LLoyds Open (Exchange) Offer NOV 09

cardsharps

This is the economics of the madhouse. Everytime Lloyds gets into a mess they create from nowhere a few billion more shares and the best thing is mugs fall over themselves to buy them!!

Lakeuk

x2-zero wrote: »

Just Landed- Yes i have been allocated 424 new shares,i already have 317 so will they be added together,in which case i will have 741 in total,is this how it works.

Yep, you'll pay Lloyds £156.88 for the 424 shares

cheekykid

Richard_DandR wrote: »

As Lakeuk says, if you do nothing the lapsed nil paid shares will be sold on your behalf and the proceeds sent to your Halifax share account. You would not have any control over this process - it will happen automatically.

If you don't want to take up the shares but would prefer some control over the price you receive for the nil paid shares, you should sell them.

Assuming you sell or lapse the nil paid, the ongoing cost on your Halifax valuation will be £6,101.28. The proceeds from the lapse or sale of nil paid rights will be offset against the cost of £3,061.58 and show a gain or loss.

The reason for the split is that the new shares given to you have different characteristics to the original shares and therefore are valued differently. In due course, if the 37p per share call is paid, you would see these combine back into the LLOY line as all the shares would rank equally.

The cost allocation is largely due to accounting (eg for Capital Gains Tax) which is probably not relevant unless you have large gains for the year 2009/10 (more than £10,100).

Sorry but i still don't understand why they didn't first simply ask me if i want more shares for 37p each rather than splitting my shares? as a result am down £900 on the new shares:mad:

sabretoothtigger

Kid you lost nothing by the split but away from that the lloyds shareprice has gone down quite alot, 20% say.
There isnt really a good reason for this except turbulence from new shares flowing into the market also banking sector came down a bit recently


As lloyds is the most widely held share in the UK, its a prime target for city sharks to short sell, confuse the general public with this price change and 'scare them out of the pool' for a quick profit. Price isnt the best guide to value

cheekykid

sabretoothtigger wrote: »

Kid you lost nothing by the split but away from that the lloyds shareprice has gone down quite alot, 20% say.
There isnt really a good reason for this except turbulence from new shares flowing into the market also banking sector came down a bit recently


As lloyds is the most widely held share in the UK, its a prime target for city sharks to short sell, confuse the general public with this price change and 'scare them out of the pool' for a quick profit. Price isnt the best guide to value

I have lost because these LBGN shares will expire and i will be forced to sell them therefore my loss will no longer be on paper but actual right? If i could keep them indefenitely then yes i haven't "lost". Am down £2,500. I hope i can make this back in a year or two.

00ec25

cheekykid wrote: »

I have lost because these LBGN shares will expire and i will be forced to sell them therefore my loss will no longer be on paper but actual right? If i could keep them indefenitely then yes i haven't "lost". Am down £2,500. I hope i can make this back in a year or two.

you do NOT own or hold "these LBGN shares" so you would never have had the ability to have them indefinately anyway. You seem confused as to definitions and what it is that is expiring.

what you have been offered is the right to buy more shares (and it is those new shares which are are being offered to you at a discount to the market rate). It is this right to buy which will expire, not the shares themselves

if you chose not to exercise the right to buy (ie you DO NOT actually pay LBG 37p for each new share you buy - up to the maximum number they have allowed you to purchase ie. 13,483 shares costing £4,988.74 in your case) then, in compensation, LBG will pay you whatever is the difference between 37p and the closing market price of the existing shares on the final day of the offer
for example, market price is about 55p at the moment, so the rights are "worth" 18p (55-37), you would therefore be paid £2,426.94.

You would receive not lose approx £2,500 in cash if you do nothing, you will not be "down £2,500".
In the longer term however then the fact is the new shares bought by those who did exercise their right to buy means there are substantially more shares in issue and the market price will (in principle & in a perfect market) fall in response to basic supply economics - more shares avilable so prices are cheaper.

So longer term your holding of 10,062 (average cost to you 91p) shares is now a smaller % of the total number of LBG shares available and so will be worth less than you paid for them as the market price should be somewhere between 37p and 55p to reflect the mathematical average price of x number of shares issued at 37p and y number of shares already previously available at 55p.
Of course in reality it is not a perfect market, and the price of the shares after the rights issue could be anything. In theory they may climb back to 91p, in which case you will still hold shares worth what you paid for them and in the meantime have received almost £2,500 for doing nothing, however, it is unlikely the price will get back to 91p for some time yet!

cheekykid

00ec25 wrote: »

you do NOT own or hold "these LBGN shares" so you would never have had the ability to have them indefinately anyway. You seem confused as to definitions and what it is that is expiring.

what you have been offered is the right to buy more shares (and it is those new shares which are are being offered to you at a discount to the market rate). It is this right to buy which will expire, not the shares themselves

if you chose not to exercise the right to buy (ie you DO NOT actually pay LBG 37p for each new share you buy - up to the maximum number they have allowed you to purchase ie. 13,483 shares costing £4,988.74 in your case) then, in compensation, LBG will pay you whatever is the difference between 37p and the closing market price of the existing shares on the final day of the offer
for example, market price is about 55p at the moment, so the rights are "worth" 18p (55-37), you would therefore be paid £2,426.94.

You would receive not lose approx £2,500 in cash if you do nothing, you will not be "down £2,500".
In the longer term however then the fact is the new shares bought by those who did exercise their right to buy means there are substantially more shares in issue and the market price will (in principle & in a perfect market) fall in response to basic supply economics - more shares avilable so prices are cheaper.

So longer term your holding of 10,062 (average cost to you 91p) shares is now a smaller % of the total number of LBG shares available and so will be worth less than you paid for them as the market price should be somewhere between 37p and 55p to reflect the mathematical average price of x number of shares issued at 37p and y number of shares already previously available at 55p.
Of course in reality it is not a perfect market, and the price of the shares after the rights issue could be anything. In theory they may climb back to 91p, in which case you will still hold shares worth what you paid for them and in the meantime have received almost £2,500 for doing nothing, however, it is unlikely the price will get back to 91p for some time yet!

I can't follow you fully yet.

Why did they split my shares like that?

What am thinking is that they did the split so that i don't lose any money with the rights issue otherwise when the price halved so would have my initial investment. Therefore they take a portion of your cash in order to "adjust" your holdings so that even with the new 60p price you still in money terms have the same amount of cash. Isn't this how it works?

The screenshot I posted in the previous page is what confusing me. It shows 13,483 shares for aprox 3k at 22.7 per share.
How did they buy this amount of shares with 3k? Isn't the 13,483 what I will buy for £4,988 if i accept the new shares? This is what i don't understand. Why I was being allocated these lbgn nil paid rights shares for which i can trade with?

Do you have any book to suggest that actually explains in detail all this? I bought the "Shares made easy" by Rodney Hobson but it doesn't get into detail leaving you wondering about things.

00ec25

with respect you have been given numerous explanations of the 4 options
either 1: pay Lloyds £4,988 and you will own an additional 13,483 shares
or 2: instruct Halifax to sell your rights on the market
or 3: instruct Halifax to do a tailswallow
or 4: do nothing and you will receive approx £2,000 - £2,500

I appreciate the way the data has been presented to you by Halifax looks odd, so :rolleyes: instead of asking about books (when you only have a few working days left to issue your instructions) pick up the phone and ask Halifax to explain to you why they show it that way
unless you have physically instructed Halifax to do either options 1,2 or 3 then what you are seeing on your screen at the moment is merely your inability to understand their rather odd presentation - so ask them

as many posters have tried to explain, you do NOT already own 13,483 shares for aprox 3k at 22.7 per share. The new shares will not be issued until 14 December, what you are seeing on your screen is your rights to buy only, not actual shares, The "book cost" shown against these rights is meaningless

Granville23

I didnt have any lloyds shares so not entitled to any RI, but if I bought some shares currently about 54p, what happens to the share price when the rights issue expires.

I asume that the adjustment has already been made as the share price was 90 odd pence or is there anymore to be made when the RI expires.

leonard146

I have shares in Lloyds but do not understand the rights issue: -

Why has the value of my original shares been reduced and the price I paid for them been reduced?

I have the funds to take up the RI however why should I buy the shares when they can be bought on open market for less (Lloyds are offering them at 37p when market is 20p)

If I take up the offer what happens to my original shares?

Please help as I dont want to miss out!!!