The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
DaveT1, you need to hold at close today to qualify for the entitlement. You'll qualify, even if you buy in the closing auction tonight.
Anyone who held on the record date but sells before the ex-date needs to forward any entitlement to the buyer (if you have a nominee account this is invisible to you as your broker handles these sort of complications).
85p is a good price IMO. I was one of those who thought more likely around 60p. The rise in recent days suggests demand was leaking.
Forget the record date, it's the ex date that matters. They don't go ex-entitlement until tomorrow meaning shares bought today will still qualify for the open offer. I dare say some will disagree. Sobeit, I can't be arsed to educate on this anymore!
Pokerchips, thanks for confirming you received the open offer entitlement for shares bought 'on the placing day' (by which I assume you mean 4 May). You did well buying them at 30p, as the lowest price printed on LSE that day was 31p for a couple of small sells.
HL just confirmed my entitlement for shares bought on 4 May and subsequently sold on 5 May, which is as it should be. I find it hard to imagine anyone who has worked as a broker doesn't understand what matters for investors is holding at the point of going ex-entitlement (not record dates, settlement periods etc). A broker should be familiar with processing market claims for shares sold before the shares are marked 'ex'.
I don't suppose they'll be much appetite for the open offer. Anyone keen to buy additional shares will have surely bought cheaper in the market, albeit paying dealing costs (open offers don't have dealing costs). Plus, if you buy in the market you don't suffer the risk of being locked in for days between committing to buy and being able to sell.
castle2012, if you plan on taking up the open offer, why not just buy cheaper in the market now?
I was thinking the more you buy sub 30p, the less you're diluted by the 30p places. No hurry to buy here in case the second placing/open offer bombs.
Doesn't seem much point taking up the open offer, when you can buy in the market for 29.75p. Perhaps even lower soon. At least you don't have to worry about being 'diluted' by the 30p placees!
Buy/sell flags are only guestimates as to the aggressive participant in the trade. It's often based on whether the trade is done above or below the mid price. You probably bought below mid, which could be a sign there's plenty of selling interest.
I'd have expected there to have been a confirmation of completion of the first placing by now. Discussions about ex dates are all a bit academic if the first admission doesn't happen on Friday?
Pokerchips, I don't need to be on the record. That's an administration date for mailing allocation letters. By your argument you'd need to have bought on or before last Wednesday in order to be on the record and qualify for the open offer . That's not correct.
Did you read this clarificantion from Atlas Mara over their open offer, presumably when they were hassled by confused PIs?
https://markets.ft.com/data/announce/detail?dockey=1323-13325764-3F10R9RQPHKL9OI557N41BRCD0
Pokerchips, I bought day. I saw the trades go through the market.
All that matters to the vast majority of folk these days is the ex date. Back in the days of certificated shares a couple of times I sold between record date and ex-date and was required to return the allotment letters to my broker, in order that the entitlement could be forwarded to the buyer. It's spelt out on the documents you receive.
With dividends the ex-date is usually a Thursday and the record date a the Friday. That's a convenience for T+2 settlement and means there isn't the hassle of market claims. I'm sure it would be more convenient if open offers and rights issues were done the same way, with the record date the date after the ex date, but this would disadvantage certificate holders who wouldn't receive their allotment letters through the post in time for the ex date.
For most investors this is probably just a geeky technicality but as a trader it's important to understand the significance of ex dates (and the insignificance of record dates).
If they only commence trading ex-entitlement from tomorrow how does it not follow they traded cum-entitlement today?
FWIW I bought a few shares today in my nominee account. I fully expect to be able to particpate in the open offer, not that it's very attractive at this level.
Pokerchips, I fear you're over-thinking the issue! As I said, I don't want another protracted thread about this. Educating some RR. holders was such an uphill struggle.
For whatever reason, companies still word rights issues and open offers in a way that seems to mislead a lot of inexperienced PIs. Occasionally they are forced to clarify, as occurred with the Atlas Mara open offer some time ago.
https://markets.ft.com/data/announce/detail?dockey=1323-13325764-3F10R9RQPHKL9OI557N41BRCD0
Note how they also describe the Record Date of 8 August as the "Mailing Date" for entitlements.
Note how the ex-entitlement date is 11 August and how they've clarified that close of trading on 10 August is the time by which shareholders need to own shares in Atlas Mara in order to participate in the Placing and Open Offer.
Pokerchips, I've no desire for a protracted re-run of the RR. debacle.
The ex date is all that matters to PIs with nominee accounts. The record date is used for the allocation of provisional entitlement letters to certificated holders. Holders who sell between the record date and ex-date should forward these to the buyer.
What do you suppose the "ex-entitlement" date means?
You cannot decree retrospectively that shares bought prior to the open offer announcement don't qualify. That would be trading in a false market.
Narada, youll get given the opportunity to buy more shares at 30p on the basis of a minimum entitelemnt of 1 existing share per 6 you hold at close today. You don't get them for free. They want your money.
Don't be bamboozled by record dates. They go ex-entitlement tomorrow, meaning any shares bought today qualify for the open offer.
I think it depends on the pricing. The lower the price, the more of the company the placees stand to acquire for their money. The lower the price, the more existing holders will be disadvantaged if they don't take up the shares (unlike a rights issue the entitlement isn't tradeable).
In order to reduce the dilution existing holders can apply for more than their basic entitlement. How much extra they receive will depend upon how many people don't apply for their minium allocations.
PeterSW, in the results RNS on 21 April they said:-
"The proposed equity raise is expected to be in the range of £190m to £240m and to be undertaken by way of a Firm Placing and Placing and Open Offer."
If that's the case, existing shareholders will not have the opportunity to take up sufficient shares to avoid dilution of their stake in the company. How much they get diluted will depend upon the relative size of the firm placing. If you want to avoid dilution you need a rights issue, but it's likely the company felt shareholders might balk at the prospect of being asked to stump up another 150p per existing share held. Also, they might not have been able to obtain underwriting at a credible rights price.
I've seen these situations before and companies seem to consider they've met pre-emption, provided they have an open offer, even if it is a bit of a token gesture.
Clearing the debt is one thing but that won't reduce the accumulated losses, not directly anyway. Profits will be required to clear the accumulated losses. It's my understanding that companies cannot pay dividends if there are accumulated losses on the balance sheet and clearing £637.5m is likely to take 5 years min. worth of profits.
Reducing the debt should at least reduce interest payments and increase profits.
Dividend?
Others may know better than me but I thought under company law it was forbidden to pay dividends when you had accumulated losses on the balance sheet. As at 31 Dec 2020 accumulated losses amounted to £637.5m. That's going to take a while the clear!
I know sometimes it's possible to wangle a capital reorganisation to clear the losses but I think the company ought to be in better shape first.
I'm one of those who think that's optimistic. Personally, I think getting the issue away at 60p would be a good result. That would mean about 350m new shares to raise £210m. If the majority is raised through the firm placement, existing holders would be lucky to be offered as much as 1 for 1. Just a wild guess, I could be way out.
I think it would be better for existing holders if this was done via a rights issue, but that doesn't look like happening. It's difficult for the market to assess at the moment, not knowing the proportion of the company that will be dished out in the firm placement.