Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
For every share held at close last night I believe you now have
1 x SYNT (currently about 266p)
+
6 x SYNN nil paid rights (currently about 64p). Logically SYNN will trade about 197p below SYNT
I make that 650p. If correct, clearly it didn't pay to hold out for the rights entitlement.
Candidinvestor, I wouldn't go quite that far but I do think they're a bit of a con trick and get missold to investors who don't really understand them. Perhaps hardly surprising, given the amount of misleading information and the use of terms like 'discounted'.
HeresHopin, that's a good description of the rights shares.
People should understand that if they take up the rights they're not really buying the shares at a discount. The overall cost of taking up the shares isn't just 197p per share, it's 197p per share plus whatever they might otherwise have got selling the rights. From your description, you can see that amounts to much the same as simply buying the ordinary shares in the market, like anyone else.
You don't obtain these rights for free either. The 'discount' is offet by the drop in value in your existing holding when they commence trading ex-rights (tomorrow).
Rights issues are basically a blag for more money!
I agree, it should be!
Just to add, don't expect to receive lapsed rights proceeds for spreads/CFD longs. The providers will almost certainly charge for any rights shorts being 'taken up' but you'll have trouble getting them to reciprocate in crediting longs. Then they set the rules.
Freedom4Uall, the statement regarding "Do nothing" is inaccurate. At least, if describing a normal UK rights issue.
As long as they have some value (i.e. SYNT is trading above 197p on Thursday) the underwriters will procure subscribers for the remaining rights shares via a rump placing. They will not end up buying them themselves. The net proceeds of this placing will be distributed to the shareholders. It is not retained by the underwriters.
This rights issue is fully underwritten. However, if they are forced to buy them at 197p there won't be any value left to distribute as lapsed rights. That being the case, the nil-paid rights would have probably been worthless too, so they'd have also been no value in selling them.
Holders should face up to the fact that they've lost all but about 38p per original share. Taking up the rights (overall equivalent in cost to simply buying more ordinary shares in the market) or letting them lapse isn't going to change that.
The underwriters will only buy the shares if the rights issue bombs and the shares trade ex-rights below 197p, which I very much doubt.
Any rights not taken up by holders will be placed as a rump on Thursday morning. Those holders will then receive their share of the lapsed rights proceeds.
I don't hold but if I did I think I'd have sold on the rights announcement. Then wait and see if I can buy cheaper ex-rights. Given the scale of the rights issue (holders asked to stump up 1,182p per share currently valued at about 770p) I think it's possible the ex-rights price will drift below TERP and some people will tail swallow (sell some nil-paid rights in order to fund taking up the remaining rights). If you think you'll be able to buy below TERP next week I don't see the point in holding tomorrow night for the rights entitlement, other than sparing the cost of stamp duty and broker fees.
However, I'd also question if I really wanted to buy into a company that got itself into this dire predicament!
That's just my personal take and absolutely not intended to advise what anyone else should do. Everyone's circumstances and risk aversion are different.
Only take up the rights if you want to increase your investment in the company (presumably because you think the share price will rise sufficiently over your timescale).
Bear in mind that, in spite of the apparent discount, the rights won't really give you any preferential discount over anyone else buying the shares ex-rights. What you gain in value on 'discounted' rights you'll lose in value of your original shares.
If you decide not to take up the rights you'll receive lapsed rights proceeds. Alternatively, you could sell the rights shares, nil paid, between 28 Sept and 12 Oct (although best not leave that late). Currently you could expect to sell them for around 80p each.
The underwriters will only have to pick up the shares (at 197p) if the rights issue bombs (i.e. the shares trade below 197p on Thursday). This seems unlikely.
Instead, the rights not taken up (the rump) will be placed on Thursday. With SYNT currently trading at 790p the rump might get placed at about 275p. The proceeds, less the rights cost of 197p per share plus some minor costs, will then be distributed to the holders of the lapsed rights. In other words, if you don't take up your rights you might expect to receive about 78p per share as compensation for your reduced stake in the company.
Incidentally, the rights price is primarily determined by the risk appetite of the underwriters. The lower the price, the greater stake they'll get in the company should the rights issue fail. Otherwise, for a given-sized fundraise, the rights price makes no difference to someone taking up the rights issue, they'll end up forking out the same amount of money in order to maintain their stake in the company.
Except you won't get the divi if you buy today. In spite of Monday's RNS they traded ex-divi from open this morning.
What twollocks!
After market (6pm) is technically correct for the record date but a stock goes ex-dividend prior to the commencement of trading on the ex-dividend day, not after market that day. That's how you get alignment with T+2 trading.
Their RNS this afternoon is carefully crafted to try to avoid admitting they got it wrong. Not impressed.
Looks like the company messed up with their RNS on 24th July. Probably should have ex-dividend from 8am 27th July, not 6pm. That's not a mistake that should have made, particularly given the 35p divi amounts to 20% of the market cap.
Even the respected site dividenddata.co.uk thought they meant trading ex from 28 July.
https://www.dividenddata.co.uk/
Sorry to hear that.
I imagine your new consolidated Melrose shares will turn up in a day or two. A similar thing happened to me with Selftrade (got taken over by Equiniti I think). They were diabolical and would even make retrospective adjustments to cash accounts. As I recall there was a similar corporate action (split or consolidation) and I wanted to sell on the first day. They wouldn't let me sell for a day or two, by which time the price had dropped.
Sounds about right.
The Melrose shares trading today have been consolidated from three Melrose shares trading yesterday. That means technically they are not the same shares. They have a different nominal value and different SEDOL/ISIN numbers.
You can't expect to present a certificate for 3,000 of yesterday's Melrose shares and expect to sell them and receive the proceeds from the sale of 3,000 of today's Melrose shares.
For every three MRO shares held at close yesterday (161.95p) you now have
One MRO share (currently 393.7p)
One DWL share (currently 111.9p)
That's not exactly "a huge loss".
Has anyone heard anything about a fresh approach from Minerals Technologies Inc? If so, at what price?
"Rights issue price acting as a magnet atm"
I can't see a logical reason why the 103p rights issue price should be a magnet, although I know some people still seem to kid themselves that's all it costs them to take up their rights and anything over is 'profit'. Ah well!