TUI Capital Increase - help!

handsy

So TUI have initiated a Capital Increase meaning my Trading account with Fineco Bank have reached out to invite me to swap my current shares in to new ones.
The ratio is for every 21 shares I own, I can purchase 10 new shares. I have 250 shares, meaning I can 'sell' 231 and receive 110 new ones. This is a big financial loss to me straight away 
Anyway, the problem is that the Fineco Bank form they've sent is confusing. As well as the usual name, DoB, etc, there are 3 key fields I need to complete:

1. Number of existing TUI shares - easy, this is 250
2. Number of existing TUI shares I want to exercise - can I put 250 here, or does it have to be divisible by 21?
3. Number of new TUI shares I want to purchase - shouldn't the bank figure this out for me? If the answer to (2) is divisible by 21 then I can only ask for 231 to be sold, so I guess the answer here would then be 110?

It doesn't help that Fineco Bank is Italian so there's a fair bit of Engrish in their communications!

Any help appreciated. Pretty gutted this has happened as thought TUI would be a stick-on to bounce back successfully and I'd make a few £££££s 

MX5huggy

You are not selling your existing holding and getting new shares.

You are being given the option to buy newly issued shares at a discount, you will still own the original 250 whether you exercise your option or not. At the end of the process there will be more shares in TUI (523 million new shares). If you want to maintain your holding you need to exercise your option if you don’t you will end up owning and even smaller portion of TUI than you currently do. 

Linton

You dont sell the 231 shares.  TUI are printing extra shares which should raise 1.1Bn euros. The 231 shares you own give you the right to buy 110 extra ones for cash at what uis calculated to be a discounted rate.   TUI will then use the money to pay off large debts.

Now various things will happen.  TUI's shareholders will have paid off some of the company's debts.  So the value of TUI as a whole should rise.  However there will be more shares in existance so the value of each one will be a lower fraction of the total than previously.  Whether it is worth buying the shares is very much a gamble.

If you dont want to buy new shares what normally happens is that your right to buy has a value and can be sold.  Eventually if you do nothing the outstanding rights will be sold anyway and you will get a small payment.

The normal advice I think is to only buy the new shares if you want to invest more money in the company.  If you dont, do you really want to keep the ones you currently have?

handsy

Thanks for the replies that makes sense.
If I sell my existing then I stand to make a ~£350 loss .. if I purchase more at the asking price of €2.15 I could recover that loss over time?

edit: if I do want to purchase more shares (say 100), how do I then properly complete this form section now?

Linton

From your data you own 110 rights.  You may want to exercise (ie buy the new shares) using any number between  (presumably) 1 and 110 of them.

jimjames

You also have the option to sell the rights. Not sure how much that would be worth but if you don't want to put new money in then it's another consideration

handsy

Thank you so much for your ongoing replies.... I'm still a little embarrassed to say I still don't 100% understand how to fill those 3 fields in on my form.
First one is my existing 250 shares right?
Second one is ??
Third is ??

Linton

handsy said:

Thank you so much for your ongoing replies.... I'm still a little embarrassed to say I still don't 100% understand how to fill those 3 fields in on my form.
First one is my existing 250 shares right?
Second one is ??
Third is ??

I think that the answer to the first question is 11 - you have 1 right for each set of 21 shares you currently own.
The answer to the second is how many of these rights you want to use.  If you want to buy 40 new shares you will be using 4 rights, each right being for 10 new shares
The third number is 40 as that is the number of shares you are buying.

Note the names of the items they are asking about.  Presumably something called an RTS is a right.  TUI AG with an ISIN number is a share.

However I an relying on your description.  I have not seen the official documentation.

Thrugelmir

handsy said:

If I sell my existing then I stand to make a ~£350 loss .. if I purchase more at the asking price of €2.15 I could recover that loss over time?

Get a piece of paper. Draw a line down the middle. On the left hand side write the positive aspects of the investment, on the right write the negative aspects. Rationalise to yourself whether to invest further funds or indeed sell and cut your losses. Never become emotionally attached to your investments. We all make decisions that turn sour during our investing lives. Learning to admit to yourself is the first step of hardening up as an investor. 

If you've a better use of the money. Then cut your losses and invest elsewhere. 

handsy

I'm still deliberating what to do, but have now just noticed that I have a new entry in my portfolio for these TUI RTS 26OTT21. The number of shares seems to equate to the new equivalent of 10 new for 21 old. So does this now mean I could sell both of my share types? That would be a definite option as I would lose less that I was going to yesterday!