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RBS Rights Issue

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  • G42
    G42 Posts: 198 Forumite
    Julia_T wrote: »
    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

    Only you can decide whether to take up the Rights or not as it's your money that you'll be risking. If anything, the COB price makes the Rights more attractive - Price £2.4550. You would pay £2 per RI share. If you don't take up the Rights you will have exactly the same number of shares that you hold at present only they will be worth less per share. The dividend per share will also be reduced as the present view by RBS is that they will pay the same total amount of dividend but it will be spread over a larger number of shares due to the Rights Issue of 11 for every 18 held. Share certificates will be issued for Rights Issue shares taken up. If none are taken up your existing certificates will remain as they are.
  • G42
    G42 Posts: 198 Forumite
    Example -

    Today's Prices - RBS Ord = 2.4550: Rights = .4550

    5000 shares purchased @ £4.70 sometime in the past = £23500
    Rights = 11 for every 18 shares held = 3055 @ £2 = £6110 to take up Rights in full.

    New average if RI taken up = 23500 + 6110 divided by 5000+3055
    =29610 divided by 8055 = £3.676

    Average if RI not taken up = £23500 less sale of Rights divided by 5000=
    23500 - (3055 x .4550) divided by 5000
    =23500 - 1390 divided by 5000
    =£4.422

    You will have to substitute your own holdings/purchase price figures to work out your true position. Not taking up the Rights in full will obviously alter the figures too.
  • G42
    G42 Posts: 198 Forumite
    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.

    Just a quick not to clarify your point. Purchasing the Rights will get the OP cheaper shares, providing that the share price remains at above the RI price of £2. Today, with a price of £2.4550, buying the RI shares at £2 gives a profit of .4550 per share. They are only worth the same amount if someone else buys the Rights at .4550 and then has to spend another £2 per share making £2.4550 in total. Existing holder have been given the right to buy the new shares at no cost but each " Right" has a market value, namely .4555 as at today.
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