Member Info for Poleaxe

HeresHopin, looking at the differential between HMON and HMSO, HMON clearly look the better buy at the moment. You pay less stamp duty that way too.

I would say they're lower risk though. They're about 3x the gearing of HMSO and would be worth zero if HMSO fall to 15p.

You can buy the nil paid rights. I'm not sure why you would, unless you can get them cheaper than HMSO minus 15p.

HMSO are only FTSE 250 for one more week. Relegated to SmallCap on 21 Sept.

I think that's correct. If the share price fshould all to 15p the rights won't be worth taking up and there won't be any lapsed rights proceeds. They'll have to be mopped up by the underwriters which will suppress the market as they try to offload. Think that happened at LMI.

Market cap of the company today is:-

153m x HMSO +
3,678m x HMON

From 25th September (when the rights trade fully paid) it will be:-

3,831m x HMSO

Correction, should have said sell rights at 12p this morning, not 28p.

It'll be the price the bookrunners manage to place the shares at, which is often the low end of the price traded in the market on the day, if not lower.

If you don't plan on taking up your rights you may be better off selling them if you see a good price (e.g. 28p this morning) rather than take your chances in the rump. IMO lapsing rights is a bit of a 'backstop' for people with small holdings and/or unable to act before then.

They'll be placed as HMSO shares on 25th Sept. Several days later you'll receive your proportion of the proceeds, less the 15p rights price and costs (which normally aren't huge).

If you think HMSO should be trading at 15p today it means that you think the shares yesterday weren't worth more than 15p. Perhaps you are right, but that would be a very inefficient market.

Geez! It's not the share consolidation. It's the ex-rights.

If every HMSO share you held at close yesterday you now hold

1 x HMSO
24 x HMON (the nil paid rights)

If you want to take up the rights (convert HMON to HMSO) you'll need to pay 15p per HMON share.

Otherwise sell HMON or let them lapse (and receive the lapsed rights procceds)

Great start for holders this morning. Well done.

The nil paid ticker is HMON (should have seen that in the RNS).

Your rights entitlement should be based on your holding at close tomorrow (Wednesday 9th).

When you see the nil paid rights credited to your account will depend on the inefficiency of your broker. Don't rely on them being available to trade from open on Thursday. If it's a CFD position they should be.

The rights should be tradable, possibly under the ticker HMSN. They may not be that liquid and may have a wide spread.

The rights will trade about 15p below HMSO. Therefore, if HMSO trades at 25p, the nil paids will be about 10p. This means the nil paids are like a geared HMSO, with about 2.5x the volatility. If you're looking to trade them, try to pick a good moment. If you don't want to take up all your rights but still retain your original holding you may find you get a better price by selling your holding and taking up rights to replace them, rather than sell the rights.

If you elect to take up the rights (which you'd need to do BEFORE 25th Sept, probably sooner) you are increasing your investment in Hammerson. Whether or not it cuts your losses is down to whether or not the HMSO share price subsequently rises. Only you can decide if you want to risk the additional investment. TERP is the price level at which you'll be no better or worse off by taking up the rights.

If you sell your rights nil paid (which you would need to do before 25th September, unless you prefer to let them lapse) you are reducing your investment in Hammerson. The amount you receive should be similar to the amount you will lose in your current 744 shares when they go ex-rights on Thursday. You will still have your original 744 HMSO shares. You're not actually 'reverting back' to 744 HMSO. The rights shares are not HMSO shares unless you have exercised them by paying 15p per share and they do not get admitted and traded to the market as HMSO until 25th September.

Some people like to 'tail-swallow' and sell some of the rights to pay for taking up the others. This maintains their investment in the company at the same level and means they don't have to find additional cash.

drnasirhameed62, from Thursday the nil paid rights shares will be tradable, possibly under the ticker HMSN. They remain tradable until Friday 25th Sept, when they become fully paid HMSO shares (for payment of 15p per share).

Think of the nil paid shares like vouchers, entitling you to purchase HMSO shares for 15p. These vouchers are transferable. As long as HMSO trades above 15p these vouchers will have some value. The value will track HMSO, being approximately the price HMSO trades at, minus 15p.

During the two week period anyone can buy the nil paid shares and, if they wish, the can pay 15p per rights share to obtain fully paid HMSO shares. Or if they like they can re-sell the shares or they can let them laspe and take their chances on the proceeds from the rump placing. In other words, exactly the same options as for anyone else who receives the nil paid rights shares.

Remember, if you pay 15p to take up the rights you forgo any value you could have got by selling the rights. This means the true cost to you of taking up the rights isn't just 15p. The true cost is about the same as simply buying more HMSO shares in the market. Rights don't really give you a special deal.

Yes Pete, on Thursday you'll receive 72,000 more shares. These are the rights shares. You don't have to pay extra for them but they don't really come for free, because simultaneously the HMSO shares will fall by about 90% in value.

Initially they are 'nil paid' and should be tradable on the market (under a ticker such as HMSN to distinguish them from the HMSO shares). You'll then have a couple of weeks to decide if:-

1) You want to pay 15p per rights share to convert them to HMSO shares

2) You want to see the nil paid rights (you should receive about 10p per share for them)

3) You let them laspe. In which case you'll receive you share of the rump placing which will take place on 25th Sept. This often returns slight less than if you'd sold the nil paid shares, but won't incur commission.

I don't think anyone can tell you the best way to win on this, any more than they can tell you if they'll be trading higher or lower tomorrow. It's your decision. As long as you understand rights are not a licence to print money, not for the shareholders anyway. It's the advisors who usually do very nicely out of them!

If you hold 3,000 HMSO shares at close on 9th you'll still hold 3,000 HMSO shares at open on 10th. In addition, you'll hold 72,000 nil paid rights shares (ticker possibly HMSN).

Yes, from open on 10th the HMSO shares will trade at a 'new' price of about 25p to reflect that most of the value has shifted to the nil paid shares, which will trade at about 10p. There's no 'free lunch'. The HSMO aren't going to stay at 260p when you have all those rights. There's no guarantee you'll be better off buying the HMSO shares today as you would be buying them ex-rights from Thusday onwards. Rights don't really give holders a preferential price over anyone else buying.

If you want you can sell the nil paid rights or you can pay 15p per right to convert them to fully paid HMSO shares (the rights trade as fully paid HMSO shares from Fri 25th Sep) Or you can simply let the rights lapse and receive your share of the proceeds from the placing of the rump.

Shortly after the shares have gond ex-rights on Thursday you should receive instructions from you broker. They won't contact you before then because you might decide to sell your holding before than date.

Just to add, the rights will be tradable nil paid (possibly under the ticker HMSN). Based on a current price of 260p the HMSO shares would trade ex-rights at about 24.8p and the nil paid shares at about 9.8p. In other words for every HMSO share you held at close on Wed 9th you'd have..

1 x HMSO at 24.8p
24 x HMSN at 9.8p = 235.2p

Total value 260p.

Hi Pete,
The shares have already consolidated, effectively 5 to 1 (technically the procedure was more complicated than that).

Anything holding rights at close on Wed 9th Sept will be entitled to the 24 for 1 rights at 15p per share.

HMSO will certainly fall from opne on Thu 10th. Precisely by how much is a guess (just as the price tomorrow is a guess), but theoretically you should end up with the same overall value from close on 9th to open on 10th. Doing the sums that means a closing price 260p closing price on 9th would be equivalent to 24.8p at open on 10th.

You may have done well buying at 266p, you may not. Personally I'm thinking I'll wait until they trade ex-rights and may wait until they trade fully paid at the end of the month, when people take their 'profit' on the 15p rights, but i may change my mind!

Presumably they were just as cheap on Tuesday, before the consolidation got punters excited about the rights issue (which was known about a month ago).

ITV contributes little over 0.1% to the FTSE 100 index, obviously less to the FTSE 350 and All-Share. It's quiet noise level.

Why do trackers need to 'rebalance'? If companies issue more shares or if FTSE change the free float percentage. That doesn't sound very arduous, which means costs can be kept low.

I don't think it's such a big deal selling on the day. There's enough liquidty in the closing auction and the 10:10 expiry auction (which is also on 18th). 6% of the company changed hands in the closing auction on Friday without too much fuss, in order to accomodate the MSCI index funds' rebalancing. Even if the selling did dent the share price a bit, it doesn't really matter to a tracker because this will be reflected in a lower closing value for the index - the value the fund is supposed to be tracking!