Stocks & Shares question

[PeteXXX]

A question.
I received the following yesterday from my Share dealers

*** PLC - Important Information


Proposed Rights Issue.

***** PLC is proposing a Rights Issue on the following basis:

3 Nil Paid Rights for every 2 **** Ordinary share held on the Ex-entitlement Date of 10th May 2018.

1 Nil Paid Right entitles the holder to subscribe for 1 New **** Ordinary share at a price of 70 pence per New Ordinary share.

Should you retain your holding, we will communicate to you on the Ex-entitlement Date with details of the Rights Issue and the options available to you.

~~~~~~~~~~~~~
I bought a reasonable number of shares at £1.63 and they are, presently, £1.85

In plain English, please, what does this communication mean, and is it a good thing?

 

[biggs682]

I sent my letter out yesterday to the people who bought shares in Racing bikes biggs682 and gave them the good news that they are entitled to claim a free days use of any bike in my garage instead of being paid a dividend

sorry @PeteXXX i have no idea

 

[PeteXXX]

Fingers crossed then.
It'll either be N+1 or a new inner tube.. Or less than nothing!

 

[steveindenmark]

You can buy an ordinary share at 70p instead of the £1.85.

 

[User6179]

I would think depending on number of new shares issued the £1.85 share price will take a tumble, buying at 70p should offset any losses.

 

[sight-pin]

I once made over a billion in stocks & shares............................ trouble is it was on Xbox playing Grand Theft Auto

 

[Profpointy]

Sometimes the "rights" are themselves saleable - thus you can sell the rights rather than having to pony up the 70p. I had some Santander shares which did these rights issues a lot, the upshot of which was I got a cheque for selling the rights every now and again. It was a different way of them paying dividends in effect.

Either way the shares will be diluted a bit by the new issue.

 

[Tin Pot]

It means your shares become worth less than they were - by how much is probably already in the current share price as everyone know about the rights issue.

If you google the company name and rights issue, you’ll probably get an article explaining it.

 

[accountantpete]

As above - they want your money.

So they cancel your old ord shares (say you have 20 worth £37) and offer you the opportunity to buy 30 for 70p each which is £21. The total cost to you for the 30 shares is £37 plus £21 which is £1.93 a share. And as pointed out the increased number of shares may dilute the price - but then again the success of the rights issue may improve the price

 

[PeteXXX]

I have until 10th May to consider my options.
I’ll keep an eye on it!

 

[srw]

In plain English, please, what does this communication mean, and is it a good thing?

It means you might want to consider getting professional (paid) advice.

 

[nickyboy]

It means you might want to consider getting professional (paid) advice.

Exactly...cos the clarifications being offered here by some posters is not correct

For example the old shares are not cancelled

No point in boring everyone with a full explanation of how rights issues work here. Either research yourself and hope you get it right or pay for professional advice

 

[srw]

...but don't expect to get advice on whether putting more money into firm XXX (it's a major outsourcer, isn't it?) is the right thing to do.

I know what I'd do for my own money, and it would start by not holding the shares of any individual listed company. But that's just my preference. The reasons are outlined well in this podcast/article: http://freakonomics.com/podcast/stupidest-thing-can-money-rebroadcast/

It's also worth reading/listening to this one, mentally translating into British English: http://freakonomics.com/podcast/everything-always-wanted-know-money-afraid-ask-rebroadcast/

 

[Pale Rider]

A question.
I received the following yesterday from my Share dealers

*** PLC - Important Information


Proposed Rights Issue.

***** PLC is proposing a Rights Issue on the following basis:

3 Nil Paid Rights for every 2 **** Ordinary share held on the Ex-entitlement Date of 10th May 2018.

1 Nil Paid Right entitles the holder to subscribe for 1 New **** Ordinary share at a price of 70 pence per New Ordinary share.

Should you retain your holding, we will communicate to you on the Ex-entitlement Date with details of the Rights Issue and the options available to you.

~~~~~~~~~~~~~
I bought a reasonable number of shares at £1.63 and they are, presently, £1.85

In plain English, please, what does this communication mean, and is it a good thing?

Capita looks like a basket case to me, certainly in the short term.

You are sitting on a modest profit.

Could be time for a Steve Miller job.

View: https://www.youtube.com/watch?v=-WCFUGCOLLU