Member Info for ToffAppleton1

The amount of shares that will be in existence after the rights issue

Current market capital value £2.3 billion
Rights issue size £2 billion

86.9565 percent
@SP 115

Although slightly smaller than an anticipated 2.5 billion pounds, the rights issue is almost the same size as Rolls’ market value after Thursday’s 10% share price decline. That makes staying on board painfully expensive.

By my calculations the cost to shareholders will be 86 percent of the value of the shares they own based on the current SP of 115

So someone with £10,000 shares at current price
Will have to stump up an additional £8,600

Toff

The rights issue will most likely succeed but it isn’t a certainty.

If the magic number of £1.066666666 is breached by a fairly large margin I’d imagine investors would boycott it. That would take us into uncharted territory.

“ The group’s credibility now rides on whether investors take up the offer. The share issue has been fully underwritten, with BNP Paribas, Citigroup, Goldman Sachs, HSBC, Jefferies and Morgan Stanley acting as joint global co-ordinators.

Crédit Agricole CIB, Santander, SMBC Nikko and Société Générale are acting as co-lead managers. Goldman and Greenhill are acting as financial advisers to the company. Jefferies and Morgan Stanley are acting as joint sponsors.”

Sham

“So if somebody buys 3 shares today at 117 and he gets to buy 1000 rights via right issue for 1300 shares he has paid 671, which is probably half than your "magic number".

Your maths is as bad as your investment choices

You buy 3 shares today
You’re entitled to 10 new shares (not 1000)

If the price were to fall to £1.066666666
It would be the equivalent of £3.20

Which is the equivalent of 10 new shares.
If you want to argue with me you need to get educated first.

Toff

300 old shares gives the rights to
1000 new ones

We know the old shares fluctuate in price
But the new ones are set in stone @32

1000 new shares = £320
Which is the equivalent of
300 old shares at £1.066666666 each.

The legend of ToffAppleton grows

Is the magic number the shareprice has to fall below before the shares become cheaper to buy on the open market - rather than the rights issue.

Will that number be breached?
It could well happen.

Toff

Fahmad

“Anyone please correct me if I am wrong in calculation.“

Looks correct to me.
But the original 1000 shares are now only worth £1116

So you’d be paying almost the same for the new shares.

Note - the cost/value ratio decreases/increases with shareprice movement.

Toff

If Rolls were to fall to £1.065 there would be no discount at 32p per share. Any number below this would mean shareholders paying more than the market price.

The underwriters would have known that when backing the RI.

The big question is will the SP fall below £1.065...
And that’s one even ToffAppleton can’t answer.

With 6,436,651,043 new shares in issue (a fearfully big number) its time for the board’s Buffett quoting sage - WildTiger - to get greedy. There’re plenty for everyone - 6,436,651,043 to be exact.

Rights Issue of up to
6,436,651,043 New Ordinary Shares at 32 pence per New Ordinary Share to raise
gross proceeds of approximately £2bn.

At the current shareprice of 122
The total of the new shares being issued is equivalent to 87 percent of the shareprice (give or take a fraction)

This represents only 13 percent discount to curent SP. Almost like having to buy the company all over again. More similar to an IPO than a rights issue.

Subject to shareholder approval on October 27
Formality - II’s have already agreed.

Toff

Note; the percentage changes all the time with the SP

John

“It would have been annoying so I wondered how the eligibility date was normally worked”

If the RI is announced tomorrow you’ll be eligible.

Jjb

Here’s a real simple explanation about how rights issues work. It’s my own but it could have come out of the investing for dummies manual.

You own 5 percent of a company.
They have a RI
One new share issued for each one in existence

If you don’t take up the RI your share of the company will fall to 2.5 percent
To retain your 5 percent share you need to buy the new shares.

If you forfeit your right to buy the new shares you’ll be compensated by the underwriters by way of a small cash payment.

They will then sell those shares on. Unless you think the company is going bust or you don’t have the money to buy the new shares it is always advisable to take up the RI

Toff

jjb

“I thought you got too much of a hard time on this board in recent days.”

Success is the best revenge. There’s nothing embarrassing about being right...

Toff

Laptop

“I Wait with baited breath for the enlightenment ;-)”

I think you mean “I wait with bated breath”

Bait is the stuff you use on fishing trips:)

Toff

Post from 20 September
_________

Cash Call Will Be Announced Next Week20 Sep 2020 10:17
The decision has been made and it’s going to be a huge one.

Current market capital is about £3.5 billion
Cash call £2-2.5 billion

For every £10,000 of shares investors will be on the hook for around an extra £7,000.
_______________________

The legend of ToffAppleton grows...

Desperation mainly.

Since word got out about it the SP has tanked everyday. If they’d left it for just one more day it would have been unviable.

Float is 1.91 billion shares

At £1.05 each they can still raise £2 billion at a modest discount. If they do announce it tomorrow they’ll have made it happen by the skin of their teeth.

And if they don’t the shareprice will plummet another 20 pence.

Good news for the company. Good news for non-shareholders.

But a catastrophe for the ones who are going to have to stump up £2 bill to retain their slice of the pie.

Toff

Barring a last-minute hitch, the company, which has seen its balance sheet and share price hammered by the COVID-19 pandemic's impact on global air travel, will announce a comprehensive plan to shore up its finances on Thursday morning.

A source close to Rolls-Royce's lenders said the financing package was likely to include additional borrowing headroom as well as roughly £2bn of new equity.

Lenders including BNP Paribas and HSBC are understood to be involved in the cash call, while Goldman Sachs is also advising Rolls-Royce's board, which is chaired by Sir Ian Davis.

Toff’s prediction

The SP will rise tomorrow

So the rights issue will be announced tomorrow morning. Investors will be on the hook for about £8,000 for every ££10,000 held.

‘City sources said that Rolls-Royce had been warned by institutional investors that they were unhappy about seeing their interests in the company diluted by a £500m placing to Kuwaiti and Singaporean sovereign wealth funds.‘

I can understand that. It didn’t make sense to me bringing in sovereign funds for a relatively small amount of money and a large slice of equity.

Toff

Sale

“The Covid 19 is not the primary cause of this disaster. The disease is inside the company.“

Horse manure.! The real cause is Brexit. I have sympathy for anyone whose lost money on Rolls who didn’t inflict a grievous wound on UK companies.

But I have nothing but contempt for those who voted in favor. If you own Rolls and voted for Brexit it’s like breaking both your goalkeeper’s legs and backing your team to win.

Shame on you

Toff