LLoyds RI

caveman38

Can somebody explain how the Lloyds rights issue will operate. I know that the price is set at 38p and get the impression that it will be offered to the institutions first - is that correcct. Also no date has yet been set.
Can you tell me how that it will affect the SP will it dilute it, will it open following day at a premium over 38p, whatis the use of a higher SP before that date except to encourage the sale.
How will the ordinary investor be affected?

mrposhman

Firstly its not a rights issue, its an open offer.

Secondly, the prospectus hasn't been provided so no one really knows the terms of the offer for sure but you can read things into it.

What we do know, is it will be at 38.43p per share. We also know that ALL shareholders will have access to this at the same time, they can't offer an open offer to someone that owns shares but not another shareholder as far as I'm aware. Either way, the statement made by Lloyds says it is along the same lines as the RI late in 2008 where all shareholders were provided the same option.

The higher share price means its more likely that institutional investors and PI's will buy them leaving less for the underwriter (ie. the govt) to sweep up, good news for the bank and for shareholders.

I have no idea what will happen to the SP. Technically, it should drop. The value of the business isn't improving, its just moving 1 equity type (preference shares) into another (ordinary shares). The benefit is that there is no requirement to pay dividends to ordinary shareholders and therefore improves the groups cashflow. As we all know, the LLoyds share price isn' being driven by fundamentals but by sentiment therefore what happens to the SP is anyones guess, but if your average is higher than the 38.43p then you will lower your average on the shares.

Me - I'm planning on selling some of my holdings at a higher rate before the ex date, in order to be able to buy more in the open offer at a lower price per share. I don't have the cash to take up my full rights so this is the best solution for me.

sabretoothtigger

Sounds like a plan, is that is what they call tail swallowing or maybe not since thats a rights thing

It would be good if they didnt charge a dealing charge for the open offer. For a while they were letting people buy lloyds shares commission free

Duty is not payable right?


Generally this is all good news, if lloyds doesnt sell any more shares to government then they can operate as a private bank normally would not some half way house to northern rock status / giant sock puppet bank


trading statements is 5th may but when is ex div and ex offer

http://www.investorresearch.mdgms.com/factsheet/factsheet.html?ID_NOTATION=9454345

mrposhman

sabretoothtigger wrote: »

Sounds like a plan, is that is what they call tail swallowing or maybe not since thats a rights thing

It would be good if they didnt charge a dealing charge for the open offer. For a while they were letting people buy lloyds shares commission free

Duty is not payable right?


Generally this is all good news, if lloyds doesnt sell any more shares to government then they can operate as a private bank normally would not some half way house to northern rock status / giant sock puppet bank


trading statements is 5th may but when is ex div and ex offer

http://www.investorresearch.mdgms.com/factsheet/factsheet.html?ID_NOTATION=9454345

Isn't that the million dollar question. When will it all kick off.

I'm in 2 minds as to whether to sell at 60p now and bank a rather sizeable profit (though technically I'm still in the red on Lloyds) or hold on and hope for a bit more (greed's kicking in now). Maybe I'll set a stop loss.