Member Info for fleccy

"Fleccy Re: The price is being deliberately held down , surely that's controlled by the buyers, The more demand for a stock, the higher it drives the price and vice versa, correct me if I'm wrong"

You'd think so, but there's loads of arguments against that imo. Recently Drahi announced owning 12%+ of BT, and although BT's share price did outperform Vodafone's, there was no indication that a big player was building a holding. There were no RNS's between November 2020, and the beginning of June 2021 to indicate anything out of the ordinary. On the 7th June there was an Off Book trade, reported after the close, for over 480 million shares. The share price didn't react dramatically to the 480 million trade, in the following days, so the market effectively ignored it, and the real RNS/reason didn't become apparent until the end of the week.
My point is that the big players trade significant amounts of stock off book, and use algo's to control prices on the primary exchanges. In BT's case, the in crowd knew what was happening, but the retail investors didn't have a clue until the Drahi announcement days later, which trashes the argument that prices are based on the demand/Vice Versa argument around stock valuations.

"compound. Very interesting post. No disrespect to fleccy, but I feel that he is just lifting stuff, as opposed to you, explaining it."

"What I worry about though is the implication of share buy backs, in that, is it in the interest of vodafone to keep the sp low? I don't think many shareholders would be happy with that."

Daniel, I did state in a previous thread that I'd dig through the RNS's to find information related to the MCB's and share buybacks, which I did. I pasted the relevant content into posts and then framed a question around the conversion price at issue, £1.3505, which Compound kindly answered. Yes I did lift the content, and then asked a question about it.
As far as how much Vodafone is worth, it is obviously worth more than the current price. My personal view is that Telecom related stocks are being held down purposely, using excuses like investment in FTTP, 5G, licence fees, etc, etc as justification. The market's treatment of the Telecom sector would be Ok, if the markets approach to valuations was consistent, which it doesn't appear to be. As an example of an anomaly, look at Ryanair. Ryanair is in the worst affected sector, and has suffered huge cash burn due to the pandemic, yet it's share price is currently sitting at Pre-pandemic levels. Ryanair is also in the midst of renewing it's fleet with the 737 Max's, so it isn't like they haven't got large investment down the line. Other anomalies are Crypto, and half of US stocks, especially the likes of Tesla which is gifted with a sky high valuation.
At some point Vodafone's share price will turn around, and will likely sit in the 200p to 300p range, so am I worried about the price sitting just above 120p currently? No, because I'm in no hurry to sell, and I trust Vodafone's management team know what they're doing.

"They are trading in themselves. They would have done better to invest the money from the bond in another company as at least that company would put the money to work and generate a higher reuurn on either capital or income."

Marcus, if you read the RNS then you'll see that the bonds were for:
"Net proceeds of the bonds will be used as part of the financing of the acquisition of Liberty Global's assets in Germany, Czech Republic, Hungary and Romania"

Wouldn't it make sense to offset the shares issued under the MCB's, while the share price is cheap, rather than issuing more shares and watering down the dividend through a dividend reduction, or the dividend becoming more expensive for the company?
Vodafone will know exactly what they're doing. As I stated previously, I view Vodafone as a Hedge fund with telecom assets, rather than a traditional Telecom company.

"Personally I think ofcom rattling their sabre, but we will all have to wait result"

It isn't Ofcom, it's a class action financed by private money with Justin Le Patourel as the front man. I watched some of the CPO hearing yesterday, but had to go out and missed the last couple of hours. I assume the Competition Appeal Tribunal will now have to consider if it's worthy of going to a full trial.

Hi Compound, thanks for the detailed and informative explanation, everything you've posted makes sense. I wont be running a slide rule over the conversion prices £1.2055/£1.128, to check your figures lol. I assume you're from an accountancy background?
It appears Daniel was wrong, someone on here can make sense of this, thanks again for clarifying.

lol

I'm not sure I understand the way this works, but the important factor, I think is the conversion price at issue, £1.3505, announced on the 8th March 2019.

"In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares will be issued from treasury today at a conversion price of £1.2055. This reflects the conversion price at issue (£1.3505) adjusted for the pound sterling equivalent of aggregate dividends paid in August 2019, February 2020, August 2020 and February 2021.
As a result, Vodafone today announces it intends to commence a new share buy-back programme on 22 March 2021"

Someone might be able to clarify this for me, am I right in thinking that because the current price is sitting below the conversion price at issue (£1.3505), it's in Vodafone's best interest to buyback shares to hold in treasury for maturity of the MCB, and the lower the share price the better it is for Vodafone?

https://www.lse.co.uk/rns/VOD/share-buyback-programme-a6yke46pbmn0q2x.html

"SHARE BUYBACK PROGRAMME

In March 2019, Vodafone Group Plc ('Vodafone') issued a two-tranche mandatory convertible bond ('MCB'), the first tranche of which (£1,720,000,000 1.20 per cent. Subordinated Mandatory Convertible Bonds; ISIN XS1960588850) matured on 12 March 2021, and the second tranche of which is due to mature in March 2022. In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares were issued from existing shares held in treasury. Vodafone today announces it will commence a new irrevocable and non-discretionary share buy-back programme on 22 March 2021 (the 'Programme'). The sole purpose of the Programme is to reduce the issued share capital of Vodafone to partially offset the increase in the issued share capital as a result of the maturing of the first tranche of the MCB.

Vodafone currently intends to launch additional share buy-back programmes over the next 12 months to reduce the issued share capital of Vodafone, to further offset the increase in the issued share capital as a result of the maturing of the first tranche of the MCB, before the second tranche of the MCB matures in March 2022. Details of any such programmes, including the target number of shares to be repurchased, would be announced before any trading under such programmes begins. "
"The number of ordinary shares permitted to be purchased by Vodafone, pursuant to the authority granted by the shareholders at the Annual General Meeting of Vodafone on 28 July 2020 (the '2020 AGM'), is 2,677,388,122 ordinary shares. The number of ordinary shares to be purchased under the Programme will not exceed 256,822,895 ordinary shares and is therefore within the 2020 AGM approved limit. The purchased shares will be held as treasury shares. The maximum amount allocated to the Programme is £330 million (considering money received or paid under the accompanying option structure)."

"As announced in March 2019, when the MCB was successfully placed, Vodafone entered into an accompanying option strategy to mitigate, partially or fully, any share price appreciation relative to the initial conversion price of the bonds, should Vodafone decide to execute a share buyback. Vodafone today announces that the exercise dates have been amended to mature over the next 12 months in order to match the optimal level of average daily share buy-backs to be pursued."

https://www.lse.co.uk/rns/VOD/mandatory-convertible-bond-assocd-share-buyback-bgn8tesvf3fde4o.html

MANDATORY CONVERTIBLE BOND & ASSOC'D SHARE BUYBACK
Fri, 12th Mar 2021 07:00

RNS Number : 0087S
Vodafone Group Plc
12 March 2021

12 March 2021

Vodafone Group Plc

MATURING MANDATORY CONVERTIBLE BOND AND INTENTION TO LAUNCH AN ASSOCIATED SHARE BUYBACK PROGRAMME

In March 2019, Vodafone Group Plc ('Vodafone') issued a two-tranche mandatory convertible bond ('MCB'), the first tranche of which (£1,720,000,000 1.20 per cent. Subordinated Mandatory Convertible Bonds; ISIN XS1960588850) matures today, 12 March 2021, and the second tranche of which is due to mature in March 2022. In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares will be issued from treasury today at a conversion price of £1.2055. This reflects the conversion price at issue (£1.3505) adjusted for the pound sterling equivalent of aggregate dividends paid in August 2019, February 2020, August 2020 and February 2021.

As a result, Vodafone today announces it intends to commence a new share buy-back programme on 22 March 2021 (the 'Programme'). Further details of the Programme, including the target number of shares to be repurchased, will be announced in due course.

Details of the mandatory convertible bond can also be found on our website under:

https://www.vodafone.com/news/press-release/mandatory-convertible-bonds

https://www.lse.co.uk/rns/VOD/intended-issuance-of-mandatory-convertible-bonds-6i6o9p7ktzh3ajp.html

"The initial Conversion Price will be determined on the basis of the higher of (i) GBP 1.3136 (being Vodafone's closing share price on the London Stock Exchange (the "LSE") on Monday, 4 March 2019, the "initial Share Price") and (ii) the arithmetic average of the daily volume-weighted average prices of an Ordinary Share on the LSE on each of the three scheduled trading days starting on (and including) 6 March 2019. The Conversion Price, as so determined, will be announced by Vodafone following the close of market trading on the LSE on 8 March 2019."

https://www.lse.co.uk/rns/VOD/successful-placing-of-mandatory-convertible-bonds-oqz6daev6dv5xhj.html

"Vodafone Group Plc ("Vodafone") announces the placement of £3.44 billion of MCBs, to be issued in two tranches maturing March 2021 and March 2022 (together, the "Bonds").

The Bonds will be physically settled on mandatory conversion in accordance with their terms. Vodafone will be entitled to satisfy this delivery obligation by allotting and issuing new ordinary shares of Vodafone ("Ordinary Shares") to Bondholders or by transferring existing Ordinary Shares from treasury. The number of Ordinary Shares into which the Bonds are initially convertible (determined by dividing the nominal amount of the Bonds by the Conversion Price described below) represents approximately 9.8% of Vodafone's current share capital and accordingly falls within the limits approved by Vodafone's shareholders at its annual general meeting in July 2018 for the purposes of making offers of Ordinary Shares on a non-pre-emptive basis.
The initial Conversion Price will be determined on the basis of the higher of (i) GBP 1.3136 (being Vodafone's closing share price on the London Stock Exchange (the "LSE") on Monday, 4 March 2019, the "initial Share Price") and (ii) the arithmetic average of the daily volume-weighted average prices of an Ordinary Share on the LSE on each of the three scheduled trading days starting on (and including) 6 March 2019."

https://www.lse.co.uk/rns/VOD/conversion-price-of-mandatory-convertible-bonds-cm9v3nip151au7l.html

"8 March 2019
Vodafone Group Plc announces the determination of the initial conversion price of the£1.72 billion 1.20 per cent. Subordinated Mandatory Convertible Bonds due 2021(ISIN: XS1960588850)
and
£1.72 billion 1.50 per cent. Subordinated Mandatory Convertible Bonds due 2022(ISIN: XS1960589668)

(together, the "Bonds")

As announced on 5 March 2019, Vodafone Group Plc ("Vodafone") has placed the Bonds.

Vodafone hereby announces that the initial Conversion Price in respect of the Bonds has been determined as £1.3505, representing an initial Conversion Ratio of 74,046.64939 shares per £100,000 principal amount of the Bonds."

"I think the narrative that a falling sp is going for any buy back scheme is a bit thin.
Its only good if the sp rebounds, but there is no logic that a falling sp should go up again when the buy back is over."

When I get time, I might read through the relevant RNS's and the published documentation, associated with the MCB's and the share buybacks, as I admit to struggling with getting my head around the advantages/disadvantages of Vodafone's approach. I would guess that Vodafone are acting in their own best interest.

"If I owned 130 thousand shares in vod paying £2 a share & the sp fell to 1.23, & I buy 30 thousand more, I am far worse off than if the shares hadn't fallen in the 1st place."

Daniel, this share buyback can't be compared to an individual topping up, it's related to shares issues as a result of MCB's

" 12 March 2021



Vodafone Group Plc



MATURING MANDATORY CONVERTIBLE BOND AND INTENTION TO LAUNCH AN ASSOCIATED SHARE BUYBACK PROGRAMME

In March 2019, Vodafone Group Plc ('Vodafone') issued a two-tranche mandatory convertible bond ('MCB'), the first tranche of which (£1,720,000,000 1.20 per cent. Subordinated Mandatory Convertible Bonds; ISIN XS1960588850) matures today, 12 March 2021, and the second tranche of which is due to mature in March 2022. In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares will be issued from treasury today at a conversion price of £1.2055. This reflects the conversion price at issue (£1.3505) adjusted for the pound sterling equivalent of aggregate dividends paid in August 2019, February 2020, August 2020 and February 2021.

As a result, Vodafone today announces it intends to commence a new share buy-back programme on 22 March 2021 (the 'Programme'). Further details of the Programme, including the target number of shares to be repurchased, will be announced in due course.

Details of the mandatory convertible bond can also be found on our website under:

https://www.vodafone.com/news/press-release/mandatory-convertible-bonds"

"Perhaps Santa will cum down my chimney??"

That would leave him in a sticky spot, and possibly a mention on a certain register.

381/7/7/21 Justin Le Patourel v BT Group PLC

https://teams.microsoft.com/_#/l/meetup-join/19:meeting_MWFhNzI3MjgtZWJjZC00M2UzLTllMjgtMWIxYzhhZjdhMzA0@thread.v2/0?context=%7B%22Tid%22:%2228f5bd0d-2c18-49fa-80f3-743114ad22d3%22,%22Oid%22:%22b6c08a12-f70c-4e08-89e2-d3fddd74d100%22,%22IsBroadcastMeeting%22:true%7D&btype=a&role=a&anon=true&deeplinkId=a76c0d00-2054-4488-8078-75fcc1e8c537

The latest 24th June RNS states:
"Number of ordinary shares of 2020/21 US cents each purchased 5,707,175"
"Volume weighted average price paid per share (pence) 126.29"
"Vodafone holds 957,696,851 of its ordinary shares in treasury"

I'd say Vodafone are getting a pretty good deal on their buyback program, arguably the lower the price goes the better it is for Vodafone, unless I'm misunderstanding the mechanics around convertible bonds and share buybacks. Maybe someone could clarify if the current low price is to Vodafone's advantage, or not?

"Think management need to raise strategy emphasis from hybrid bonds but ecb and berec probably the controllers here"

Interesting that market vested interests are managing to hold the price down, effectively aiding Vodafone. I'm not complaining, I hold Vodafone stock.

"Well i guess the normal service has resumed here .SP is dropping lower and lower - are we dropping back below £1.20 - i really hope not . Will be interesting to hear what the shareholders think at the AGM in July ."

Isn't a low share price an advantage, while Vodafone are in the midst of a share buyback program, just saying, or am I misreading the situation?

"It's never too late to sell SIDI, if you decide there is somewhere better for your funds. Don't fall the 'not a loss till you sell' dillusion."

Ok, a couple of things, you can either use illusion, or delusion, not both lol.
Dissecting your post, how do you know what's better? I've previously sold stock stagnating around a price, and invested in "something better", only to see my previous stock take off and my new investment go down; In fact it happened so rapidly, after I moved stocks, it felt personal. Since there's no surety in investing, everyone should do their own research and carefully weigh up any investment decisions. Selling at a loss does convert a virtual loss into a paper loss, same as selling at a profit is a capital gain, HMRC will confirm that.

I suspect the market is watching BT quite carefully now, should any RNS's appear showing more large stake building, then it could push BT much higher. Drahi's comments were interesting; From media reports he said he wouldn't bid unless someone else moved. If Drahi has agents quietly accumulating more holdings, I suspect we wont hear anything until the six month limit is exceeded, since Drahi has stated he isn't currently interested in bidding. You don't spend £2 Billion without a plan, and involvement.

"Fleccy, what's the chances that its Drahi adding to his 12.1% holding?"

Not a clue. If he can obtain a 12%+ holding, virtually overnight, without the market noticing, anything's possible.