Member Info for Poleaxe

Prior to the open offer there were 170,871,885 shares in issue (see total voting rights RNS of 3 April 2018).

That would mean a basic open offer entitlement of 170,871,885 shares, based on a ratio of 1 new share for every existing share.

All the shares were conditionally placed, with any shares subscribed for under the open offer being clawed back from this amount.

The *total* number of shares subscribed for under the open offer was 133,046,870. That left 37,825,015 to be taken up by the places.

If all holders had taken up their basic entitlement in full, they'd have been no additional shares available to subscribe to and no shares left to place.

If many people subscribed for an additional 10x on top of their basic entitlement, that means a lot of holders didn't take up their entitlements or only took them up in part. i.e. for everyone taking an additional 10x, they'd be ten holders who didn't take up any shares (not nine as I said earlier).

I think you're right copperband. With the share price hovering at about 20p, it probably wasn't worth the risk for most people. It was only a 'guaranteed' gain if you'd already shorted your entitlement at a higher price (e.g. 27p) and were using the open offer to close out your position.

Sorry, I guess 'bomb' was a bit emotive and unjustified. It would have bombed if the current share price were below 19p. Even so, they're not far off and are a lot lower than 27.5p, which is what they closed at on the day they went ex-entitlement.

It was 77.9% subscribed, but if many received 10 times their entitlement (they could have requested more), that means far fewer than 77.9% took up even their basic entitlement (for every person who took up 10x there are nine people who didn't take up any). Why did so many not take them up? Seems a bit odd, given it was a guaranteed gain. Lethargy I guess.

Sorry, I was wrong and must have misread my statement (or it's been amended at close). In fact I have been adjusted for the open offer (on a 1 for 1 basis), shorted at 19p, so I'm down on that position.

So there is no such thing as a free lunch for shorters. Jolly good too!

If you short a share ahead of ex-rights you'd definitely be liable for the value of the lapsed nil paid rights, otherwise it would be a no brainer shorting a share ahead of them going ex!

If the MTC open offer hadn't bombed I suspect shorters would have had to pay for the entitlement.

Along with others I was short MTC when they went ex offer. I believe that potentially shorters might have had to provide shares at 19p, to cover the open offer entitlement of the shorted shares. This would happen in the case of a rights issue, when there are lapsed rights payments to fund, but hasn't happened here.

If this is the usual outcome of an open offer, it makes them a bit of a gift for shorters.

jerembg, my open offer provision was today closed out at zero, so it doesn't look like I'm going to receive any claim for open offer shares. Hopefully your short will be treated the same.

I was not aware that the excess application was limited to 10x the guaranteed 1 for 1 entitlement.

My understanding is that any excess will be met from the open offer entitlements that haven't been taken up and if the excess demand exceeds the 171m shares available, applications will be scaled back. Therefore the maximum number of shares distributed in the open offer will be limited to 1 for 1. I therefore don't see how in this case there can be a risk of shorts being hit for any excess.

There again, I can't recall ever having been in this position with an open offer, only a rights issue.

jerembg, if you were short before 9 July you could consider buying now at about 20p to hedge against the risk of the open offer claim against you, but you then risk taking a loss if the price falls below 19p!

Why should the share price go to 19p? If it does, then the open offer is a failure, just as it would be if shares fell to a rights issue price.

Theoretically the premium value over the issue price of 19p could be paid for by the dip when the shares started trading ex-entitlement on Monday 9 July. i.e. from close of 28.6p on Friday you might have expected them to trade at 23.8p on Monday. The fact so many punters are confused made for an inefficient market, much to the benefit of shorters!

It's NOT a rights issue and an open offer. It's a placing and open offer. The shares are conditionally placed with institutional investors and clawed back according to demand from the open offer. There are no nil paid rights. If there are, tell me the ticker!

The company have even spelt it out:- "Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying Non-CREST Shareholders should note that their Application Forms are not negotiable documents and cannot be traded"

It's an open offer, not a rights issue, so there are no tradeable rights shares.

If you were short before 9th July, potentially you could receive a claim for the open offer shares @ 19p. i.e. effectively a short position token out at 19p. However, I can't see that happening if the open offer bombs and the shares are trading below 19p - why would anyone pay you 19p to deliver the shares?

jerembg, are you short from 9 July? If you were short before 9 July your broker will probably be adding a 1 for 1 short position based at 19p. There's no such thing as a free lunch!

Also agree with f15jcm. It's like ex-entitlement to dividends. Ex-open offer was 9 July. You could therefore sell all your holding from open on 9 July and be entitled to take part in the open offer, not just the basic 1 for 1 but also the excess allocation.

Should add, being an open offer, rather than a rights issue, the entitlement is not tradeable and won't have any value if you let it lapse. You therefore have to take up the open offer, or lose out (assuming that they'll be trading over 19p after the procedure). One strategy that I'm sure some will have adopted is to have sold short their entitlement at 27p or more, to guarantee their gain.Thank you for your reply. The address is correct but the item has not arrived after waiting over 6 weeks. Our post is normally good and it's very unusual for anything to be lost. Please can you issue a refund. If the item does arrive I will pay you again.

copperband, if the current price drops below 19p the open offer would bomb (i.e. no holder in their right mind would take up the offer if they could buy cheaper in the market). The shares would then all be placed with the underwriters. The mechanism is that all the shares are conditionally placed with the underwriters, but any shares taken up by existing holders in the open offer are clawed back.

Only existing holders on the record date (close 5 July) will receive a conditional invitation to subscribe for the open offer. However, it's important to understand that this is not the ex-entitlement date, which is from start of 9 July. For most of us with nominee accounts, it's only the ex-entitlement date we need to worry about. Any shares bought before 9 July will qualify for the open offer, even those bought on 6 July (if you bought in certificated form on that date you should be forwarded the conditional invitation notice from the seller. With a nominee account your broker does the legwork for you).

Existing holders may apply in excess of their basic 1 for 1 allocation. They'll then receive a proportion of any shares not taken up by other qualifying holders.

KLR rejoins the FTSE 250 tomorrow. Watch out for blips.

Alternatively buy ex-rights, the end cost will be much the same.

They trade ex-rights from 10 July. In order to quality all that matters is holding at close on 9 July.

Nope, it's demoted to the Small Cap index with effect from open tomorrow. Hence the volume at close on Friday. http://www.ftse.com/products/index-notices/home/GetAttachment?id=caa07742-3765-4202-88bb-faddcf758866&title=FTSE_UK_Review_June_2018_Amendment.xlsx