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I hope Monday`s announcement will reveal that TSCO have decided to re-name the payment as "Capital Return" , this would boost the share price by a good few % since the taxation on a "Dividend" would not apply.
I would expect a 'Capital Return' as the sale is a capital transaction, dividends are paid from the business income stream. Any funds from realisation of the asset not returned to shareholders will be deployed for the benefit of said shareholders i.e. through the business strategy going forward. Let's see what the BoD are up to.
Jaff
The original meeting voted for a special dividend and not a return of capital. Hope you are right though
RW
I have already said that a special dividend can be used as the vehicle to make a return of capital payment.
Agreed. A return of capital is preferred however, that was not put before shareholders in the original meeting as far as I am aware. It may be that the circular for Monday will give guidance and then voted upon. All of mine are in an ISA so won't affect me. My major concern is that if consolidation is more than keeping the share price as now e.g. to take the so to £3, £4 or £5 that we still get the price per share in our SAYE plans. A nice bonus
I have not had any time to look but, from memory, the original circular mentioned that the sale represented something like eight times EBITDA. The multiple was stated but can't remember
RW
''All of mine are in an ISA so won't affect me. ''
I would think a capital gain/loss would only come about when shares are actually sold.
I am assuming that a consolidation would be made to match the reduction in share capital.
In other words I would of thought that 4 new shares would be given for each 5 existing shares.
If someone now purchases 10,000 at £2.40 at a cost of £24,000 and £5,000 capital is returned then their base cost becomes £19,000 for 8,000 shares which would be about £2.38 per share.
If then the 8,000 shares were sold for £2.68 then a capital gain of £2,400 would have been made.
If someone had purchased 10,000 at £1.60 at a cost of £16,000 and £5,000 capital is returned then their base cost becomes £11,000 for 8,000 shares which would be about £1.38 per share.
If then the 8,000 shares were sold for £2.68 then a capital gain of £10,400 would have been made
RW
''e.g. to take the so to £3, £4 or £5 that we still get the price per share in our SAYE plans. A nice bonus''
I'm afraid not.
If a consolidation is made over and above that required to take account of the return of capital then your SAYE option price would have to be adjusted.
LTI
That is the point. I am still trying to find out what is happening about that. I can't find anything that indicates what would happen under consolidation. I have written to some Directors but haven't received a response yet. In October , people signed up for 1 share at £1.98 to be converted at that price in three years time. There was one lad on here last week that has had his matured plan but hadn't yet made the decision when to convert (I think he said he has up until July). Does he convert now and receive the Special Dividend and consolidation or does he miss the Special Dividend and go for the consolidated shares.
RW
''Does he convert now and receive the Special Dividend and consolidation or does he miss the Special Dividend and go for the consolidated shares.''
If someone had £9,900 in that particular SAYE price option scheme it appears the choice would be between investing £9,900 for 5,000 shares and getting £2,500 returned and ending up with 4,000 shares or investing £9,900 for 5,000 shares.
Those rough figures of course assume the option price remains the same.
The only difference is that any share purchase made now, about 50p per share of the capital outlay will be returned to you.
LTI
Nigella asked in a post earlier today about the Tender offer. Do you have a view?
RW
'' I have written to some Directors but haven't received a response yet''
I'm not quite sure how you were expecting details on the return of capital/consolidation ratio before the market was informed via an RNS
RW
Leas has already made a post covering what a debt tender offer it is all about.
Simply buying back debt.
''Does he convert now and receive the Special Dividend and consolidation or does he miss the Special Dividend and go for the consolidated shares.''
If dates are anything like when mine matured Jan/Feb last year, as I recall the earliest you could make your option was late Feb and the earliest you could then buy at the option price was into early March.
it would be a beneficial move as otherwise the BOD wouldn't be making such an offer.
Sale of Polish assets is to come as well
LTI
I am not expecting a direct response immediately for obvious reasons. I requested that a simple guide , with examples, be sent to all colleagues. The questions were about SAYE and taxation. If they do send one out it will be after any RNS.
RW
I would have thought that all employees would know where they stand regarding any effect on SAYE schemes soon after a return of capital and consolidation has been sanctioned on the 11th Feb. Until it is, it is all hypothetical .
I don't think it would be a good idea for thousands of employees to start sending emails asking questions about details of something that is yet to happen. I would also be ignoring such emails.
Rather like some people thinking it OK to pester GP surgeries enquiring as to when they my be getting a C19 vaccination.
Relax and wait for the 11th Feb outcome.
A circular containing further details of the special dividend and the share consolidation ratio will be sent to Tesco shareholders on or around 25 January 2021.
LTI,
It is one of those many days where i am not making myself clear. I am asking for the company to email colleagues (as we do virtually every day anyway) with simplified details of what the SD and consolidation means. Talking to colleagues many colleagues will view consolidation as the theft of shares. Colleagues are investing in their company, their future, their savings. They are not investors in the same way as the majority of people on this board are.They are knowledgable in that way.
RW
'' simplified details of what the SD and consolidation means''
Another poster of here seemed to suggest that the option to purchase shares under a scheme just maturing won't be until after the proposed return of capital and consolidation in any case.
Everyone already knows that each shareholder will be returned about 50p per share if approved which will be payable in February. Details of the consolidation ratio will be known as early as Monday. Sending emails was not necessary as all relevant information will be conveyed to shareholders and interested employees very soon.
Also, everyone will be contacted when they will be eligible to get a C19 vaccination.
No need for people to keep phoning a GP's surgery.
a bit like some Lloyds shareholders complaining that the BOD have not spoken up about dividends when everyone should know that dividend details at the latest will be given with full year results next month.