Real beer ... doesn't need CO2 ... it makes it's own in the cask when it's allowed time to condition in the cellar.
But of course the dead/sterile/pasteurised (past-your-eyes) stuff that they sell in a lot of pubs does have to have the CO2 added back in so that they can encourage you to part with money for the stuff.
That's not to say that real ale might not use CO2 somewhere in the brewing process as a means of pumping/forcing the stuff around or keeping an inert void over the brew.
Personally I think this story is more likely to be the same as the famous 'toilet roll' shortage that we had a few years ago ... and should probably go the same way as well!
Well if I'm wrong then so is the Companies Act ... CA 2006 s658(1) states ... "A limited company must not acquire its own shares, whether by purchase, subscription or otherwise, except in accordance with the provisions of this Part."
If you care to read the rest of the Act you will see that any funds used for such a buy back must come from a) Capital (defined in the CA as those monies raised by the issuance of shares) or b) distributable profits (defined in the CA as those monies arising from profits that could have been distributable to shareholders as dividends).
If you can post some definitive link to statute that supports your case ... then you would have a case ... in the meantime the law is what it is.
For the sake of clarification and for others ... your use of the word 'premium' corresponds to the general English use of the word, meaning "price in excess of the current market price" ... the CA does not use the word in that way. Premium on share price is the difference between the price paid and the nominal, designated value of the share on the certificate. For Marstons that is 7.375p ... would you let the company buy your shares at that price?
Shares can be held in Treasury for a variety of reasons ... if they are created but not issued for example. They do not have to have been purchased in the market place.
Finally what price the company pays for the shares in the case of a buy back is not regulated in any way whatsoever. They can pay under or over the odds it's entirely up to them and what we as shareholders will let them get away with.
So, if you can find a linkable source that supports your view that companies can take on debt and use it to buy back their own shares I'd be very interested to see it ... otherwise we'll just have to make do with the law of the land!
Au contraire Appleby ... buy backs can not be funded from debt ...
"Originally it was prohibited by the common law, but now although the general rule remains in section 658 there are two exceptions. First, a company may issue shares on terms that they may be redeemed, though only if there is express authority in the constitution of a public company, and the re-purchase can only be made from distributable profits. [CA 2006 ss 684-690 & 735] Second, since 1980 shares can simply be bought back from shareholders if, again this is done out of distributable profits. Crucially, the directors must also state that the company will be able to pay all its debts and continue for the next year, and shareholders must approve this by special resolution. [CA 2006 ss 714-717]"
And that's what the Companies Act says ... specifically ... s692(2)(b) ... "any premium payable on the purchase by a limited company of its own shares must be paid out of distributable profits of the company,"
And the reason is as I said, without this provision, it would extend limited liability to shareholders in companies that were explicitly formed for the purpose of defrauding loaners of money etc.
(The first exception to the rule is currently being used by SLA to issue B-Shares for redemption.)
Now it is possible to fund buy backs from debt in the sense that taking on debt may release other funds that it would have been prudent to hold back for contingency etc ... however, the Act is clear ... just as dividends can only be paid from distributable profits, buy backs too can only be made from distributable profits.
Borrowing money and buying back ... unless you have the distributable profits to book it against ... is not legal. :(
Does any one have any links to sites or pages that describe the ways in which Form 8.3 (which makes up the bulk of these RNS postings) are used and what they mean?
I guess I'm not the only one who is confused about this veritable snow storm of announcements, who is doing what, and what they all mean!
Because ... I seem to recall that it's illegal for a company to incur debt in order to buy back it's own shares. A buy back should only be possible from surplus cash generated within the company (ie profits or asset sales).
The reason is that I could form a limited company, give myself all the shares for a small amount, borrow/raise money on extravagant promises and then buy back my own shares at inflated prices ... fold and hide behind the limited liability.
As an income driven investor I too avoid the auto-reinvest that my broker offers. (Although to be honest if I had small investments then I would use it as its extremely cost effective ... 2% fee, max £5 for any amount from pennies upwards.)
What I do is run a portfolio of income shares ... when one pays a dividend I hold that and then I use that to invest in selected others, often on their exDividend date.
Whilst I don't hold with the conspiracy theory element ... MMs are there to make a profit and if they know for certain that x shares will be bought on a specific date then they are going to exploit that if they can!
Londoner, thank you for your thoughts and figures ... as I'm an income based investor the dividends are important to us both in the short and long term so I'm appreciative of your analysis.
I guess until we get some real figures from the company we're all going to be guessing a bit on this one!
The rights issue put a lot more shares into circulation ... what's peoples thoughts as to the actual numerical value that will be announced for the next dividend? My own thought is that the value per share will have to go down ... note that I'm not saying that the overall value of the dividend will go down, just that it has to be shared amongst more shares.
Thanks for the info on the timing of the updates to the short tracker ... I didn't know that ... and it's useful to know!
I use https://shorttracker.co.uk/ which is not without it's problems but I find is about the best of the bunch for this sort of information.
Whilst we can't be absolutely certain of the extent of shorting and it's timing we can of course get a general-ish sort of picture of what's going on. One thing is for sure there's some where in the region of 15-20m shares that are being shorted, and at �5-6 a time that's a significant chunk of money in anybody's world.
Good luck ... my own personal limit is about 5% ... when a share hits that I start to seriously think of pulling out on the basis that maybe the market knows more than I do! (It's for that reason, that while I'm a keen watcher of GNK, I'm not invested at the moment.)
Bread-Dipper ... a couple of things that are worth knowing about regarding how shorts are reported (if you've not seen them before) are ...
1. That shorts take at least 2-3 days to be reported because of the various delays in notifications and RNS's etc. And its not without precedent that they have been completely 'missed' ... whether by accident or intent is another question.
2. Short positions below 0.5% don't have to be reported and this means that as a short position crosses the 0.5% boundary it either appears or disappears off the radar ... on May 30/31 Blackrock and Henderson both nudged below the threshold and the impression is that the shorting rate dropped by 1%. In practice they both still hold (I assume) a significant position. In reality the total number is only a minimal figure and the reality can be much higher -- it pays to be cautious.
Hope that helps cast some light on what is inevitably a confusing situation.
I think the operative words in the RNS, and the one's that explain why the RNS was made are "During the visit no new material information will be made available."
Effectively without this declaration and without the RNS what is essentially a PR exercise with analysts etc would lead to the very sort of speculation and Machiavellian type discussions that we are seeing here :)
Without the RNS, sooner or later some pundit or other would be "tipped-off" or spot the visit/presentation and then the rumours would be flying around about insider knowledge, bids and take overs etc etc
This RNS effectively heads that sort of thing off at the pass ... unless of course you are *very* Machiavellian in which case it could of course mean exactly the opposite ... :)
I concur on the detail the peson loaning the stock is eligibile for all rights and payments that would have accrued to the share whilst it is out on loan. If the person borrowing the share sells it in the market place then they have to make good the dividend themselves from their own funds as the dividend will now be paid to the person who they sold it to.
Shorting is a very expensive business!
Londoner ... thanks for the input/reply ... as I clicked the post button and disappeared out of the door this morning I realized that I'd not created quite the right impression with my posting, the aim of which was to show that with an infinite-hold type income driven investment strategy the capital value as such didn't really matter -- provided the income stream remained intact.
I rather over-simplified the numbers that I used and the description of how/what we held. In reality we hold a basket of income generating stocks all chosen with the intention of holding for the very long-term. RDSB is indeed the largest of the holdings, but there are about 6-8 others alongside it to even things out a little. Also I chose the �100K figure to allow me to do the annuity comparison easily, in reality there's a significant multiple of that and that is held in two separate ISA's (plus some traditional brokerage accounts).
The 65 bit though was very nearly spot on ... whilst we are currently still building wealth and investing the derived income rather than spending it that will probably change in the coming years!
Just to put a few numbers on the way I think of it ... I'm 65 I want to retire and have �100,000 to help supplement my pension .... I can ...
1. Buy an annuity ... gives me �5,600 of level taxable income guaranteed until I die ... then zero capital return. (If I take inflation linked income it drops to about �3,300.)
2. Buy �100,000 worth of RDSB shares ... gives me �5,100 of income per year, raising in line with dividend increases over the years ... then when I die the whole of the capital (plus any gains or losses) is available to the estate ... plus being inside the ISA the income is completely tax free as is any capital gains.
So that's why I think of it that way. This way of looking at it means that dividend flow is the major criteria and capital value is only secondary.
I agree ... if you are an income investor then what matters is the dividend, it's consistency, and ultimately that the company doesn't actually go bust.
Oh, and that the company doesn't get taken over for a stupidly small amount, usually with a massive cut in the dividend.
17000 * 13.80 = �234,600 ... umm ... hard to take the rest of what you say seriously ... if you really are playing around with a quarter of a million pounds on what is just a range trading strategy on GSK then what are you doing spending your time posting on this board?
OK, let's see if we can head this one off at the pass before we all go nuts with postings about "What is consolidation?" and "Why are they taking shares off me?" ... here's four links that everyone who doesn't know what consolidation is should read before they post anything about it!
Now, I don't claim that the links are prefect but they will give you a broad understanding of what's going on.
A quick stab at the calculator suggests that the B-shares will be issued 1:1 against the ordinary shares, then �1b split over them to give the 34p price for redemption.
That will convert what would have been income via a special dividend into capital gains for PI's which I'm happy with.
The share consolidation is an arithmetical operation and has no effect except it often has a negative psychological effect on the market.
Regular readers of the board will not be surprised that I'm not keen on the buy-back part of the offering ... I think they should either have retained that part of the cash or better returned it via the B-Share scheme (giving us 50p) ... especially if they intend a consolidation (which can be used to manipulate the number of shares in issue quite nicely).
What's clear this morning is that the market's first reaction to the announcement is not an overwhelmingly positive one ... on the other hand it's not a major thumbs down either given the general down movement today.
Oh no they're not ... it was the market makers swapping stock ...
5296 278.2 9174232 UT 280.2 280.4 16:35:27 9,174,232
Notice the time 16:35 and the trade type ... "UT" ... it's the end of day automated auction.
Do try to learn how the market works!