Rolls Royce capitalisation issue

tiff

We have some RR shares and received a letter today about them undertaking a capitalisation issue. 85.8 shares for each RR ordinary share held.

So, if we have 1007 shares, what does this mean? Are we getting a bonus amount of shares that we can sell if we like?

Mr_Mumble

Hi tiff, if you've held Rolls-Royce shares for a while then the C share distribution just replaces the B shares (the only difference is you can no longer automatically convert the shares into ordinary shares).

If the above paragraph is gobbledegook then you need to read:
http://ir.rolls-royce.com/rr/investors/shareholder/cshare/introduction/

Simply put: Rolls-Royce pays out these C shares twice a year in lieu of a normal dividend.

The math:
1007 ordinary shares * 85.8 = 86,400 C shares

a C share is worth a grand total of 0.1p so 86,400 * £0.001 = £86.40

(If Rolls-Royce paid out a normal dividend it'd be 8.58p per share i.e. 8.58p * 1007 = £86.40)

You have the choice of converting the C shares into 1. cash, 2. cash which is then used to purchase ordinary shares, 3. keep the C shares. You probably should not keep the C shares (they're a form of preferential share and you'll only have a rump stake). So, choose 1 or 2 depending on your circumstance.

tiff

Thank you, I did do a google search but didnt think to check RR website! We've only just got the shares, exercised the sharesave option recently. Thanks for the info.