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downbutnotout -- Example --- to buy a rights share is £4.87 to us. The right itself is 70p which we don't have to pay. If we don't take up our rights and sell them for 70p each now and use that 70p to put towards buying shares on the open market after the rights issue is completed at an sp of say £5 then we would only have to find another £4.30 per share. So 1 share post rights issue would in effect cost us £4.30 instead of £4.87. If the sp post rights issue is more than £5.57 (£4.87 + 70p) then we would gain by taking up our rights. This is all in relation to today's TUIB price of 70p and an assumption that the sp will significantly drop post event.
Hexam --- Yes at the moment its a 43p gain for each rights share we take up. What I mean is If the sp drops to say £5 on completion of the rights issue then we would have been better selling out rights now and get 70p each and use that 70p towards buying the shares on the open market at £5 minus the 70p giving a price to us of £4.30 saving us 57p per share as opposed to buying our rights shares at £4.87 each. It all a question of balancing the risk and how we see the sp going
£4.87 to buy right share , right price approx 70p , total £5.57. Current sp around £6. Got to the stage where you have to ask is it worth taking up your rights now with a big risk for the sake of 43p per share --- (7% of current sp) as opposed to buying on the open market with the probable sp drop when the rights issue is completed
leepo01 --- An option ( NOT ADVICE ) would be to sell your current holding at today's price ( currently £6.10 ---- £6.20ish ) and use the funds to buy as many rights as possible at £4.87 and hope the sp holds up. It's what works best for you.
Ash11 --- I Completelty appreciate your reasoning and your actions which you have decided is the right decision for you. I have considered completely coming out of Tui but will decide on one of the options I previously mentioned. There are no good options just damage limitation.
Well Golitha I have been working out all my options today and it all boils down to how much confidence I have in Tui going forward. I am loath to invest more but taking up all the rights will obviously give the lowest average but with a lot more investment but would give the best and fastest return if the sp goes up. My second option would be to sell my current holding , buy as many rights with that money and buy the rest of the rights giving me a £1.16 higher average average but with half the layout but with a slower return if the sp goes up . My third option would be to sell my current holding , buy as many rights as possible with that money and tail swallow the rest of the rights obviously giving me an even higher average and again a slower return if the sp goes up but with no layout. And my fourth option would be to tail swallow all my rights with no layout giving me the highest average.
Going to assess things tomorrow when the market opens and decide. Hope everybody makes the best decision for themselves because this is a personal decision based on personal circumstances and individuals confidence in Tui which is going to be different for each of us. What is right for one isn't going to be right for everyone. Sorry to harp on but everybody remember to do something with your rights , don't do nothing because you will get nothing. Good luck all and make the right decision for you.
MikeS02 ---- Don't forget that investors who buy any unwanted rights have to pay the rights price which is currently £1.07 plus the price of the rights shares which is around £4.88 depending on the exchange rate ( it was £4.86 during Friday ) so the new shares will cost them around £5.95. This is the figure you should be looking at as regards influence on the sp when the shares come onto the open market later in April. Obviously the rights price can alter as seen on Friday which i belive was due to the sentiment of the large 8 for 3 ratio but it would be unusual for the rights price of £1.07 to significantly drop towards zero in my opinion ( but it could happen of course )
The price of the shares for the rights issue is €5.55 Euros. This was set by Tui in their prospectus and how i understand it this will not alter even in a rump sale. If they don't sell then this is a problem for the underwriters but will be an indicator as to confidence in Tui.
Very difficult to decide just how to handle this rights issue for me. It all boils down to how you see TUIs future over the next few months . They hope to reduce their debt substantially with this rights issue which will take their debt down to around pre covid levels. That's if all the rights are taken up of course. The cost to take up a right with Halfax is £4.86 as of my discussion with their corporate department yesterday taking into account yesterday's exchange rate. This can slightly change of course as exchange rates change. TUIB closed yesterday at £1.07 after a volatile day , dropping into the 80ps at one point. What happens to it Monday is unknown. So at the moment I could take my rights at £4.86 compared to a current sp of around £6.23. If I sell my rights someone then has to buy them for at least £1.07 each plus they will then have to pay the £4.86 to take each one up making a total they will have to pay for each rights share is at least £5.93 as of today compared to the current sp of around £6.23. Not a massive difference between the sp and the purchase cost of new rights issue share and this price difference could reduce with the volatility of trading next week. I am not confident all rights will be sold. Thinking about tail swallowing. Most people probably know about tail swallowing but just as an example of the result of doing it ---- At todays TUIB level of £1.07 , anyone who has 1100 rights would have to sell 900 of them to raise enough to purchase the remaining 200 ( give or take a little ). So selling 900 would give you £963 which would give you enough to purchase the remaining 200 (you would have to add between £1 and £2 ). So you could acquire 200 shares without cost. This calculation works for the TUIB price of £1.07 and the calculation will change slightly as the T UIB price alters. But currently you have to sell 9 eleventh of your entitlement to raise enough to purchase the remaining 2 eleventh. Might be of interest to some on this board. I am not fully confident in Tuis situation at the moment considering this cost of living of living crisis and how this will bite into people's pockets and how it will affect their holiday choices so I will assess the situation over the next few days before I decide my choices as I am very reluctant to invest more in Tui but need to do something to protect my current investment. At the moment I have elected to take all my rights with Halifax but this can be altered right up to the 11th of April. Various choices of what to do ---- Tail swallow and add 200 shares to my current Tui stock at no cost , sell my cureent stock to take up my rights in full , combination of both , sell up and get out or bite the bullitt and invest more to take up my rights. Hmmmm I wonder how the sp is going to go in the next few months? Can anyone lend me a crystal ball please? Good luck everyone invested.