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"If someone is holding 10.000 shares, what would be the number of shares, for how much if he picks up all his rights?"
Is it a trick question? Surely 40,000 rights for £41,200?
They'll end up with a total of 50,000 shares. As I type the share price is about 425p making TERP 167.4p. That means the value of their 10k holding is currently £42,500 and the value of their new 50k holding would be £83,700 (based on TERP).
"please explain why the SP is where it is today instead of going south?"
The fundraise and its size have been known about since they announced on 15 July so the market should have already factored it into the company valuation. As explained in another post, the rights price doesn't really matter to shareholders, other than being a reflection of the underwriters' risk appetite.
swingman: "You could sell the nil paid rights in the market like shares. So your investment is NOT completely wiped out."
Exactly, rights have value and are tradeable.
What many people forget is the cost of taking up your rights isn't 103p, it's 103p plus the value of the nil paid rights you could have otherwise sold. As it stands at the moment these would trade at about 66p. In fact, the true cost of taking up your rights is the same as simply buying the shares in the market, ex-rights, as anyone could do.
For a given size of fund raise (about £575m in this case) the rights price doesn't actually matter to most people, nor does the dilution. People have trouble visualising this and are more likley to take up 4 for 1 rights at 103p than they would 1 for 1 at 412p, yet it amounts to the same thing.
If you take up your rights in full the amount you have to cough up is the same if it's 4 for 1 at 103p or 1 for 1 at 412p.
If you sell rights in order to fund taking up the remaining rights (tail swallowing) the amount of dilution is the same if it's 4 for 1 at 103p or 1 for 1 at 412p.
Some people get worked up over dilution. Dilution means you end up with a smaller percentage stake in the company. However, they overlook that the company valuation increases. It means you end up with a smaller stake in a company which is worth more. As long as the market doesn't lose faith in the company, dilution should be offset by the increase in the market cap and you should be no worse off.
HBR was demoted from the FTSE 100 to the FTSE 250 today not because of any quarterly review but because of the HLN demerger from GSK. Both HLN and GSK are now in the FTSE 100 which meant the stock at the bottom (HBR) got booted out.
This situation may be completely different but I'm somehow reminded of Conviviality. There are always some willing to risk catching a falling knife and, remarkably, they always seem to manage to get out just in the nick of time!
I couldn't understand why it was priced so high before and I still don't understand how it can be viewed as cheap here. On what metric?
A target (which they may well fail to meet) of breaking even on adjusted EBITA isn't very inspiring.
And a going concern statement that warns of the possibility of breaking covenants as soon as this month and includes "this material uncertainty may cast significant doubt on the Group's ability to continue as a going concern and therefore to realise its assets and discharge its liabilities in the normal course of business."
I may be wrong but I think there's a strong possibility of tapping shareholders for funding in the near future. That means discounted shares. That means dilution. Bang go your EPS forecasts (if there were any 'E' in EPS).
A placing/open offer/rights issue coming soon?
It was announced by FTSE on 1 June. Here's the link to the link. I'm not sure if you need to register to access it.
https://research.ftserussell.com/products/index-notices/home/getnotice/?id=2604442
In case you'd missed it, the FTSE index move takes effect from open on Monday and a lot of the action today will be related to that, especially the volume in the closing auction.
Index funds will have reweighted. They're now a small fish at the bottom of the SmallCap index. Previously they were at the top of the Fldgling index.
I don't think we've heard the last of this. Don't you think the timing looks rather contrived, being the last day possible before he'd have hit three years of employment and qualified for options?
@alan188, I may run the CFD short to several days beyond 18th June as I'd expect some holders to bank their 'profit' as soon as they can sell their open offer shares. Perhaps KIE will bounce and I'll have to take a hit on the short, just this way I know roughly the gain I should make, rather than agonise that the share price could fall between now and getting my hands on the open offer shares. It's not 100% guaranteed, because there are events that could scupper the plan, like the shares getting suspended or IG forceably closing shorts at short notice.
I actually think KIE look a reasonable investment punt once the debt is reduced so may well keep hold of the shares, perhaps buy more if they drop further.
In order to qualify for the open offer shares you needed to hold them at close on 13th May. That's all that matters.
i.e. if you bought them on 13th and sold them on 14th you'll be entitled to participate in the open offer. I did just that and instructed HL yesterday to take up my entitlement. I've also shorted via CFD in order to lock in the gain, because the price often drifts back before the new shares commence trading, as it has done so far.
djframboise, I talking about shorting to lock in your gains on the open offer rather than unhedged shorting. I'm sure some people were happy to short their entitlement at 120p knowing they'd be able to take up the open offer shares at 85p.
Perhaps you'll be able to sell your open offer shares after 18th June for more than 120p. Perhaps you won't. At least by shorting you've locked in 35p net gains (less minor costs).
Rebooter, you won't receive the open offer shares into your account until 18th June, at the earliest.
If you want to lock in selling at today's share price you can always short the shares now. No doubt shrewd holders will have done this a couple of days ago.
I received my entitlement notification today from HL, for shares purchased on 13th May (the announcement date), just as it should be. No nonsense with irrelevant record dates / settlement periods!
I think the excess entitlement is derived from unsubscribed open offer entitlements. There are bound to be some.
The total number of shares available under the open offer (including any excess) will be 141,851,386, taken as clawback from the conditional placees.
In other words, if the open offer (including any excess) does not reach 141,851,386, the remaining shares are placed.