil paid - ie you havent paid anything for them
So in Tui's case the value of 1 share sold during the rights issue is TERP (£7.80) minus Rights value (£4.88) which equals £2.92 per share
Happy to be corrected if i'm wrong
We are in a similar boat Jeffrey
For me personally i think that yes the share price will slide right down until the end of the rights issue, but i then have my fingers crossed that big institutional investors will pile back in and bring the share price back up to the quoted TERP of around £6.80
This will still leave myself and yourself out of pocket, but not by as much compared to if we sell our rights
You'll have an average price of £10.70 like you say and i'll have an average price of £9.80
Its then a case of hanging in for the long term and hope within a year or 2 the share price rises above our averages
It depends on your broker
I am with T212 and you cannot sell the rights with them until after the Rights issue finishes, which at that point could see the share price below £3.
However other brokers such as HL seem to allow you to see right away
Juboy
Yes you are correct - your calculations are spot on in that your new average price will be £10.70
I am in the same boat as you in that T212 have said all they are offering us is to buy the right share now or sell at the end of the period.
My average was £18 before the rights share so like yourself either way i am going to be massively out of pocket
There seems to be a lot of confusion here.
If you take up your rights you dont suddenly have your existing and new shares valued at the current share price
If you owned 99 shares at £18 and now have exercised the rights issue and bought another 264 shares (99 divided by 3, multiplied by 8) at £4.88, your shares will be worth the 'average' of your 2 holdings
You now have 364 shares at an average cost to you of £8.48 each . You do not have the 364 shares at the current share
So at the close today of Tui at £6.50 you are £1.98 down for every share you own - ie £720.72 down