Barclays Rights Issue

Yorksport

So much bad news has come out of Barclays recently that I vaguely feel (hope) there can't be much more. Plus, management plan an improved divi payout policy. As a consequence, I think the share price can only go one way which makes taking up the rights the sensible course so that's what I'm doing.

Richchad

I only have a few Barclay shares, was going to get shot of them, now this rights issue has made me think that price will fall come October 3rd so maybe I will sell both my shares and the rights issue..

I have my shares in certificate which is a pain, does anyone know which broker I should use to sell them cheaply..?

Richchad

monica wrote: »

I sold all nil paid shares this morning at 92.75.

Monica, did you actually speak to anyone when you sold yours, or is it all automated and punch in numbers etc..?

monica_3

I spoke to Barclays Stockbrokers with whom I hold an account. Tel 08004154449.

monica_3

Richchad wrote: »

Monica, did you actually speak to anyone when you sold yours, or is it all automated and punch in numbers etc..?

I spoke to Barclays Stockbrokers with whom I hold an account – 08000154449.

T11PES

Okay, consider me confused.

I have 532 ordinary shares, and nil paid rights to 133 shares.

1) If I "tail swallow", would the shares become diluted? How much less would they be worth than ordinary shares?

2) If I "take no action", when rights expire, what is the most likely cash payment I would be expected to receive?

3) If I did what "monica" did, and sold all nil paid shares, what would be the reasoning for this, and the outcome?

Ark_Welder

T11PES wrote: »

Okay, consider me confused.

I have 532 ordinary shares, and nil paid rights to 133 shares.

1) If I "tail swallow", would the shares become diluted? How much less would they be worth than ordinary shares?

2) If I "take no action", when rights expire, what is the most likely cash payment I would be expected to receive?

3) If I did what "monica" did, and sold all nil paid shares, what would be the reasoning for this, and the outcome?

1) It isn't your shares that become diluted, it is your shareholding - i.e. the percentage of the company that you own. e.g. if you currently owned 5% of the company and didn't take up your rights, the end result is that you would still have the same number of shares but would own only 4% of the company. Tail swallowing describes the action of selling enough nil paid rights to be able to raise enough cash to fund the purchase of the remaining rights without having to contribute any cash from elsewhere.

2) Impossible to say with any certainty. Section 2..3.1 of the prospectus describes the process when rights are not taken up.

3) Various reasons. Perhaps the investor doesn't have the cash available to take up their rights, and the transaction costs associated with a partial take-up do not justify this option. Or they might have a negative view on the company and don't want to put more cash into it, but do want to keep their existing holding just in case things do turn out better than they expect. Whatever the reason, the outcome will be a dilution of their holding within the company. Search for dilution in the prospectus - and in several locations - for the implications of this.

grizzly1911

T11PES wrote: »

Okay, consider me confused.

I have 532 ordinary shares, and nil paid rights to 133 shares.

1) If I "tail swallow", would the shares become diluted? How much less would they be worth than ordinary shares?

2) If I "take no action", when rights expire, what is the most likely cash payment I would be expected to receive?

3) If I did what "monica" did, and sold all nil paid shares, what would be the reasoning for this, and the outcome?

Ark Welder has answered your questions.

Try to think what this means in terms of you individually and your own financial position. Dilution in the schemes is not going to be major factor at this level.

Using the closing figures today

At the moment you have 532 shares worth c.£1480, plus rights that are worth around £105.

1.)If you tail swallow that £105 less costs (£15 with Barclays) would effectively buy 35 new shares leaving you with shares with a value of around £1575.

2.)If you do nothing you are at the whim of the market. Barclays will endeavour to find investors to pick up the shares. There is no guarantee what price those surplus shares could attain. AIUI you would only get some money back, after costs, if those investors are prepared to pay over £1.85 a share.

3.)If you did a Monica you would get £105 less costs in cash. Your remaining shares would be worth £1480. So net of costs about the same as tail swallowing.

They were around £1622 on Monday before going ex rights.

So for 1.) & 3.) you will be a bit down. for 2.) It is unknown but hopefully you would get something.

As Ark Welder mentioned in a previous post anothe impact will be that the dividend pot will have to stretch across more shares so the amount available per share will "drop". Divi last year was 6.5p per share. They are suggesting increased an increased dividend pot going forward so exact impact is an unknown.

Ark_Welder

Thanks. I didn't try to do any maths on the grounds that Friday night started a bit early this week...

Ifts

Richchad wrote: »

I have my shares in certificate which is a pain, does anyone know which broker I should use to sell them cheaply..?

You could do it via X-O.co.uk share dealing services (£5.95 per trade) -

Open a Share Dealing account with them (free to open and no annual account charges) then transfer your share certificate in to your account, then all you pay is £5.95 to sell.

How do I transfer in stock that I hold in the form of certificates?

http://www.x-o.co.uk/how_to_use.htm#5

With X-O.co.uk there are no account opening fees, management charges or inactivity fees, you can trade in any quoted UK equity (but not foreign stocks or unit trusts).