Member Info for LordAdam

The new shares rank ... pari passu ... equal-step ... with the existing ones. They are indistinguishable from all the others that are/were in existence prior to the RI.

So, any restriction on sale etc could not apply to the shares themselves per se ... any restriction would have to be done on a contractual/agreement basis with the actual holder. As such it's virtually impossible to create/adminster let alone police ... for example if I sell 1000 shares, is it part of my original holding or part of the new issued shares?

From here on in we are dependent on what the market thinks for the share price itself.

Inevitably once the RI has completed (ie now) there are a number of investors who have extended themselves to take up the rights and are now looking to reduce their holdings. Hence the usual/general decline in the days/weeks after ...

I'm not expecting much of an increase for about 6 months ... that would be about right I feel for a bit of rebalancing of holdings etc.

Mike

I think we're working to the same script ... topped up our ISA holding yesterday ... We use the ISA's for an income driven investment policy for long-term dividend income rather than capital gain.

VOD is now well into our buy range and having some cash from a top-skimming of RDSB in the recent rise we put some of it here.

Our main aim is to buy and hold for the very long period at consistent dividend rates of 6%+ ... usually 6.5% these days. But if the yield drops below 5% due to share price increase then we'll consider selling for the gain (RDSB did that recently).

What do I think about 160? ... not so likely I think ... maybe the high 170's at a trough ... 240? ... also not likely -- but if we did get up to 220'ish I'd be using the calculator and thinking about a sale. In the meanwhile I'll hold and bank the dividend.

Mike

You're right .... they have actually been changed/consolidated, it's just your broker's accounts that are taking time to catch up with reality.

iWeb had theirs posted yesterday ... best brokers that I've ever come across, £5 a trade, zero cost limit orders (in ISA's), and a very professional telephone service and back office. (Ps I don't own shares in them!)

Mike

You may not think of yourself as a mathematician but your numbers are spot on.

Now why didn't I think of looking what they did last time! You're right they didn't drop down as far as the RI would have suggested that they did ... 17p was the adjusted figure and they actually paid 23.9 rising to the 25.1 on recent payments.

This time around the adjusted figure is again 17.1p ... before an announced rise to 29.5p. I wonder if they'll pitch in for the interim at around the 20-25p mark. If so, nice little income earner on what we're holding at the moment (thanks to 2 RIs!).

Mike

Actually, this October and next May there will be more shares in issue ... so if the dividend amount is maintained the same we will only get 17p ...

I can see what happens after the coming year end in Dec 2018 but not what will happen this October and next May during the transition period.

Anybody got any ideas or firm information?

Mike

Have I got my maths right?

Just been looking at the level of dividends that we can expect _after_ the rights issue.

At the mo there's 393m shares in issue, after the RI there will be 578m. Current dividend amount is £197m which gives 50.2p per share over the year ... which looks correct. After the RI the prospectus says £338m after year ending 2018 ... that should give us 59p per share per year.

Year end is 31 Dec ... so I'm expecting 59p per share _after_ the payment in March 2019.

So this October and next May we get 25.1p per share (+growth hopefully) and then thereafter 29.5p per share for October 2019 onwards (+growth of course).

If I've got that right I can live with that ... I'm essentially an income investor so these things are important to us.

Mike

Oh, thanks for thinking of me ... I'm still here and watching carefully the goings on ... still just as invested as before, not sold one share or added one either for a long time now.

I would add more, but I'm excessively over weight here (whilst being only mildly overweight in real life!), and can't really afford to increase my risk profile at the moment.

My viewpoint hasn't changed, if anything, I feel that we've moved closer to the point where this has to break out of the groove that it's been stuck in for a while.

The ultimate question has to be, "What is the management's plan for extracting value/income from the company?".

If you had asked me 12-18 mths ago before the wider management all chipped in to support the company I would have said that the end game was probably a bid/sale. But now that the share holdings are wider amongst the company there has to be either a) a substantial share price increase to allow for them to sell into the market place, or b) a substantial dividend stream. Both of these suggest a significant rerating of the share price is on the cards in the not too distant future.

One thing is for sure, the games the market makers are playing with the bid/offer prices to create 'churn' aren't helping the sentiment any ...

Mike

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! Mike

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! Mike

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. :( Mike

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! Mike

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. Mike

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! Mike

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! Mike

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. Mike

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.) Mike

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. Mike

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 ... :) Mike

If you want to qualify for the dividend the earliest that you can sell is effectively 8:01am on Thursday 7th June. Mike

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! Mike