National grid shares help

gc747

Hi, 
I hold some National Grid shares, I’ve recieved an email regarding “7 for 24 rights issue of x amount new shares” 

can someone in laymans terms explain to me what this means and what may be the best thing to do? 

Thanks in advance 

itscatchingup

Hi. It means that you can buy 7 new shares for every 24 you hold, but at a lower rate. I held 15 shares, so the rights issue meant I could buy 4 at the new rate. It does not mean you're getting anything for free, just an opportunity to grab more shares at a low cost £6.45 per share against the current £8.91). If you want to buy more NG shares, it's a good deal, I think.

EthicsGradient

National Grid want some money to invest in new infrastructure. They have decided to raise some of it from existing shareholders, if they are willing to invest more.

They have allocated you some new "nil-paid" shares - 7 / 24 times the number of regular shares you hold. By the end of next week or so, you should decide what you want to do with them. Your options are:

Pay £6.45 per nil-paid share, and they will get converted to being like the regular shares, giving you dividends (not the one due in July, but they will after that).

Do nothing, and they will sell the shares to companies that do want them and will pay the £6.45 (the companies have already agreed to buy them if they're available), and give you the proceeds when it's all been worked out.

Or you could sell the nil-paid shares in the next week or so in the stock market, and then the buyer gets the choice of paying the £6.45 or letting the companies do that. This would mean you pay a trading fee.

You can mix these options up; rather than paying the £6.45 (ie increasing your investment), or letting the nil-paid shares get sold, and getting a bit of money a few weeks later (ie decreasing your investment), some people will sell enough to be able to pay the £6.45 for  the rest of the nil-paid shares (this has become known as "swallowing your own tail") - this keeps the net amount you had invested level. If you don't have the cash available for paying the £6.45 for some of the shares, then you'd need to sell the others in the stock market now to get it.

Do you hold your National Grid shares as paper certificates? If so, National Grid should send you forms and a lot of background material on what you can do. If you hold them on a platform (perhaps in an ISA or SIPP), the platform should tell you how to tell them what your decision is - log onto the platform.

wmb194

At the moment the rights are selling for roughly 200p each.

https://www.londonstockexchange.com/stock/NGPN/national-grid-plc/company-page

helpidontunderstand

Hi, new to the group, I’ve just received my Provisional Allotment Letter and quite honestly don’t understand any of it, would someone please be kind enough to explain what all the different options mean.

MACKEM99

So if I sell 123 rights they are currently worth £246?

MACKEM99

helpidontunderstand said:

Hi, new to the group, I’ve just received my Provisional Allotment Letter and quite honestly don’t understand any of it, would someone please be kind enough to explain what all the different options mean.

EthicsGradient

Has given a very good explanation above.

MACKEM99

Existing Shares held at Record Date

425

Rights Issue Entitlement (Your Rights)

123

Total cost of Rights

793.35 GBP

The above is mine for example.

EthicsGradient

MACKEM99 said:

So if I sell 123 rights they are currently worth £246?

Yes, that's about right (price when looked up just now was £1.9815).

wmb194

MACKEM99 said:

So if I sell 123 rights they are currently worth £246?

Yes, or a little less - 198p at the moment.

wmb194

MACKEM99 said:

Sorry to be a pest if I decide to take up the rights how will I pay.  Mine are all on line, not received the paper version yet?

How do you hold them? If it's with a stockbroker you deposit the money with the stockbroker and tell it that you want to take up your rights. Usually there's a 'corporate actions' section of their website or you send a secure message.