Rock bottom shares

Billionpounddreamer

I'm just wondering if there is anyone on here who knows what effect the rights issue that Branson is proposing to Northern Rock shareholders will have?

Obviously it will decrease the share price, and even though I don't want to, it seems I must throw more good money after bad just so my shares don't become diluted with this new rights issue.

If Branson succeeds, the rights issue will take place at 6 for 1, at 25p per share.

What kind of affect will this have on the current share price, currently at 120p per share.

Just asking for opinions that's all!

jonesMUFCforever

£1.20 is a false price.
Hedge funds hoping to take over he company on the cheap have been building up stakes in the hope that the Virgin deal does not go through.

Either way IMO NR is a dead duck.
If you want to see your money go down the pan then invest in the shares!

sarah998

The current price of £1.20ish values the company at around £360 million. Branston Pickles offer values it around £200 million.

On the other hand, it was worth £6 billion at the start of the year. It may be in a bit of a mess, but is it in that much of a mess?

Alias_Omega

I looked at investing when everyone was jumping ship, mentioned it on here and got laughed at.

If you have £500 to waste then why not give it a go,

need to speculate to accumulate..

my old economics teacher told me that..

sarah998

That was when the shares were still around £3 each. They were down at around 80 pence the other day.

This is a gamble, surely Mr Branston wouldn't be sticking his beard into something that is going to see his "money go down the pan"?

Curious_Moose

Trying to catch falling knives can be dangerous.

jonesMUFCforever

sarah998 wrote: »

That was when the shares were still around £3 each. They were down at around 80 pence the other day.

This is a gamble, surely Mr Branston wouldn't be sticking his beard into something that is going to see his "money go down the pan"?

Like most of his Virgin 'brand' - most of the money won't be coming from him or his companies. He will be a figurehead.
Apart from his airline quite a lot of his ''companies'' have not done too well eg remember his Virgin Cola?

When the company is £25 billion in hoc to the government what has he got to lose.
The real assets of the business is the mortgage book - ie money that is secured on your bricks and mortar.
Now if there was to be a house price slump in this country to go with the credit crunch NR would (again IMO) would have to go into administration with all branches closed for new business, unless one of these rescue packages actually goes through.

geordie_joe

ejones999 wrote: »

Either way IMO NR is a dead duck.
If you want to see your money go down the pan then invest in the shares!

Far from it, with smarter people than us fighting to buy it, and promising to pay back the debt, it can't be a dead duck.

They want to buy it because the share price has dropped through the floor because of people panicking and selling their shares. The company is worth a lot more than the share price indicates, even after they also pay the 24 billion.

geordie_joe

ejones999 wrote: »

Now if there was to be a house price slump in this country to go with the credit crunch NR would (again IMO) would have to go into administration with all branches closed for new business, unless one of these rescue packages actually goes through.

Why?

The people who took out mortgages with them would still owe the money. If you take out a mortgage to buy your house for £100,000 and six months later the selling price of your house drops to £50,000 you still owe £100,000 on your mortgage. Less six months payment plus six months interest.

All it would mean is the company would be giving out £50,000 mortgages instead of £100,000 ones. So would all the other mortgage lenders, so why would NR go to the wall?

jonesMUFCforever

geordie_joe wrote: »

Why?

The people who took out mortgages with them would still owe the money. If you take out a mortgage to buy your house for £100,000 and six months later the selling price of your house drops to £50,000 you still owe £100,000 on your mortgage. Less six months payment plus six months interest.

All it would mean is the company would be giving out £50,000 mortgages instead of £100,000 ones. So would all the other mortgage lenders, so why would NR go to the wall?

You won't require any branches to do that - one single admin centre would be able to proces all the work.
As it stands nobody other then the BoE is lending money to NR - without capital they cannot lend.
I also read that investors are still withdrawing funds from them at an alarming rate which is making it worse.

IMO a dead duck waiting to be carved up on the cheap.
Nobody will be paying a premium for the bank - there will almost be nothing left to shareholders.

jonesMUFCforever

geordie_joe wrote: »

Far from it, with smarter people than us fighting to buy it, and promising to pay back the debt, it can't be a dead duck.

They want to buy it because the share price has dropped through the floor because of people panicking and selling their shares. The company is worth a lot more than the share price indicates, even after they also pay the 24 billion.

If the hedgefunds were not holding stock it would be a penny share by now.
Sorry geordie joe but it is really that bad.

Sorry but they want to buy it for a quick buck - they will have no allegience to other shareholders and certainly not their staff.