Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
If my maths is right (and may well not be) if they issue all 27.5 billion that would make the average share price 34p each based on Friday’s closing prices. Obviously that’s all theoretical! To me the share price at the moment isn’t the major factor here, the amount of EUR0.10 shares they issue is.
Don’t know if anyone else has read this yet, but the minutes for the shareholder meeting include proposal 15, stating new issued shares will be at a fixed price as per the proposal of 0.1EUR each. They can issue up to 27.5 billion of them.
The price is fixed in the proposal, so there we have the rights issue price per share should it go ahead, along with a good indication of shares to be raised.
Realise this was touted before on here but this time the value is concrete, allows more meaningful calculations to be done before deciding whether to stick or twist next week!
https://www.iairgroup.com/~/media/Files/I/IAG/agm-documents/en/proposed-resolutions.pdf
I have to say that this is wrong as it takes no account of the increased amount of money then held by IAG. Your maths assumes that the new shares are issued at zero pence. The reality is the new share price will always be half way between the discounted price and the price of the original shares.
Not fully understanding it myself I did some rough work in Excel earlier and this holds irrespective of the discounted price.
That is of course the theory. In practise, where the share price ends up will depend on how the market believes the extra money will be spent. IE cash burn not good, buying other airlines is good.
BA agreed a partial deal with the unions, doesn’t cover cabin crew deal but covers the rest.
https://www.ft.com/content/66a700fa-167a-40b9-9f6b-e32d96da1e10
Interested in how everyone works this out. Take the current situation, what method do you all use to calculate what is a short term dip in price for a day or two vs the share price starting to dip longer term like through July?
My personal opinion is the rights issue announcement was to stop the union calling strike action. By giving notice of a rights issue they made it untenable for Unite to call it.
IAG certainly don’t need any more money in my opinion.
I’m holding and have been buying in all the way down each month tbh. Just fairly new to share buying and want to make sure I understand all the implications of the RI tbh.
I do fundamentally believe we will have to learn to live with Covid, I don’t think an effective vaccine will be found tbh due to how quickly coronaviruses mutate. Best we can hope for is something like a flu vaccine but they usually take years to develop.
That said, I’m in it for the long haul I have a good few years before I’ll be retiring!
Triumph, surely though the dilution effect on the shares you’ve explained so well relies on the market believing the company is worth the new market cap though? If the maket judges that the company isn’t worth the new market cap all shares could go down quickly?
Appreciate that if they have an extra £2.5b in the bank the market cap should be justified but isn’t this quite risky to be holding if that cash is just spent on survival?
Quick question re rights issue if I may. Say they issue the RI based on a current share price of £2. They offer out shares on a 1:4 basis ie for every 4 shares you have you can buy one more discounted. Let’s say the discount rate is £1.40. Once all shares are sold, the share price should correct to around £1.60 based on their being 25% more shares in the company.
Overall the investor who stays in would have lost money.
Given they want to raise £2.75b and their market cap is currently just £3.4b, how on earth can they do that without massively diluting down any investors money?
Can someone explain a scenario where that might work, I think I’m being a bit thick!
Thanks!
It’s my understanding that a RI has to be announced with certain notice. Their balance sheet sounds as though it’s healthier than many expected. To me this is insurance, if things improve significantly before Sept they won’t proceed. Just sensible management to me. I’m expecting the overall news to be well received this morning tbh.
£1.91-£2 range. I'm basing this based on their losses being £200 million EUR per week (approx. £180m per week) - £750m deal with AMEX and the cargo/passengers they have been able to shift taking them to under £1.5b in losses. Costs will have been cut and if the board has done their job properly losses should be significantly under that figure now.
Have decided to hold till tomorrow, I hope I'm not wrong but I can't sees a massive drop coming after the results tomorrow, nor can I see them announcing a rights issue yet. By my back of a fag packet calculations they should be sitting on £8.5b cash available and some (albeit not a lot) of flights will be generating some income for them now.