Rbs Rights Issue

mamazaac

I will be entitled to approx 45 shares and it seems (from the small part of the paper-wasting booklet they sent to me that I could be bothered to read) that I have a choice of doing nothing and waiting for my nil paid rights to be sold for me, transferring the nil paid rights myself or buying them for £2 each when I can then either transfer them as fully paid rights before 6 June or sell them after 6 June in the normal way. I know that if I sell just the new shares in the normal way after 6 June I will obviously incur a dealing fee, but do you know please whether this also applies if I transfer either nil paid rights or fully paid rights before 6 June? If not, then presumably one of these options would be the best way to go - but which is best, fully paid or nil paid? I'm hoping this makes sense to somebody on this forum as it doesn't make much to me!! All I know for definite is that I don't want to hold onto the new shares.

Many thanks in advance for any advice given.

Reestit_Mutton

Okay...first of all, I will assume that your mind is made up regarding whether or not you intend to subscribe for the rights issue and make no attempt to advise whether you should take up your rights or not.

If you don't want to subscribe for the new shares then you need to look at what your rights are worth to you. These rights give you the right to buy 45 shares at a price of £2 per share. Until the deadline to subscribe passes these rights are tradeable just like normal shares and their value is effectively the difference in price between the rights issue price of £2 and the current price of the existing shares (approx 70p each at present given the current share price of approx £2.70).

So, the right to purchase 45 shares at £2 is effectively worth approximately £30 to you. Any sale that you make will incur dealing fees - even if you let the bank's registrars do it for you.

If you let the bank's registrars sell your rights for you they will simply package up all unsubscribed rights (and there will likely be lots of them) and sell them as a single job lot, with their own dealing fees shared pro-rata among the owners of those rights. This is likely to be far more cost-effective from an individual's point of view.

Anyway, given that we're talking about only £30 of value here you probably shouldn't waste your time worrying about it - just let nature take its course and take what the bank's registrars get for your rights.

Had these rights been worth a lot more than £30 then you would have had to judge whether you wanted a quick sale while their value remains high (i.e. take up your rights and sell them yourself ASAP) or take a risk and wait until the rights expire (by which time the share price may have tumbled further resulting in a loss of value for your rights). i.e. the decision would have been similar to deciding whether to hold or sell the underlying shares.

HtH
Reestit Mutton

Reestit_Mutton

oh...and one other thing...

Whether you sell fully paid up rights or nil-paid rights is irrelevant. The fully-paid up rights will be worth more but, all else being equal, the increase in value will only match the value of the investment that you have put in.

HtH
Reestit Mutton