Easyjet Rights Issue in LISA

tryingtogetmyheadaround

I have a LISA and a very small amount of EasyJet shares in my LISA account. I have all my cash in my LISA invested apart form a £52 from a dividend pay-out. I don't have a linked general account so I can only use the cash/investments to buy the EasyJet shares on offer. I have already maxed out the cash input for this year.

Now I'm not talking a lot but I don't really get what to do for the best....... The max I can buy is 38 shares at 175.88p so £66.83.... however I cant buy them all as I only have £52 in cash in the account and don't really want to sell anything.

I have to pay a £10.99 charge per trade so trying to work out what's best on this low amount, as commission eats into both buying and selling at low volumes.

Sell all 38 and get £55.44 (£66.43 - £10.99 commission)

Use all my available cash £52 and buy 23 shares ( £40.42+£10.99comission + £0.20 stamp duty) Total cost £51.61. So would be paying £2.24 a share.

Never had an offer to buy these type of shares so very confused on what's best. I'm think the shares will drop in value due to this issue??

As in a LISA I cant touch this money for 20 years!!!!

wmb194

With capital raisings like placings, rights issues, IPOs and so forth you don't usually have to pay any dealing commission as it's covered by the company/issuer and you certainly don't have to pay stamp duty/SDRT as it's only due on secondary market purchases.

Thrugelmir

Do nothing. If you fail to take up the option then the nil paid rights will be sold in the market and you'll receive the net proceeds. 

There should be no commission charge for this type of transaction nor stamp duty. As a corporate action the broker picks up the tab. Utilising your available cash is an option. If you wish to increase your stake in the company. 

wmb194

I don't know about easyjet and its prospects but another option is to do nothing and wait for your rights to be sold into the market on the day the new shares begin trading or, if your broker gives the option, sell your rights to the market before that date - it looks like they're trading on the LSE under the ticker EZJN.

https://www.londonstockexchange.com/stock/EZJN/easyjet-plc/company-page

MX5huggy

Thrugelmir said:

Do nothing. If you fail to take up the option then the nil paid rights will be sold in the market and you'll receive the net proceeds. 

There should be no commission charge for this type of transaction nor stamp duty. As a corporate action the broker picks up the tab. Utilising your available cash is an option. If you wish to increase your stake in the company. 

Wouldn’t they have to take the option of buying into the rights issue to maintain their stake in the company. Ie if they don’t then their stake is reduced. 

Alexland

This might be a good time to reassess if you really want to be holding individual shares in the LISA.

redped

tryingtogetmyheadaround said:

Now I'm not talking a lot but I don't really get what to do for the best....... The max I can buy is 38 shares at 175.88p so £66.83.... however I cant buy them all as I only have £52 in cash in the account and don't really want to sell anything.

I have to pay a £10.99 charge per trade so trying to work out what's best on this low amount, as commission eats into both buying and selling at low volumes.

Sell all 38 and get £55.44 (£66.43 - £10.99 commission)

Use all my available cash £52 and buy 23 shares ( £40.42+£10.99comission + £0.20 stamp duty) Total cost £51.61. So would be paying £2.24 a share.

I'm confused by what you're trying to do ... you say you can buy 38 shares at 175.88p - are you saying you have the right to buy 38 shares?  If so, then they'll cost 410p each, i.e. £155.80.

If you have 38 rights (which I assume were worth 175.88p this morning, but are now worth 161.50p), then you can sell each one (or let it lapse, and after the offer is over you should eventually get a payment for them).

Edit: The rights issue is 31-for-47, so I assume you have 58 shares, and you've now got the right to buy a further 38 for 410p each if you wish, or you could sell those rights now for 161.50p each.

[Deleted User]

I'd be interested in any views on the viability of the rights issue.
I've got the option of spending a further £13,000 to take up my full allocation or take the sale of the rights and I'm genuinely torn.
I quite like the company and think it has a good future but I fear more market turbulence is on the way.
Thoughts ?

redped

This is certainly not advice, but one option is to only take up some of your allocation.  Like you, I believe airlines will improve post-Covid, but who knows what'll happen between now and then.

I'm hedging my bets by taking up about 2/3 of my allocation, so at least I'll get some cash back from the sale of the other 1/3.