Member Info for tichtich

"A very rough and wholly theoretical calculation is to assume (hope!) that your return will be 40% of the value of your current holding."

A word of caution on the word "return", which is ambiguous. LGEN say they aim to "return" 40% of market cap to investors in 2025-27. This is, of course, very different from a 40% "return" (i.e. gain) on investment.

I missed the opportunity to add back at the April lows, as I was waiting for an even lower low. Looks like I might get another chance now. But I'm not buying yet. I already have a large position in LGEN, and the larger my existing exposure, the more attractive the price needs to be to entice me to add still more. Same goes for adding to UK exposure, especially with the state of the UK economy and interest rates.

P.S. I guess I shouldn't say "insignificant". 0.4p per qarter is 1.6p per year (if continued at the same rate). That's well over 1% of NAV. An extra 1% anual return is significant. But that calculation assumes you believe that the predicted future cash flows (on which the NAV is based) will be realised in practice. And if you believe that, then all is good (for long term investors) and there's nothing to worry about! 😉

"Just suppose that company weren’t buying back 700-800k shares per day. What would the SP be?"

The quarterly NAV reports tell us the effect of the buybacks on NAV per share. In Q2 they added 0.4p to the NAV per share. It's pretty insignificant in comparison to other effects.

"Selling off unprofitable assets is fine but shouldn't disposals be balanced with acquisitiions? "

The assets sold weren't unprofitable. The logic behind selling is that it's a gain if you sell assets at NAV to buy back shares below NAV. Buying new assets at NAV would have the opposite effect.

If shareholders have something to worry about, it's the possibility of poor wind speeds, low energy prices and adverse changes in government policy towards wind farms. It's mainly the last of these that worries me, and why I've reduced the size of my UKW position. (It's still quite large.)

UKW is not selling assets to pay the dividend. The dividend is more than covered by operating profits.

Why are you so keen on the company being wound up? Are you a shareholder?

"This feels like a value trap. It doesn't matter if we sell assets for NAV, if we are reinvesting that in just buying more shares, the NAV will only go down."

Selling assets at NAV to buy back shares below NAV increases the NAV per share (other things being equal).

The main question investors should be concerned with is whether the the current NAV figure is appropriate. Since the NAV is based on a discounted can flow calculation, this involves a prediction of future revenues. As I see it, the NAV per share keeps falling (even after discount rates stopped rising) because previous revenue projections have turned out to be overoptimistic. So, are they still being overoptimistic, or they now getting it about right? My best guess (for what it's worth) is that they're probably getting it about right, ASSUMING no significant change in government policy. But a major change to the electricity pricing system would probably mean lower NAV and ultimately lower returns.

Jason99, did you get any of the shares that you oversubscribed for? If I understand correctly, they're trying to sell the unclaimed shares closer to market price, so they can compensate the people who let their rights expire. I doubt that anyone is getting extra shares for 176p, which I assume is what you were hoping for. But I may have that all wrong. I'm just wondering if I missed out by NOT oversubscribing. 😉

I bought some BME today, for the first time. It's been on my watch list for the last 4 years, since it was recommended by Motley Fool (their paid service, which I subscribed to for a while), but I always found some reason not to buy. A couple of years ago I was kicking myself for not buying near the 2022 low point. I didn't expect to see that price again. But here we are, even lower. I invest for dividends, and the yield seems attractive at this price. But it's still one of my lower yielders.

You can find the adjusted dividend figure in the Appendix to the 'Acquisition & Rights Issue' document in the RNS:

"The FY24 interim dividend was 8.6p and final dividend was 16.1p resulting in a total dividend of 24.7p. Following issue of 79,539,337 new shares in relation to the Rights Issue at a discount of 30.4% to the theoretical ex-rights price, the adjusted dividend per share for FY24 would have been 21.3p (interim dividend of 7.4p and final dividend of 13.9p) on the basis of a bonus factor of 1.16 being applied. The FY25 dividend is expected to increase to 22.3p (interim dividend of 7.6p and final dividend of 14.7p) and the interim dividend per share for FY26 is expected to increase to 8.1p, reflecting the one-year acceleration described above. This is set out in more detail in the table below."

I reckon that the the 1.16 adjustment factor is calculated as 293.50 / 252.98, where

252.98 is the "theoretical" (or other things being equal) ex-rights share price, and

293.50 is the stated pre-announcement price on which that theoretical price was based.

"At this rate the share price is going to be 1.76, not sure how a company trading at 2.85 can drop to 2.49, 3 p below the agreed price. Could be a money losing opportunity this."

The fall in share price (to the "theoretical" price of 252.98p) is just an artifact of the rights issue and not a loss to shareholders, as the grant of rights compensates you for this fall (as long as you exercise your rights or sell them). If the price falls below the theoretical price, that is a real fall, but it seems to me that the price has remained very close to the theoretical price, sometimes slightly higher, sometimes slightly lower, within the range of normal daily variation, and not significant. To me this suggests that the market is currently taking a neutral view of the RI and acquisition, setting it as neither advantageous or disadvantageous. But perhaps it would be more informative to wait and look at the share price after the RI is complete plus allowing time for the price to settle. Of course you also have to allow for the effect of the whole stock market rising or falling due to factors not related to Chesnara.

Oops ... editing error. I meant to delete the last paragraph.

"Also if the rights are worth just 74.5p, why are they priced at 176p?"

Someone who wants to buy a CSN share can either pay about 252p now (the current share price) or pay about 75p now for the right to buy a share in a couple of weeks time for 176p. You would expect the market to adjust the current prices so that these two ways of buying a share cost roughly the same in total, as no one would choose the more expensive way if there was a significant difference between the two.

That buyer would make a tiny profit, assuming that the price hasn't changed by the time they need shares are issued. The market presumably thinks that email profit is

I've now received my rights on Interactive Investor. They have a "sell" option, but that doesn't seem to be working. Not that I want to sell them but I wanted to see how the option worked, for future reference. I have now exercised my rights, under "Corporate Actions", but haven't yet seen any effect. The rights are still listed as a position in my portfolio.

"The dividend is to be increased by an 'adjusted' 6%. That means we will get the same divi as last time plus 6%, but spread over a larger number of shares."

Ah... I didn't notice the word "adjusted". I guess that means people should ignore my previous comment about an effective dividend increase. Sorry!

Following up my previous comment, I've realised that I could have got to the 16% more easily by just comparing the theoretical new share price with the pre-announcement share price on which it was based. 293.50/252.98 is about 1.16.

An interesting point that I don't think anyone has yet made is that maintaining the same dividend per share while diluting the shares is effectively an increase in the dividend. From the company point of view, the total dividend payout will increase by 10/19, or 52.6%. Presumably they think that the increased cash flow from the acquisition is enough to cover this, as well as the planned 6% dividend increase in the coming year.

A shareholder who takes up their rights will own the same fraction of the company that they owned before, but with an increase of 52.6% in their total dividend. (I'm ignoring the planned 6% increase.) However, they are paying for the privilege of maintaining their share of the company, so we should take that into account. Since they are getting the new shares cheap (with an elevated dividend yield), I would say that this is effectively a dividend increase. But how much?

I think it's easier to look at this from the point of view of someone who sells their rights for the "theoretical" price of 76p (252-176, as mentioned by casapinas), and uses that money to buy more shares. For each 19 shares, they sell 10 rights at 76p, making 760p, which is roughly enough to buy 3 shares. So their shareholding (and total dividend) rises by 3/19 (or nearly 16%), at no cost to them.

My conclusion is that, in a reasonable sense, we are getting an effective 16% dividend increase, in addition to the planned 6% increase for the next year. Nice! But of course a dividend increase is only a real gain if it is justified by an improvement in the company's prospects. So the important question is whether the acquisition is accretive enough to justify this increase.

The rights to new shares effectively make up for the dilution, so they have a value. You should either exercise your rights or sell them, otherwise you're throwing money away. As I haven't done this before, I'm not sure how the selling of rights works. I'm waiting to see if Interactive Investor gives me that option.

To anyone who has done this before, will the rights have their own ticker symbol?

Good explanation, Casapinos. But I think you made a typo, which I just point out in case anyone is confused. You wrote: "If you buy shares using your rights, you will end up after 22 july with 19 shares worth somewhere in the region of 252p(obvs any market moves allowed for) ." Surely that should be 19 + 10 = 29 shares, not 19.

Bigma9i wrote: "Chive1 says cut off is 1st July. And what I have read the new share price will 252, meaning if you buy at 286 and do not have the new rights then you will lose 34p per share".

Surely people would not be buying the shares today at 286 if those shares were ex-rights (unless all such buyers are making a big mistake!). And the timetable says: 'Existing Ordinary Shares marked "ex-rights" by the London Stock Exchange' on 8th July. That seems to imply that shares are still trading with rights attached.