First Bus Rights Issue

gadgetmind

JoeCrystal wrote: »

Yes, that is the whole point of the right issues!

Some rights issues let you apply for additional shares, but these are normally rights issues due to companies expanding and investing rather than having hit a crisis point.

Bazofts_Revenge

syco1 wrote: »

Bit off when someone has been so helpful :rotfl:

I am quite open as to my trading stratedgy / DIY investing but it really serves no purpose to give away where my accounts are. People could then try and access my account with this user name or other info they could trawl the net and find... although I only use this name in Forums as I aren't that dumb.

buffman

Can anyone please tell me the ex-rights date? Many thanks.

Bazofts_Revenge

Ex rights date is early june from what I remember.

Can anyone answer this? Will I be able to buy the rights issue shares in my ordinary stocks and shares account even though my First Bus shares are in my Stocks and shares ISA which I've already used my full allowance. Both with the same broker.

If I can only use my ISA then I'll just have to sell some other stock to make some cash available.

Bazofts_Revenge

Well this has been a bit confusing. I thought this arrangement was to raise funds. I now have 721 new Nil Paid shares and no money has gone anywhere. How does First Group raise money from this. I had held money aside for this. Thinking about pumping that money into Man Group.

Ark_Welder

http://corporate.practicallaw.com/1-107-6418

Bazofts_Revenge

Well I hope I get something in writing from my broker explaining what to do soon. Thanks Ark Welder may your sparks glow bright

Ark_Welder

You should get some information from your broker now that the shares have gone ex-rights. The ticker for the rights is FGPN (until 25th June, when they become fully paid-up shares). You can sell these in the market, buy more, or allow them to lapse (in which case you might get some cash for them if a buyer can be found for them at that time).

If you do want to subscribe then the cash will need to be there in your account by the broker's deadline. Remember to allow for any additional fee that the broker might charge for corporate actions (some do, some don't - will be in their Rates & Charges section).

If you want to subscribe outside your ISA then ask your broker whether it is possible to transfer the nil paid rights out to your dealing account. But don't transfer out the existing ordinary shares, which would mean you are in effect making a withdrawal from your ISA. The downside to taking the nil paid out of the ISA, though, is that you would end up having the same company shares in two accounts - but that might not be important to you (as it isn't to me).


The relevant RNS detailing the issue:

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11586963

Note that your broker might give shorter deadlines for instructions than those given in the RNS because they will have to allow time to pass the instructions on.


Not sure about sparks, but hope there aren't any holes in this raft of information!

loofer

I'm new to the whole concept of rights issues so go easy on me.

Bit confused as at first I thought I just get given new shares for free (effectively) in return for my old ones, then after reading on this thread it appears I have a choice of buying shares at a preferential rate of 85p but I have to inform my broker. Not exactly appealing idea considering the closing price today was 99p.

Looked at my HL account just now and I've obviously been given these shares already. I haven't instructed my broker, they are just in my account. What can I do with these new shares? Should I have been asked first if I actually want them?
The cost price of these new shares somehow works out at about 33p... (630 new shares at cost of £208)
Seriously confused!!!

Ark_Welder

loofer wrote: »

I'm new to the whole concept of rights issues so go easy on me.

Bit confused as at first I thought I just get given new shares for free (effectively) in return for my old ones, then after reading on this thread it appears I have a choice of buying shares at a preferential rate of 85p but I have to inform my broker. Not exactly appealing idea considering the closing price today was 99p.

Looked at my HL account just now and I've obviously been given these shares already. I haven't instructed my broker, they are just in my account. What can I do with these new shares? Should I have been asked first if I actually want them?
The cost price of these new shares somehow works out at about 33p... (630 new shares at cost of £208)
Seriously confused!!!

What you can see in your account are not new shares - not yet - they are called nil paid rights, and represent your entitlement to the allocation of new shares under the rights issue. These new shares would be in addition to the shares that you currently hold, not replacements for them.

A rights issue is a method by which a company can raise cash, so you will not be getting free shares, you will have to buy them if you want them, and the cost is 85p each. You do not have to buy new shares if you do not want them: you can either sell the rights now, just as you would with shares (current bid price is around 14p each), or you could allow them to lapse (i.e. you do nothing) and you might get some cash if the price of the existing shares is higher than the issue price of the new shares.

Note that your existing shares have fallen by around 23p today to reflect the fact that they are now trading ex-rights, i.e. the holder is entitled to subscribe to buy their allocation. If the price of the existing shares remained at 99p and you stumped up the cash for new shares (i.e. turning your nil paid rights into fully paid rights) then your 85p cost price would be turned into a new share worth 99p. However, the price of the existing shares could also fall to less than 85p, in which case you would have been better off by allowing the rights to lapse and buying additional shares in the open market. Or the price could rise above 99p, so your 85p purchase by taking up you rights would work out even better. So what you decide to do ought to depend upon: a) whether you have the cash to take up the rights; b) how you view the prospects for the company; c) what your view is of the reasons for the fundraising.

Have a read of the RNS because it will give you an idea of why FGP is raising funds. Also google rights issue definition to get more information of what is involved. I would suggest doing this before deciding what to do. But as a couple of starters:

http://www.investopedia.com/articles/stocks/05/062905.asp
http://en.wikipedia.org/wiki/Rights_issue