LLoyds Open (Exchange) Offer NOV 09

Reaper

Where are you seeing 20p? I make it 54p at the time of writing:
http://www.google.co.uk/finance?q=LON%3ALLOY

The value of the shares will fall because the pool is being diluted by issuing the extras. However even so the new shares are being offered at a discount price so it ought to be worth it unless you have a particularly gloomy view of Lloyds in the short term.

Lakeuk

leonard146 wrote: »

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!!!

Say you have 10 shares in a company, and the company increase the number of shares, say another 10 shares which they will sell to someone at a discount.

Before the rights you had 100% invested, with the extra 10 share available before you take them up your investment is 50% (you have 10 out of the 20 shares)

You have 1st dibs to buy the discounted shares which will maintain your current holding of 100%, if you don't want to buy the additional shares then you can sell your rights which will be the differernce between the original price before the new rights were offered and the current trading price of the shares, Someone else will then buys your allocation of rights

leonard146

I meant the RI shares which are about 17p now. Why should I pay Lloyds 37p for them when they are valued at 17p

Sorry if I sound thick

00ec25

as an existing shareholder you have been given the right to buy the number of shares you have been allocated
it is the right to buy extra shares which is valued at 17p each, those "rights" are themselves tradeable and can be sold in the market at (currently) a price of 17p each. If you do so then you no longer have the right to buy the new shares at 37p

if you "take up your rights" in full you will have to pay 37p each for the new shares and they will be valued at the market price for LLoyds shares - this will be anywhere >37p

(the rights are "worth" 17 p becuase that is the difference in value between the new shares cost of @ 37 p and the current market price of the existing shares @ 54 p - this difference obviously fluctuates as the price of the existing shares changes )

00ec25

Granville23 wrote: »

I asume that the adjustment has already been made as the share price was 90 odd pence.

in a perfect market you are correct, markets are not perfect, feel free to gamble...

Rollinghome

Granville23 wrote: »

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.

The short answer is nothing. The longer answer is it depends. If the rights went badly and a lot of shareholders failed to take up their rights then the overhang of unwanted shares would cause the price to fall. If it goes smoothly, as it probably will barring disaster, then the price could rise slightly because the risk has gone. Overlaying all that is the volatility that will affect all bank shares for quite a while.

cardsharps

leonard146 wrote: »

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

You're not meant to understand. Lloyds just want you to part with your hard-earned cash so that they can waste it like they did the last lot. It's alot easier to achieve this if you don't understand what's going on

Mr_K

Mmm... Well I'm taking the plunge and taking all they're offering. Not expecting a profit anytime soon. However I probably won't be cashing in until retirement (20 years time), by which time I think there's a chance of a good/significant return.

cheekykid

00ec25 wrote: »

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

Thanks am slowly getting there. The representation on my halifax account has fully confused me.

Some clarifications:

1) The rights price fluctuates automatically depending 100% on the share price right?

2) Assuming the rights price now is 17p and someone buys my rights of 13483 shares. He will pay for one "the price of the rights" and two the price of the 13483@ 37p shares? something am missing here

3)What my halifax account shows is meaningless and i haven't really paid anything for the rights even though it says i bought them at 3k?

4)My 9k is still unsplitted with lloyds ordinary shares?

5) I read i can make a profit on the rights if someone else buys them. Can you explain how can this happen?

Many thanks

Just_landed

Mmm... Well I'm taking the plunge and taking all they're offering. Not expecting a profit anytime soon. However I probably won't be cashing in until retirement (20 years time), by which time I think there's a chance of a good/significant return. >>>

Don't forget shares are just like horse racing, you can win and lose I started at £4 +:rotfl: