B&B Rights issue.. take up the offer ?

Steve_xx

bloaty wrote: »

Hi all

Got my pack yesterday but haven't got a clue.

I have the standard 250 shares which means I am eligible to purchase an additional 160 shares which means I will own the same proportion of shares as before the righst issue. I understand that.

However, if I am buying 160 shares and I currently own 250 shares but I will end up with the same proportion of shares - how does 160 equate to 250??

Am I being thick or does that mean my 250 shares will be revalued at a lower rate?

I know I should read the pack but it's good to get others points on this (LOL), well that's my excuse.

You will own 250 + 160 shares = 410 shares in total. The same proportion of the company, but more shares. This is because B&B are putting out more shares, therefore they are diluting the value of the ones already in existence. So to maintain your percentage stake in B&B you need to buy the shares on offer.

earlgrey_3

bloaty wrote: »

Am I being thick or does that mean my 250 shares will be revalued at a lower rate?

Initially the share will trade c um rights, i.e. with entitlement to the rights, but at some point will go ex-rights. Then the value of your shares will drop by the value of the rights and the rights themselves can be traded separately. The ex-rights date will be in the docs somewhere.

After the rights there'll be more shares in the company so each share will represent a smaller chunk of the company. But the company will then be worth, you hope, what it was before plus the new money that's gone into it from the rights.

So assuming all things are equal, your total holding would then be worth what it was before plus the money you've paid for the rights.

In reality it tends to be more complicated. With luck, after the uncertainty of a rights issue shares usually recover a bit. Also some of the money you pay for the rights, usually 2-3%, goes straight to the underwriters. Like all investments, you pays your money and takes your choice (or maybe the other way around).

babyblooz

well, after all that I am now more confused than ever!

ad44downey

Don't give them any more money, they'll only waste it. Don't throw good money after bad.

equitydealer

ad44downey wrote: »

Don't give them any more money, they'll only waste it. Don't throw good money after bad.

Long term this could be a good investment - the inexperienced start panicking when share prices fall. The next two years could be bad but if this is part of a balanced 10yr+ portfolio....

B&B is too small to survive as an independent bank.

poppy10_2

setmefree wrote: »

shares price at 11.59am 113.00
12.40pm 112.75
13.10pm 110.75

Down to 88 on Friday. There have been some major developments this weekend.

Over the weekend, Bradford & Bingley revealed the rights issue was undersubscribed. The share price has fallen to almost the rights issue price of 82p, making it very unattractive.

Bradford & Bingley chief executive resigned on Sunday June 1st, citing health grounds.

A few hours later, the government reveal a rescue bid to save B&B has been made by the American private equity group TPG. They will buy 20% of B&B for just 50p a share. B&B will also raise another £250m in a new rights issue, again at 50p. A slap in the face for all those that bought into the rights issue at 82p.

This morning (Monday) B&B is expected to make an emergency trading announcement. More will be revealed.

This is all looking very bad. Time to get your money out of B&B, whether you are a shareholder or a saver. :eek:

tradetime

A few hours later, the government reveal a rescue bid to save B&B has been made by the American private equity group TPG. They will buy 20% of B&B for just 50p a share. B&B will also raise another £250m in a new rights issue, again at 50p. A slap in the face for all those that bought into the rights issue at 82p.

Slap in the face it may be, but assuming they are able to survive it will be a less of a beating than shareholders would take if it followed NR.

6022tivo

I am a noob when it comes to this..

I was always told in bad times to keep going and things will get better..

I take it NRock's shares went very down, now what has happened to all the shares in NR?? Are they sitting at zero, or will they recover, or as they are now owned by the queen they have been delisted and are worthless???

I may as well just keep them my BB's ones now, and hope they recover??

tradetime

6022tivo wrote: »

I am a noob when it comes to this..

I was always told in bad times to keep going and things will get better..

I take it NRock's shares went very down, now what has happened to all the shares in NR?? Are they sitting at zero, or will they recover, or as they are now owned by the queen they have been delisted and are worthless???

I may as well just keep them my BB's ones now, and hope they recover??

http://news.sky.com/skynews/article/0,,30400-1309924,00.html

johnbfan

If my savings with B&B are safe, and its just my 250 free shares (my kids have the same shares but no savings) then it looks like its might be a good idea to just ride it out.

especially if theres a bit of a loyalty bonus coming for staying put.