£1.5 billion return to united utilities shareholders

Eckythumper

Anybody out there understand the ins and outs of this offer. I've been reading this for 3 days and cant work out how they are returning anything. In fact you recieve less new shares, so lose 5 x shares for every 22 currently owned.

mrkbrrws

The Company has sold part of its business so currently has a load of cash.

It doesn't know what to do with all this money so it decides to give it back to its owners (i.e. the Shareholders).

So instead of 22 shares which include the value of a stack of cash you get the cash returned to you to spend or invest as you wish.

If the Company left it at that the value of its shares would fall because they no longer include the stack of cash, so they reduce the number of shares in issue so that approximately each new share should be worth the same as one share at the moment.

ad44downey

I hold these shares in a nominee account. I still haven't heard a dickie bird about any of this.

Darka

The distribution is due for August, see here for http://www.unitedutilities.com/?OBH=5932&SPAID=180 further details.

regards,

tomthered

mrkbrrws wrote: »

The Company has sold part of its business so currently has a load of cash.

It doesn't know what to do with all this money so it decides to give it back to its owners (i.e. the Shareholders).

So instead of 22 shares which include the value of a stack of cash you get the cash returned to you to spend or invest as you wish.

If the Company left it at that the value of its shares would fall because they no longer include the stack of cash, so they reduce the number of shares in issue so that approximately each new share should be worth the same as one share at the moment.

So do you think the shares in the new holding company will rise to present levels of UU share? Is that what normally happens only I have been told that as they are looking to reduce their dividend cover in future by 30% and this will reduce value of said shares. Whats your thoughts on that?

mrkbrrws

So do you think the shares in the new holding company will rise to present levels of UU share? Is that what normally happens only I have been told that as they are looking to reduce their dividend cover in future by 30% and this will reduce value of said shares. Whats your thoughts on that?

I don't know as I have no particular knowledge of this Company, I was just setting out the process of the restructuring for the OP.

If the dividend policy is publicly known then it should already be factored in to the current share price.

tomthered

The proposed new dividend is intended to be 30% less, currently its 47pence over the year. The current price is about £7.40. On that basis what do you think the chance are of it maintaining its current value? Not holding you to this maybe a % against % for or ratio would be better.

Eckythumper

mrkbrrws wrote: »

The Company has sold part of its business so currently has a load of cash.

It doesn't know what to do with all this money so it decides to give it back to its owners (i.e. the Shareholders).

So instead of 22 shares which include the value of a stack of cash you get the cash returned to you to spend or invest as you wish.

If the Company left it at that the value of its shares would fall because they no longer include the stack of cash, so they reduce the number of shares in issue so that approximately each new share should be worth the same as one share at the moment.

If I hold 2200 shares @ £7.50 they are currently worth around £16500 .

Under the new issue I will hold 1700 shares @ £7.50 worth £12750 + 2200 b shares @ £1.70 valued at £3740.

A loss of £10.

So a £1.5 billion payout results in all shareholders losing money,and that's if the share price stays the same, no doubt the £1.5 billion will turn up in somebodies pension scheme or company bonus.

mrkbrrws

Eckythumper wrote: »

If I hold 2200 shares @ £7.50 they are currently worth around £16500.

Under the new issue I will hold 1700 shares @ £7.50 worth £12750 + 2200 b shares @ £1.70 valued at £3740.

A loss of £10.

Probably best to not hold the shares if a £10 movement is concerning you. A possible loss of a fraction of one percent is insignificant really in the context of share value fluctuations.

Note that I said "approximately each new share should be worth the same as one share at the moment" not "each new share will be worth the same as one share at the moment".

[Deleted User]

enjoyshoes wrote: »

what he say is important

:spam: in the signature. Reported