Member Info for Hexam

@Marcinkus - Thanks for the nice words - I don't think I anywhere near live up to them though!

I also made a BIG mistake. You are better off selling if on April 24th if the sp is better than 4.88 + 0.4 i.e. £5.28. I incorrectly used the current SP rather than the price of the new shares. Apologies!!

It doesn't matter what happens after that in terms of relative value but you are right - if you have more invested the percentage increase to recover a loss is always less (the downside is that you risk losing more if it goes pear shaped).

Really don't know how you work that one out. The Russians are suffering worse than us as they are seeing the same fall in sp but without any value of the rights (small though that is now).

"Is it true that the more Tui you buy the more you save?!"

No. The more you buy, the more you spend and whether you are better off taking up the rights rather than selling them depends on what the sp does from here.

Hi Marcinkus,

If you sell the rights you are not quite 92% down on them and you have cash for those rights plus your original shares at the current sp. So nothing happens to your original investment except the sp is much lower because of poor sentiment on top of the expected impact that the discounted new shares have (it's not the dilution that does the damage in this respect but the discount on the new shares which is then offset, in theory, by the value of your rights):

If you have 5334 rights then it means you presumably have 2000 shares.

Just before the RI was announced these were trading at around £13.80 so worth about £27,600.

Once the rights were announced then would have expected this sp to drop to around £7.32 and the rights to be worth (7.32 - 4.88) = 2.44 each so that your total value would be £14,600 in shares and £13,000 in rights - so total still £27,600.

At 562p though your shares are now worth £11,200 (23% less) and your rights at 40p are worth £2,100 (84% less) and your overall investment is worth £13,300 (over 50% less). This is all down to sentiment since the announcement.

The percentages are the same for all of us (and probably getting worse as I type) so maybe your 92% is getting closer!

The fact that the value of the rights has fallen further I think reflects a lack of confidence that the sp will hold 562p and is expected to be much lower when the new shares are actually allocated. The affordability of exercising the rights also isn't helping.

At this stage (at least when I started typing) you would be better off selling the rights IF you think the sp come April 24 will be lower then 602p (562p + 40p) and better off buying if you believe the price will be higher than 602p. Of course risk tolerance and affordability should come into it too. Hopes that helps and apologies for all the numbers but they can make it more real (and hopefully not more confusing)!

AB - Unless I've got my numbers wrong their efficiency is no worse now than it was 18 months ago and has been consistently poor (or poorer) in between so not sure why an update would be coming now?

HC - Excellent summing up.

Thanks Tegop - yes the references in the RSA are well buried so well done for spotting! And I suppose that gives us a smidgeon more hope of getting at least something back :)

Hi Tegop - where does it state this as I haven't seen any reference to a new company but then again I could easily have missed it as there's such a lot of info.

ge0rge - every broker has different deadlines so that's why it's so important to check what your own one is.

I have a bit more time than you (close of play Wednesday).

"Was billed as getting a super deal of a 39% discount."

But that's the thing - it's not a deal let alone a super one. It never is with RIs. What they give you with one hand (the discount) gets taken away with the other (with the drop in sp to the TERP and the loss in value on the existing shares). So if the sp does settle at the TERP you are no better off if you take up the rights. In this case it is way below the TERP so everybody is currently much worse off than before the RI whether they take them up, sell them or bury them in a ditch beside the road.

@masaimara - I'll be surprised if it's not lower than it is today - maybe less than £5. That seems to be where it's heading and it's not very unusual for RIs to go as low as the offer price for new shares - and of course they'll be a lot of new shares on the market on the 24th.

This RI has been unusual from the start though so perhaps it will buck the trend?

Even if it does fall that low though to me it's just the RI working through and so hopefully temporary. This RI puts TUI in a much stronger position so what I think is already a bargain will just be much more of a bargain. Unless there is something I'm missing I cannot a see why (from fundamentals) the sp has fallen so much below the TERP.

So for me it's a dilemma. The sp looks very attractive now and tempting to buy but waiting could be much better. I sold some rights at 89p but now I wished I sold the whole lot at the start when they were well over a pound. Now selling the rights would give less than 50p but still may be the best option despite how paltry that looks - but it's just so hard to press the sell button at that price!

Until the judge signs it though it's not approved. The wording is simply draft ahead of that signing. There will be another docket when it is actually approved saying it has been and with the judge's signature on it.

Yes but the RI is fully underwritten so TUI will get their 1.8bn come what may.

mc-hammer - It depends on your view of TUI going forward, what you think the sp is going to do in the short-term and even if you are bullish on TUI whether you want to risk more capital (assuming you have the spare cash).

If you think the sp isn't going to go down much more and are optimistic long-term then it makes since to take up the rights so long as you don't think you are increasing your exposure to TUI to a level you're not really comfortable with.

Alternatively you can sell the rights if the above doesn't apply. Even if you are optimistic long term but feel the sp will fall further as we work through the RI then it might still be a good idea to sell the rights and then buy cheaper shares later (though the rights selling price is quite poor value at the moment compared to where it should be at this sp).

It's up to you but one thing I would suggest is that if you don't want to take up the rights that you sell them yourself as your broker will only 'try to sell them' for you on the 12th if you just leave it. If he doesn't manage to sell them then you lose the value of the rights altogether.

It seems to be following the pattern of many RIs - but harder and faster. The price often drops from the TERP to near the price of the new shares but not usually until near to or after the rights issue has been completed. So it's often better to sell the rights at the start and simply buy the shares later in the market - but here the rights price didn't start off in a good place and has got worse very quickly since. So was never very tempting to start with and really a bit late now :(

Leases go through cash flow and profit differently.

In cash flow it is simply the actual lease payments. In profit (overall profit not EBITDAaL) it goes through partly as depreciation and partly as interest (the unwinding of the interest rate at which the future lease payments are discounted).

In EBITDAaL the leases are also cash and you can see the figures match up in those.

Yes, Cash Flow is a bit better but I'm only seeing $600m a year before interest at the end of the period and less than $400m a year after interest?

I suppose it doesn't matter anyway though how good or bad we think it is (and we can debate it all day) as the die has already been cast by those who count.

Yes, they are in the EBIDTAaL figures but they are still not the same as overall profits (and that can be distributed to shareholders). Also most of the $600k figure you are calling interest is not actually interest on loans. Again a lot of this will relate to leases.

But Penta - the EBIDTA figure means very little as it excludes a lot of costs including all the lease payments.

The overall loss in 2022 seems to be over a $1bn and even by 2027 the net profit is only forecast to be just over $200m (less/similar to pre-pandemic). On first glance it's no wonder it is where it is and there weren't any good offers - except for RoW which does seem to be in reasonable shape.

The total assets may be $10bn but that is nowhere near enough to cover the $6bn of loans once you strip out goodwill and the accounting assets relating to leases. The saleable assets they have are only around $2bn (hence why they are not going down the Chapter 7 route as the ongoing business is worth more than they can get by selling all the assets they can). Unfortunately nobody thinks the ongoing business is worth more than $6bn either as no such offers have come in.

So we are where we are sadly.

*debts to the lenders