RBS Rights Issue

Pssst

Dohhh,,,can someone give me a clue about this? Ive been away for four weeks,just got back and got an email from my online broker about this. On my on line portfolio I am currently showing 2000 RBS shares at £246.75 each and 1222 RBS GR something elses at 46.5 each. Now then,im not interested in pumping any more money into equities at the moment. What do i need to do? Can i just sell the 1222 thingies and get money? what are the options? basically im not interested in putting my hand in my pocket in this situation...thanks guys n gals..

earlgrey_3

Pssst wrote: »

Dohhh,,,can someone give me a clue about this? Ive been away for four weeks,just got back and got an email from my online broker about this. On my on line portfolio I am currently showing 2000 RBS shares at £246.75 each and 1222 RBS GR something elses at 46.5 each. Now then,im not interested in pumping any more money into equities at the moment. What do i need to do? Can i just sell the 1222 thingies and get money? what are the options? basically im not interested in putting my hand in my pocket in this situation...thanks guys n gals..

That'll teach you to take holidays.

You've got 1222 Nil Paid Rights that you can sell up until 6 June - 11 for every 18 shares. If they lapse without being exercised then the underwriters sell them on your behalf and you take pot luck on the price you get. The value of the rights will move up and down with the underlying share price so you need to take a punt on the best time to sell.

So you can a) take up the rights b) ignore the whole thing and wait for them to send you the dosh, or, c) sell the rights yourself. Boring details are on p55 of the offer document.

Julia_T

Sorry I I havent posted this in teh right place I have a query re RBS Rights Issue - but couldn't work out how to post a message -

can I sell existing shares at market price to raise funds to buy rights - market price is approx 2.35 - rights are 2.00. I have worked out that I could sell 3844 shares and then use the proceeds plus some spare cash to exercise my rights??

I must admit however that I am so disappointed in the performance of these shares that I am inclined to just let them lapse - I cant work out how the dilution of shares will pan out - I am holding 11188 shares - if I do nothing how many will I have post rights issue - is it the same amout but they will be worth less?

Taking up teh rights is becoming less attractive as the price keeps dropping and I actually feel that I am throwing good money after bad.............I bought at 5.00 plus - so this has turned into a nightmare scenario - that said i can afford to leave them where they are for years - and consider at present it to be merely a paper loss which will come good one day!

Julia_T

can I sell existing fully paid share to raise capital to buy rights - therby I sell at 2.35(approx) and can buy rights at 2.00

debbie42

Julia_T wrote: »

Sorry I I havent posted this in teh right place I have a query re RBS Rights Issue - but couldn't work out how to post a message -

can I sell existing shares at market price to raise funds to buy rights - market price is approx 2.35 - rights are 2.00. I have worked out that I could sell 3844 shares and then use the proceeds plus some spare cash to exercise my rights??

I must admit however that I am so disappointed in the performance of these shares that I am inclined to just let them lapse - I cant work out how the dilution of shares will pan out - I am holding 11188 shares - if I do nothing how many will I have post rights issue - is it the same amout but they will be worth less?

There is no point in selling current shares to exercise your rights. If you add £2 to the value of the nil-paid rights then they add up to the same value as the current shares. You'd pay dealing charges to effectively swap like for like.

If you let your rights lapse, then you may get some cash back for them, depending upon what value they get once all the lapsed rights are disposed of.

With at least two brokers (Halifax/Selftrade) it's now too late to advise them if you wanted to exercise your rights.

ad44downey

Julia_T wrote: »

I actually feel that I am throwing good money after bad............

You're far from the only one who believes that.....

G42

debbie42 wrote: »

There is no point in selling current shares to exercise your rights. If you add £2 to the value of the nil-paid rights then they add up to the same value as the current shares. You'd pay dealing charges to effectively swap like for like.

If you let your rights lapse, then you may get some cash back for them, depending upon what value they get once all the lapsed rights are disposed of.

With at least two brokers (Halifax/Selftrade) it's now too late to advise them if you wanted to exercise your rights.

A bit of a mis-direction here. If you bought them at higher than the Market price which you quoted you could effectively create a loss for CGT purposes which could be handy in the future when the shares move up again. CGT in itself is not exactly straightforward. It depends on when you bought the original shares and at what price you bought them. The point made about adding the take up cost of £2 to the value of the Rights has no bearing on the position whatsoever. They are completely separate. You either take up the all or part of the Rights at £2 each, sell all or part at 28p (present price) or let them lapse and hope for something back. If someone else bought your Rights at 28p then they would have to pay another £2 to end up with each share. That's the only time that adding the value of Rights to the £2 cost of taking up the Rights would come into play.

debbie42

G42 wrote: »

If you bought them at higher than the Market price which you quoted you could effectively create a loss for CGT purposes which could be handy in the future when the shares move up again. CGT in itself is not exactly straightforward. It depends on when you bought the original shares and at what price you bought them. The point made about adding the take up cost of £2 to the value of the Rights has no bearing on the position whatsoever. They are completely separate. You either take up the all or part of the Rights at £2 each, sell all or part at 28p (present price) or let them lapse and hope for something back. If someone else bought your Rights at 28p then they would have to pay another £2 to end up with each share. That's the only time that adding the value of Rights to the £2 cost of taking up the Rights would come into play.

I posted under the impression that the OP was thinking that purchasing the rights would get them "cheaper" shares, so it may be worth selling current shares. That's the only reason I added the two together: to illustrate they are effectively worth the same amount.

I'm not sure I follow your CGT angle. What's the point of crystallising losses on one share if you're going to immediately purchase the same share?

Also, in what way does the purchase date affect the CGT liability, now that taper relief has gone?

Mind you, if I ever get to the position of having CGT liabilities on my RBS shares I'll be a happy bunny :rolleyes:

G42

debbie42 wrote: »

I posted under the impression that the OP was thinking that purchasing the rights would get them "cheaper" shares, so it may be worth selling current shares. That's the only reason I added the two together: to illustrate they are effectively worth the same amount.

I'm not sure I follow your CGT angle. What's the point of crystallising losses on one share if you're going to immediately purchase the same share?

Also, in what way does the purchase date affect the CGT liability, now that taper relief has gone?

Mind you, if I ever get to the position of having CGT liabilities on my RBS shares I'll be a happy bunny :rolleyes:

An example's probably easiest.

Let's say 5000 shares bought at 3.70 on March 28 2008 = 18500
Rights = 3055 shares @£2 = 6110
Sell 2679 shares @2.38 = 6108
Loss = 9912 (PP) - 6108 (SP) = 3804

Buy Rights at £2 = 3055 x £2 = 6010

Net effect - Sold 2679 and end up with 3055 without investing further funds.
Holding will still be diluted by not investing anymore money but a CGT loss has been established. Investing some more money would reduce the dilution and the amount of CGT paper loss.

The point about purchase date is that although Taper Relief has been withdrawn, purchases made on a same day basis or within 30 days are still considered separately from the s104 pool.

Let's hope we all end up having to pay CGT! (but not more than we need to)

Julia_T

Any fresh idea on whether to take up these rights bearing in mind the price today at COB, surely these are less attractive.

Can anyone confirm if I do not take up the rights will I actually have less shares post rights issue - do they issue new certs? what happens