National Grid rights issue

edda

Got the letter from National Grid today for the rights issue.

If you have shares, expect yours soon. Deadline date for a decision is 8th June if you want to choose between the 3 options.

1 - buy all your allocated rights
2 - buy some rights (no cash needed)
3 - sell all your rights

steveksullivan

If I'm reading things correctly, at todays share price this represents a 'profit' (before dealing fees) of about £1.54 a share?

What are people doing?

Think I will probably sell - on my meagre allocation of 148 new shares - and based on todays share price - think I should net about £210.00 after Capita's fees........

Plse correct me if I'm wrong !!

fullstop

Down over 11% today !!! so far .

Rollinghome

fullstop wrote: »

Down over 11% today !!! so far .

That's because they went ex-rights today.

gatita

Please can someone advise me, I haven't a clue as to what all this means. I have a few shares worth as far as I know about £500. What are most of you doing? Taking up All your rights (box one) Cashless Take-up (box 2) Sell All Your Rights Box 3

It says I have 75 existing shares, in box One New shares 30, in box 2, Amount payable £100.50 in box 3

HELPPPPPPPPPPPP please lol

cheerfulcat

Hello, gatita,

You have a choice of paying £100.50 to buy 30 new shares [box 1], selling enough of your " nil paid rights " ( the right to buy a share at a certain price, normally under the current market price ) to pay for a lesser number of new shares [ box 2 ]; this will also cost you the dealing charge...

or selling all of your rights [ box 3 ]. Price currently unknown.

Option one costs you an immediate £100.50, option two costs you nothing ( except for the dealing costs - about a tenner in your particular case ). Option 3 will also cost you a tenner.



FWIW, I have just sent my cheque to take up my rights in total.

gatita

Aww Cheerfulcat, thank you so much for explaining things so clearly, I really appreciate it! still haven't quite decided what to do.......will sleep on it!

Masomnia

Be aware that if you opt not to take up your rights your holding will be diluted.

Masomnia

steveksullivan wrote: »

If I'm reading things correctly, at todays share price this represents a 'profit' (before dealing fees) of about £1.54 a share?

What are people doing?

Think I will probably sell - on my meagre allocation of 148 new shares - and based on todays share price - think I should net about £210.00 after Capita's fees........

Plse correct me if I'm wrong !!

I think you may have the wrong end of this rather confusing stick.

By selling your rights it means selling the right to purchase the shares at the offered price. These rights themselves are traded at a price, and it's the rights you sell for the going rate, not the shares being issued.

steveksullivan

If you're right - and I'm sure you are - thank you HUGELY for saving me from a big mistake (well, lets not exaggerate - its only a couple of hundred quid!!)

Two questions :

1. Is there any way of knowing in advance what the price for the rights is going to be ?

2. Is there anywhere in the accompanying documentation that explains this better ? if so I can't see it........

Based on the above what are others doing?

Although, ......further to question 1 - now that I think about it .......


Is it possible (or even likely) that this corrected situation might actually make me more money than I thought ...... e.g if the 'sale of rights' price is greater than the profit I thought I was going to make per share? Historically where do they 'pitch' these 'sale of rights' prices?

EDIT: THe more I think about it - I guess the 'sale of rights ' price is going to be just under the difference between the current share price minus the offer price - so that whoever buys them is already sitting on a profit of sorts ?.........

Can someone help me with my logic (again!!)

Rollinghome

steveksullivan wrote: »

Two questions :

1. Is there any way of knowing in advance what the price for the rights is going to be ?

2. Is there anywhere in the accompanying documentation that explains this better ? if so I can't see it........

Based on the above what are others doing?

Although, ......further to question 1 - now that I think about it .......

Is it possible (or even likely) that this corrected situation might actually make me more money than I thought ...... e.g if the 'sale of rights' price is greater than the profit I thought I was going to make per share? Historically where do they 'pitch' these 'sale of rights' prices?

The rights can bought and sold like shares at the current rate or you can just allow the rights to lapse and they'll then be sold for you and the proceeds forwarded. You can follow the value of the rights, National Grid Nil Paid shares, on stockbrokers sites etc. E.g.: http://www.h-l.co.uk/shares/shares-search-results/n/national-grid--nil-paid-shares

A rights issue is when existing shareholders are invited to increase their investment. There are typically two very different reasons why that happens: either a) the company has been successful and it thinks that with more capital it could be even more successful, or b) it has got itself in bit of a bind and needs your money to get out of it. Before subscribing you need to decide which reason applies and whether you want to increase your investment with the company or not.

Personally, I would always wait until the last few days if you decide to send them your cheque. There's no advantage in being early and there can be considerable advantage in delaying if something unforseen emerges at the last minute. In the HBOS rights issue some while back some people actually paid more for exercising the rights than they could have bought shares in the market.