What if HBOS Goes Ahead with a Right Issue?

esbo

ianmr65 wrote: »

Companies on the up often do rights issues, not just to raise capital, but to help make the share price more manageable than 30000p per share or whatever. Dell, and ebay did this.

Ha ha HBOS share price was already more managable because it had dropped from
4 figures to three and it is on line to hit 2 figures in a few months time at the current rate of depreciation. :rotfl:

ad44downey

Yes exactly. The one and only reason HBOS is having a rights issue (which is presently in disarray) is because HBOS are in dire straits! Sell these shares while you still can.

something_girl

ok, I've become rather dim in my old age and haven't got time to read through all the threads that are related on here, so......

I just got the HBOS rights thing through the post, they have provisionally alloted me 260 shares and want £715 for them....

To be honest, I don't have a clue about any of this, I certainly don't want to be shelling out any more money on shares etc, I've read the booklet and it makes little sense to me.... if I just ignore this letter, do I lose anything?

I currently have 651 shares in HBOS.

What do I want to do with this?

Thanks for any advice.

jatinmistry_uk

Like many others, I am confused and not sure what to do in this type of situation. I have Child Trust Account of stokes and in them have got HBOS shares.

It is the first time I have come across this RIGHT ISSUE stuff and not sure what to do. I DO NOT want to sell the shares as current market price is much lower than what I bought for.

Anyone can me suggest what other options I can choose as like I said have no experience/knowledge of RIGHT ISSUES

Thank you in advance.

ad44downey

Don't give them any more money. They'll only waste it as previously. You may as well throw your money in the bin.

earlgrey_3

something_girl wrote: »

ok, I've become rather dim in my old age and haven't got time to read through all the threads that are related on here, so......

I just got the HBOS rights thing through the post, they have provisionally alloted me 260 shares and want £715 for them....

To be honest, I don't have a clue about any of this, I certainly don't want to be shelling out any more money on shares etc, I've read the booklet and it makes little sense to me.... if I just ignore this letter, do I lose anything?

I currently have 651 shares in HBOS.

What do I want to do with this?

Thanks for any advice.

Normally you have three main options, pay to take up the rights, sell the rights, or let them lapse in which case the underwriters will sell your rights options for you.

But in this case the shares are being offered to you at 275p whereas, probably due to speculators driving down the price by "shorting" the stock, the market price for the shares is only, as of today, 270p. So it would be cheaper for you to buy more shares in the market than take up the rights if you wanted more shares in HBOS.

So if you just ignore the letter you'll be sent a cheque for whatever the rights are sold for but if the share price is below the offer price then the rights will be worth nothing.

something_girl

hi, thanks for that...

can you explain the difference between 'sell your rights and receive a payment' and 'take no action and let your Rights lapse', as it says in both options that I will receive a payment.

What am I receiving a payment for exactly, if I do nothing?

Am I giving up some of my 651 existing shares, or are the two not connected?

Thanks

missymouse

yes something girl. That is my query too. Did you get something in the post about this before today. I had a clear out last week but i am sure it was only general AGM stuff.

I am also concerned that if i do nothing i am losing out. I have been given 44 shares to buy but i am not sure i want to spend out on them

somebody please help

something_girl

missymouse wrote: »

yes something girl. That is my query too. Did you get something in the post about this before today. I had a clear out last week but i am sure it was only general AGM stuff.

I am also concerned that if i do nothing i am losing out. I have been given 44 shares to buy but i am not sure i want to spend out on them

somebody please help

to be honest, if I got any correspondence about this before now, I just chucked it out, I don't tend to bother reading the AGM stuff, it all goes in the recycling. I certainly won't be spending any more money on the shares, just want to make sure I'm not losing out!

earlgrey_3

something_girl wrote: »

hi, thanks for that...

can you explain the difference between 'sell your rights and receive a payment' and 'take no action and let your Rights lapse', as it says in both options that I will receive a payment.

What am I receiving a payment for exactly, if I do nothing?

Am I giving up some of my 651 existing shares, or are the two not connected?

Thanks

Usually in a rights issue the shares are offered at well below the market price. So if HBOS shares were worth say 375p you would have the right, as an existing shareholder, to buy at 100p less than in the market.

Obviously the right to buy something worth 375p for just 275p is worth 100p. Rights can be sold and in that case you could sell them for about 100p.

In this case because you have the right to buy new shares only at more than they're now worth then the rights, at the moment at least, aren't worth anything, sorry. If it stays like that you won't get paid anything. If the share price of HBOS rose above the rights price then that would change.

You aren't giving up any shares if you don't take up the rights. You'll still own 651 shares and as of today they're worth 270p each but what they'll be worth when this all pans out is anyone's guess.

If the rights issue went ahead and there were enough people willing to take up the issue at 275p then your shares could go up. It doesn't look that way at the moment. There are various possibilities so it all depends on what happens from here.

The last date for taking up the rights is 11 July. Always leave your decision on rights as late as possible.