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Potential fun trading options for the Lucky ones, who are qualified for Rights issue, will soon be available. Rights Issue rarely occur and my understanding is:-
Between 8.00 a.m. on 25 November 2020 and 11.00 a.m. on 9 December 2020, you can either trade Ordinary Shares (which will not carry any entitlement to participate in the Rights Issue) or you can, subject to demand and market conditions, trade in the Nil Paid Rights these are Priced under a different EPIC
Other fun tricks are “Cashless Take-up” or “tail-swallowing” is if sell some rights and use the proceeds to take up remaining rights. Contact your stockbroker or financial adviser who may be able to help if you wish to do this.
If you don’t wish to take up your rights do nothing. You may, or may not, get some cash later when those not taken up are sold in an auction. Other tricks are listed in the Circular and Prospectus DYOR
FWIW____EPIC for Aveva shares
Code_____Instrument name_________________Price
AVV______ORD 3 5/9P______________________3,263.00__Normal shres GBX -20.72%
AVVN_____NEW ORD 3 5/9P (NP-09/12/20)____1,022.00__Right Issue Nil Paid
AVVF_____NEW ORD 3 5/9P (FP-09/12/20)______________Rights Issue Fully Paid
'
Ordinary shares have declined in Value by some 21% price
Rights Issue Nil Paid shares are being traded today
Rights Issue Fully Paid shares are NOT yet being traded today
Hi SB,
Could you confirm the basic mechanics of the share allocation/rights?
Simple example:
Holding 90 shares pre rights
Existing holding becomes 70 shares today (AVV)
Select to exercise rights option
Then:
New Rights issued Nil paid shares (70) able to traded today (AVVN)
New rights issued for 70 'new shares' at 22.55 (AVVN) added to existing holding 10 Dec.
Total holding post 10 Dec - 140 shares traded under AVV
Apologies if blindingly obvious but just checking.
Update to last incorrect post! Spreadsheet deducted right issue ratio from original holding!
So example (corrected):
Holding 90 shares pre rights
Nil paid rights shares available today (70) (AVVN)
Select to exercise rights:
Nil paid rights shares (70) can be traded as of today
Post 10th Dec 70 new shares (at 22.55) added to existing
Total holding post 10 Dec - 160 shares
Apologies for last post confusion.
FWIW Example Wkend you had 90 shares at 4175p value 3,757.50
Say Today
A __Your original 90 shares at say 3263p value £2936.70
B__You have your Rights NIL paid to 70 shares valued at 1022p say £715.40
So you have both nvestmenst A plus B to give value £3,825.10
OK I haven’t fixed the numbers to be equal for numbers to be but point is
that you only paid for original A , your rights are currently nil paid B so far cost zero, so you are roughly even.
Prices for all three EPIC prices will move in the market so you can play with the numbers and decide what to do
'
Convert your Nil paid to share, Sell Your nil paid for cash, or wait and see if you get anything out of the end auction
Circular gives al possible theoretical ex-rights price (TERP) of £33.28 per Existing Ordinary Share
Very clear and thanks.
Much appreciated.
I am no teacher but this example may give you a guide
Shares___________Price___Value_______Cost_______Profit
90___Invest 5 Nov_40.54___£3,648.60___£3,648.00
‘
90___26-Nov_____32.63____£2,936.70
70___Nil Paid_____10.22_____£715.40 Cash or Value
========================================================
Total in Nil Paid_____________£3,652.10___£3,648.00_____0.1%
‘
End___08-Dec-20___TERP_____Value_______Cost______ Profit
90___Original_____33.28_____£2,995.20___£3,618.00
70___Fully Paid___33.28______£2,329.60___£1,578.50
=================================================
End of Rights______________£5,324.80___£5,196.50_____2%
Example only
Given that we have to pay 2250p for the new Rights Issue shares and yet the market price for my entire holding may well fall to below 2500p by 10th Dec once all RI shares are eligible for trading, I cannot see any benefit to buying them. Kindly help me out. Also if I sell the free Rights Issue shares (worth bugger all), does that affect the value of my overall holding. Still confused despite SailorBeware's excellent thesis.
The value of your rights are using the sample, 70 times AVVN price or £715.40, if you sell them before 7 Dec. They can be worth B all if you don't sell them or buy them by 7 Dec. NO ACTION means they may be or may not be sold in an auction when B all is a possible outcome
'
TERP was the value calculated in Circular on 5 Nov. What it will be on 8 Dec is your guess