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  • FIRST POST
    • DIYhelp76
    • By DIYhelp76 16th May 19, 5:31 AM
    • 90Posts
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    DIYhelp76
    M&S Rights Issue - their email - sell rights?
    • #1
    • 16th May 19, 5:31 AM
    M&S Rights Issue - their email - sell rights? 16th May 19 at 5:31 AM
    Hi

    Hope someone on this forum can help.

    An elderly relative holds M&S Shares.

    She's received an email about some "rights issue" M&S are having to do with raising money for a link up with Ocado.

    The email says to ensure your shareholding is registered so that when the time comes you can buy OR SELL rights.

    Know next to nothing about shares and stuff. Can anyone tell me in a nutshell if this means my relative can sell some "rights" to make some money? Don't really understand what this means.

    She doesn't want to sell her shareholding as the shares are at a bad price at the moment.

    Many thx in advance.
Page 1
    • MovingForwards
    • By MovingForwards 16th May 19, 6:00 AM
    • 1,009 Posts
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    MovingForwards
    • #2
    • 16th May 19, 6:00 AM
    • #2
    • 16th May 19, 6:00 AM
    I would be phoning m&s on the number held on official paperwork and not responding to the email / clicking any link or calling the number on the email.

    See what m&s say needs to be done.
    • Malthusian
    • By Malthusian 16th May 19, 9:24 AM
    • 5,748 Posts
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    Malthusian
    • #3
    • 16th May 19, 9:24 AM
    • #3
    • 16th May 19, 9:24 AM
    I am also a bit suspicious of the mention of "selling her rights". Typically in a rights issue the shareholder has the option to pay money to buy more shares at a special price.

    Has she given her email address to the M&S investor relations team?

    If she doesn't want to invest more money in M&S she should simply do nothing.
    • alanq
    • By alanq 16th May 19, 9:46 AM
    • 4,154 Posts
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    alanq
    • #4
    • 16th May 19, 9:46 AM
    • #4
    • 16th May 19, 9:46 AM
    I am also a bit suspicious of the mention of "selling her rights". Typically in a rights issue the shareholder has the option to pay money to buy more shares at a special price.
    Originally posted by Malthusian
    Nothing suspicious with that. If one does not wish to take up the offer of discounted shares one can sell the rights to someone who does. I have done this myself.
    Last edited by alanq; 16-05-2019 at 9:54 AM.
    • steampowered
    • By steampowered 16th May 19, 10:06 AM
    • 3,219 Posts
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    steampowered
    • #5
    • 16th May 19, 10:06 AM
    • #5
    • 16th May 19, 10:06 AM
    This is a perfectly normal part of a rights issue.

    During a rights issue, all shareholders are given a right to buy some of the new shares, at the rights issue price, proportionate to their shareholding.

    Any shares which are not taken up by existing shareholders will then be offered to new shareholders.

    Imagine that the rights issue price is 10 per share. But - when the rights issue finishes - the stock market price is 12 per share.

    Your relative could either:
    - Take up her right to buy more shares at 10 per share.
    - Do nothing - in which case her rights are sold to a new investor - and she pockets the 2 the difference.

    If your relative wants to buy more M&S shares, she should take the opportunity to buy more shares at the discounted price.

    If your relative does not want to buy more M&S shares, she should just sell her rights. This will probably happen automatically if she does nothing.

    Nothing to be concerned about this is all normal practice.
    • DIYhelp76
    • By DIYhelp76 17th May 19, 4:41 AM
    • 90 Posts
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    DIYhelp76
    • #6
    • 17th May 19, 4:41 AM
    thank you
    • #6
    • 17th May 19, 4:41 AM
    Steampowered,

    Thank you so much for taking the time to reply and for your clear and helpful explanation.

    I understand now so can advise my relative and she can decide what she'd like to do.
    • Tom99
    • By Tom99 17th May 19, 5:38 AM
    • 4,074 Posts
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    Tom99
    • #7
    • 17th May 19, 5:38 AM
    • #7
    • 17th May 19, 5:38 AM
    If she sells her rights she will reduce the value of her shareholding, if she takes up the offer she will increase the value of her shareholding by investing new money.
    Sometimes there is a 3rd option which is to sell some rights and use that money to take up the remaining rights, so a neutral position which will leave the same amount as now invested in M&S shares.
    • Tom99
    • By Tom99 18th May 19, 12:42 PM
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    Tom99
    • #8
    • 18th May 19, 12:42 PM
    • #8
    • 18th May 19, 12:42 PM
    M&S are due to announce details of the rights issue on Wednesday along with their full year results.
    • AnotherJoe
    • By AnotherJoe 18th May 19, 12:44 PM
    • 14,314 Posts
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    AnotherJoe
    • #9
    • 18th May 19, 12:44 PM
    • #9
    • 18th May 19, 12:44 PM
    If she sells her rights she will reduce the value of her shareholding, if she takes up the offer she will increase the value of her shareholding by investing new money.
    Sometimes there is a 3rd option which is to sell some rights and use that money to take up the remaining rights, so a neutral position which will leave the same amount as now invested in M&S shares.
    Originally posted by Tom99

    Did you mean in the generality, eg if everyone sold their rights their would be more shares? Because if she owns say 10k worth of M&S shares now they wont be taking money off her shares.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Tom99
    • By Tom99 18th May 19, 12:56 PM
    • 4,074 Posts
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    Tom99
    Did you mean in the generality, eg if everyone sold their rights their would be more shares? Because if she owns say 10k worth of M&S shares now they wont be taking money off her shares.
    Originally posted by AnotherJoe
    Say she owns 10k worth of shares and the rights to more shares can be exercised at a cost of 2k, or they can be sold say for 2k.
    If she sells the rights for 2k then the shares she retains (same number as owns now) are likely to be worth 8k. If she exercises her rights and invests 2k then the increased number of shares she owns are likely to be worth 12k.
    Alternatively she may be able to sell half the rights for 1k and exercise the other half paying 1k after which her increase number of shares are likely to be worth 10k ie the same value as now.
    Last edited by Tom99; 18-05-2019 at 12:59 PM.
    • AnotherJoe
    • By AnotherJoe 18th May 19, 1:37 PM
    • 14,314 Posts
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    AnotherJoe
    Ok that works in the generality but for any one individual seller it doesn't make a jot of difference what they do unless they are say Woodford with 2bn worth of rights (just an example I don't know that he has) OP's Mum selling her 2k is irrelevant and IMO it's totally misleading to state that if she sells her rights her shares will drop in value as if they are specially marked or she can control the share price. The shares will do what they do when you take all the rights uptake into account. One small shareholders holding is irrelevant.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Tom99
    • By Tom99 18th May 19, 1:46 PM
    • 4,074 Posts
    • 2,858 Thanks
    Tom99
    Ok that works in the generality but for any one individual seller it doesn't make a jot of difference what they do unless they are say Woodford with 2bn worth of rights (just an example I don't know that he has) OP's Mum selling her 2k is irrelevant and IMO it's totally misleading to state that if she sells her rights her shares will drop in value as if they are specially marked or she can control the share price. The shares will do what they do when you take all the rights uptake into account. One small shareholders holding is irrelevant.
    Originally posted by AnotherJoe
    M&S shares are currently about 268p and if M&S follow the normal form the rights issue will give existing shareholders the right to buy a certain number of new shares at a discounted price, lets say 200p. When those new shares go live there will be an increase in the number of M&S shares and they will be worth less that 268p per share. How much less depends how many new shares are issued and the level of discount they are offered at.
    If OP's Mum sells her rights then the value of her shares will drop by about the same amount as she gets for selling the rights.
    Last edited by Tom99; 18-05-2019 at 1:54 PM.
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