M&S Rights Issue - their email - sell rights?

Tom99

AnotherJoe wrote: »

Ok that works in the generality but for any one individual seller it doesn't make a jot of difference what they do unless they are say Woodford with £2bn worth of rights (just an example I don't know that he has) OP's Mum selling her £2k is irrelevant and IMO it's totally misleading to state that if she sells her rights her shares will drop in value as if they are specially marked or she can control the share price. The shares will do what they do when you take all the rights uptake into account. One small shareholders holding is irrelevant.

M&S shares are currently about 268p and if M&S follow the normal form the rights issue will give existing shareholders the right to buy a certain number of new shares at a discounted price, lets say 200p. When those new shares go live there will be an increase in the number of M&S shares and they will be worth less that 268p per share. How much less depends how many new shares are issued and the level of discount they are offered at.
If OP's Mum sells her rights then the value of her shares will drop by about the same amount as she gets for selling the rights.

Jingscrivvens

My wife's an M&S shareholder, and I'm trying to get my head round this Rights Issue offer. I'm not clear how taking up all her rights will be beneficial.
For ease of calculation, say she has 1000 shares: that means she has rights to 200 more, at a cost of 200*£1.85=£370. But, prior to the offer affecting the price (e.g. on 21/5/19), the share price was £2.60, so back then, her 1000 shares were worth £2600. If we add to that the £370 she'd pay to exercise the offer, her "stake" would be £2970. But she would now have 1200 shares. So in order not to lose money, the share price, after the dust settles with the rights issue, would have to be at least £2970 / 1200 = £2.47 a share.
However, what I can't understand is how that squares with the fact that there's now 20% more shares around. Wouldn't that mean that, everything else being equal, the £2.60 share price will settle at around 20% lower, i.e. £2.08?
I'm scratching my head. Am I missing something?

Tom99

Jingscrivvens wrote: »

My wife's an M&S shareholder, and I'm trying to get my head round this Rights Issue offer. I'm not clear how taking up all her rights will be beneficial.
For ease of calculation, say she has 1000 shares: that means she has rights to 200 more, at a cost of 200*£1.85=£370. But, prior to the offer affecting the price (e.g. on 21/5/19), the share price was £2.60, so back then, her 1000 shares were worth £2600. If we add to that the £370 she'd pay to exercise the offer, her "stake" would be £2970. But she would now have 1200 shares. So in order not to lose money, the share price, after the dust settles with the rights issue, would have to be at least £2970 / 1200 = £2.47 a share.
However, what I can't understand is how that squares with the fact that there's now 20% more shares around. Wouldn't that mean that, everything else being equal, the £2.60 share price will settle at around 20% lower, i.e. £2.08?
I'm scratching my head. Am I missing something?

No because M&S have received £1.85 for each of the new shares issued so the market capitalisation of M&S now takes account of all the cash they have raised. Therefore your £2.47 calculation is nearer the mark.

tel_

I've hit a stumbling block. Here's my lack of understating of the rights issue:

I have received documents explaining the rights issue for current M&S shareholders, and have decided to take Option 1 on the form: Take Up ALL My RIghts. I did this online using the ref no and allotment no from the Provisional Allotment Letter. I thought I could then follow the same procedure and buy the shares that are on the other form - Form Of Instruction, but when I type in the ref no and allotment number for this it says it's not recognised.

I thought I had a fairly clear picture of what to do when I had read the literature, but clearly not

I take it I cannot buy the shares via the Form Of Instruction, because I have misunderstood something using the Provisional Allotment Letter?

Jingscrivvens

Tom99 wrote: »

No because M&S have received £1.85 for each of the new shares issued so the market capitalisation of M&S now takes account of all the cash they have raised. Therefore your £2.47 calculation is nearer the mark.

Thanks, Tom99. Of course....M&S are now worth a lot more (approx 20%, not including the discount).

Jingscrivvens

tel_ wrote: »

I've hit a stumbling block. Here's my lack of understating of the rights issue:

I have received documents explaining the rights issue for current M&S shareholders, and have decided to take Option 1 on the form: Take Up ALL My RIghts. I did this online using the ref no and allotment no from the Provisional Allotment Letter. I thought I could then follow the same procedure and buy the shares that are on the other form - Form Of Instruction, but when I type in the ref no and allotment number for this it says it's not recognised.

I thought I had a fairly clear picture of what to do when I had read the literature, but clearly not

I take it I cannot buy the shares via the Form Of Instruction, because I have misunderstood something using the Provisional Allotment Letter?

I think you're trying to do the same thing twice. The top of the Form of Instruction says "Only use this form if you are unable to participate online". But you did participate online. Nice try, though

Tim_S

tel_ wrote: »

I've hit a stumbling block. Here's my lack of understating of the rights issue:

I have received documents explaining the rights issue for current M&S shareholders, and have decided to take Option 1 on the form: Take Up ALL My RIghts. I did this online using the ref no and allotment no from the Provisional Allotment Letter. I thought I could then follow the same procedure and buy the shares that are on the other form - Form Of Instruction, but when I type in the ref no and allotment number for this it says it's not recognised.

I thought I had a fairly clear picture of what to do when I had read the literature, but clearly not

I take it I cannot buy the shares via the Form Of Instruction, because I have misunderstood something using the Provisional Allotment Letter?

It depends on whether your shares are held as a certificate or in the Share Service. On the M&S shareholder page, you can tell which link to click on based on the colour of the document you received, white or green. The numbers on the Form of Instruction should get you through if you’ve chosen the right link. It sounds like you may have completed the process once but, if you hold both types of shares, you'll need to complete it for the other shareholding too.