Reduced Price HBOS shares

Davey_2

Hi all

My dad has just over 400 shares in HBOS, and i've been reading about the reduced price shares on offer to existing HBOS share holders in which you are entitled to 2 shares at 275p for every 5 you currently own.
I recently have been thinking about purchasing some shares in HBOS and was wondering if my dad could purchase the reduced shares he's entitled to using my money and then transfer the shares into my name. Can this be done? and if so how? will my dad be receiving a letter from HBOS asking if he wants to take up the offer or will it have to be done through a broker of some kind? How would we start the ball rolling on this?

Many Thanks

Tozer

Its a rights issue so you won't be buying shares from the market but from the company. Therefore, you don't need a broker.

Yes, you can pay for the shares (HBOS won't care where the money comes from) and then they can be transferred to you. In theory, however, the transfer will attract stamp duty so you may be better off making the transfer a gift.

Note though that if a gift, as the shares would, technically, be your dad's, this would be a potentially exempt transfer for inheritance tax purposes. If your dad were to die within 7 (I think!) years of the gift, then this would be subject to IHT.

The other way of doing it is for your dad to hold them on trust for you.

Davey_2

So will HBOS be contacting my dad about the offer by letter or will he have to contact them about it?
Thanks for your reply

Tozer

They will send him a form in due course. It seems a very good offer to me.

ad44downey

Don't buy any more HBOS shares. The housing market is just about to tank and HBOS is massively over-exposed.

Tozer

ad44downey wrote: »

Don't buy any more HBOS shares. The housing market is just about to tank and HBOS is massively over-exposed.

Huge discount to the current share price?

Can't see anything significantly bad happening to HBOS.

debbie42

Tozer wrote: »

Huge discount to the current share price?

If you have shares totalling, say, 18K, and buy another 11K, then, assuming the market doesn't react to the cash injection, you'll have shares worth 29K. OK, the market might rerate the shares due to the better liquidity, or it might tank as others have suggested.

It's not like share options. All that is happening is cash is being injected to the company, and shares are being issued to fund it. It isn't like the company has discovered a money tree somewhere and is rewarding the existing share holders out of the goodness of their hearts.

debbie42

Davey wrote: »

I recently have been thinking about purchasing some shares in HBOS and was wondering if my dad could purchase the reduced shares he's entitled to using my money and then transfer the shares into my name. Can this be done?

Just to point out that if your Dad doesn't want to take up his rights options, but lets you have the rights for free, then he will have lost money on his existing holdings.

There is an article here which explains the maths in easy to understand terms:
http://money.uk.msn.com/investing/articles/nicklouth/article.aspx?cp-documentid=8198084

napoleon

Tozer wrote: »

Can't see anything significantly bad happening to HBOS.

Have you not watched the news anytime in the last 6 months?

Why would anyone want to 'invest' any more money in a failing company?

napoleon

Tozer wrote: »

Huge discount to the current share price?

.

Sorry but you clearly don't understand what a rights issue means.

This is no bargain, quite the opposite in fact. You need to do a bit of research otherwise you're just going to be throwing good money after bad.

Tozer

napoleon wrote: »

Sorry but you clearly don't understand what a rights issue means.

This is no bargain, quite the opposite in fact. You need to do a bit of research otherwise you're just going to be throwing good money after bad.

Err, I do thanks. If you don't think it is good value, don't invest. I am. So what is your problem?

But yes, I am absolutely fully aware of what a rights issue is.