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‘No risk”. Depends on what you mean by risk and what your tax situation is. In real terms, for higher rate taxpayers it is not a risk because it is a certainty you will lose purchasing power with cash. 5% gross converts to to 3% net after tax at 40% minus current RPI inflation rate at 3.3% leads to a loss of purchasing power of 0.3%. And with the higher inflation over the last 2 years holding cash has been wealth destroying. NG dividends at least increase by CPIH, and are taxed at ca32% rather than 40% - and there is some possibility of a capital gain taxed at 20%.

Isn’t gearing all about risk/benefit balance? Equity is expensive - debt less so. Yes NGs gearing is high resulting in debt 150% of equity , but with a mostly regulated income. Banks operate with loans at 850-900% above equity levels with a more fragile income. Which business is more fragile? What is the right level now interest rates are projected to fall ? I don’t know, but I I do know I would be happier with a lower debt to equity ratio - so I think it is right to raise equity to expand the business, painful as it is.

We all have our own views, we all take our own decision, and we all hope we have got it right.

So good luck all.

Tony, I agree with you that the primary purpose the BoD is to look after the interests of the shareholders and tat they are accountable to the shareholders. This is why they were set up centuries ago, and it is as valid today as it was then.

They have many responsibilities to ensure they look after those interests:

- to appoint and reward the Execs, because this is in the interests of the SHs

- to formulate strategy, because this is in the interests of the SHs

- to ensure ESG issues are managed appropriately, because this would be in the interests of the SHs

Etc, etc. as mentioned by you and others

Sadly this focus on linking all their energy to ensuring SHs interests are protected, has become confused and diffuse, and the BOD of Darktrace did not even mention the word SH in their first annual report. And they have shafted their SHs right royally by agreeing to sell the company way below its potential value IMO.

I actually don’t think the BoD of NG is doing such a bad job - it is complex business.

But to look after those interest

Desert sands - it should be be done in exactly the same way if you are registered with your platform to vote on company resolutions. That is how it works with HL and II anyway.

Fleccy - regulated industries can afford high levels of debt because of guaranteed income agreed with the regulators. And although the interest cover is over 2x, I do agree the debt level, and debt to equity ratio, is uncomfortably high. Shoring up the balance sheet by raising equity is sensible, although unwelcome, in my view.

The key to the future success of NG will be will be in the outcome of the Offom negotiations - and the ability to get a good deal will be critical. The negotiating skills of management is one of the main comptences regulated industry managers need. I suspect strengthening the balance sheet is part of the negotiating tactics.

Realist1 - thanks for posting the II analysis. It is a very good summary of the situation and the quotes at the end from BoA give a good explanation as to why Mr Market is not too thrilled about the RI. Generally positive in tone though.

The similarities with the 2010 RI are there, and in real terms the size of the current is not hugely different from that in 2010. All worked out ok in 2010 after all the fuss then too.

Ggplyr - strictly you are referring to Nihl paid rights being ca 2.03 as the right is to be able to buy shares for 6.45. And strictly the calculation for nihl paid rights is 8.9 - 6.45 - div (0.39) . So on 6 June, when the SP becomes ex-div one may expect the SP to fall by 0.39 after which indeed then nihl paid rights becomes the SP- 6.45.

But, as we all know, there is logic and there is Mr Market who is a manic depressive whose mood swings from overly optimistic to overly pessimistic - logic going out of the window.

I don’t think companies are allowed to “leak” information like RIs in advance as it would affect the market. Mostly this information has to be given prior to opening. And why not on results day? In my opinion NG made the announcement correctly.

Just re-read Buffett’s annual letter to shareholders.

Basically he now regrets his ownership in electric utilities.

He now sees that the US electric utility industry has a voracious need for new investment but at the same time a deteriorating investment climate prevents him from investing incremental sums.

I should, perhaps, have taken better note when I first read the letter as it seems the UK electric transmission industry is no different.

MrMath The buying and selling prices of the rights are quoted by the MMs under NGNP. At close today the buy price is 213p and sell price is 212p.

If you buy a right at 213p and then pay 645p by taking up that right you get a share, ex div, for 858. Add the 39p div that you won’t get but which existing shares have the right to, gives a sp of 897p. That is also the current SP unsurprising enough in my view.

Yes you can do that. II at least offer you the option take up anything from 0% tom100% of the rights. You can sell those you don’t take up. Or you an do nothing in which you will be paid for those rights at the going rate at the end. But if the prevailing SP is below the rights price (645p) you will get nothing as the price of NGPN would be zero.

To clarify further. My understanding from past rights issues I have participated in is this:

The record date for a rights issue is 3 days before the ex date. For dividends it is 1 day later.

For a rights issue if you sell your shares after the record date, you no longer get the rights.

For a rights issue, if you buy shares after the record date but before the ex date you get the rights as others have explained and as per the Prospectus.

To sell a right from a platform like II you sell it like any other share you hold- in this case under the ticker NGPN. Normal trading costs apply. I’m not sure if all platforms offer this facility but they should.

235

So it seems to me the equation connecting the values - give or take a few pence and the market view on things is:

ng price - div - rights price = NGPN price

909 - 39 - 645 = 238 which is more or less the NGPN price

Good post IDoMyBest. The only thing I can add is that this is after all the primary purpose of the stock market - the ability of companies to raise cash when they need it to grow their businesses. However, the market does not take kindly to being asked for money - how dare they?

I too participated in the 2010 RI and will do so again. As long as NG does not dilute the existing ROCE figure in the medium/long term, all will be wel IMHO.

Clued - the default payment is in USD but one can elect to receive payment in £ as an option.

The incompetence of the BoD allowing the offer to be made in USD knows no bounds!

According to the site I attached earlier if “D” is the date the scheme document is issued/announced, the last date for a competitive bid is normally after 14 days, not 21 days after , “D” day.

“D + 14 is the last date date potential competing bidder usually allowed to clarify its intentions (assuming court and shareholder meetings to be held on D + 21).”

The only timeline I know of is the one in the attached document. Seems some of the timing is indicative and the other obligatory.

https://resourcehub.bakermckenzie.com/pl-pl/resources/global-public-ma-guide/europe-middle-east-and-africa/united-kingdom/topics/timeline

Exactly where we are in this scheme of things I don’t know, but certainly we have moved on from “A”.

CR888 - I got a letter from the company about 2 weeks ago “announcing” the take over and quoting the relevant clause. I thought this was “A” day. If this is correct - but am open to an an alternative interpretation - we are well into the 21days already.

I’m sure Jefferies will do quite well financially out of the take-over . Impartial they are not - they will act in their own best interests. And those of the SHs is not one of those interests. Saying an offer is “fair and reasonable” does not equate with a recent much higher valuation they gave as a broker recommendation which is supposed to be “fair” value.

Whenever an advisor does well out of the advice given it is a red flag .