Jar-Jar_Both
20 Jun 2018
Too good to be true ???? I’ve looked very hard!..How on earth of the new II site do you find dividend yield for each share - I could find it very easily on the old site! Thats Progress I Suppose!!
Bowman
01 Jun 2018
Re: Too good to be true ???? - bowman Prefs,This will be the 34th Rights Issue that has occurred to shares I have held where I have participated. (There were also three Open Offers, but that is a different story). I have no records of Rights Issues that occurred where I did not take the rights up, although I seem to remember one involving Lloyds Bank. Unfortunately I have never retroactively analysed if taking the rights up was beneficial since I see no point in wasting analysis time and effort. Each RI is different so there are rarely points that read across.One of the RI's in which I participated was the previous one for PHNX in Nov. 2016. I paid 508 for the shares in that issue, and the sp shortly after the Issue was 700.
PrefInvestor1
01 Jun 2018
Re: Too good to be true ???? - bowman Hi Again Bowman,I have no experience of rights issues and needed to try to understand what was going on to decide what action to take. I knew that the share price was likely to go down but it wasn’t clear to me by how much or what profit might be made from the RI shares.I have since re-read your explanation in the attached post, where provided you take up the rights you are no worse off seems fair and equitable. The profit on your RI shares being counterbalanced by an equivalent loss on your original holding. What happens thereafter is then down to the markets reaction to the company post the RI.I must have got something wrong in my attempt at calculations I guess. Please ignore my previous post as it was clearly erroneous.ATBPref
strapuk
01 Jun 2018
Re: Too good to be true ???? - bowman No need to apologise! The more minds contributing the better.
Bowman
01 Jun 2018
Re: Too good to be true ???? - bowman Strapuk,I did not see your contribution, since you posted whilst I was composing my post. Apologies for the duplication.
Bowman
01 Jun 2018
Re: Too good to be true ???? - bowman The 691 figure is based on the closing price on May 29th, which was 772. The derivation of 691 is straight forward.shares now in issue - 393,262,255 RI shares - 183,522,385 Ratio of RI shares to existing shares - 0.4666667 (=183,522,385 / 393,262,255)RI rate = 7 for 15 (7/15 = 0.4666667)Number of shares after RI - 576,784,640 SP on 29/6/18 - 772 Mcap on 29/6/18 - £3,035,984,609RI Proceeds - £950,645,954Mcap after RI - £3,986,630,563 XR SP - £6.912 (=£3,986,630,563 / 576,784,640 )The actual XR price will be determined by the June 22nd closing price.Your calculation had 720,890,689 post-RI shares, which appears to be ~140m too many. In any RI the loss on the existing shares is always balanced by the gain on the RI shares, based on the theoretical XR price, but this price only actually exists fleetingly at market open on the XR date, since immediately after the open the actual market price takes over, which may be higher or lower than the theoretical price.What one does in the case of a RI is up to each Investor. Selling out now, removes the necessity of finding the additional 31.3% more capital to invest in PHNX (cost of taking up the RI) or of selling a portion to pay for the RI take-up. Personally I intend to keep my existing holding and to take up my allocation in full. This will move PHNX from 12th position in my Portfolio to 4th (in terms of value of holding). I am quite satisfied with PHNX's performance because, taking my various purchases since I first bought in 2013 and all the dividends received into account, I have just about doubled my investment.
strapuk
01 Jun 2018
Re: Too good to be true ???? - bowman I think your nr of expanded shares is incorrect. 393,262,255 * 7 / 15 = 183,522,385 new shares for an expanded total of 576,784,640, rther than the 720,890,689 figure you use as the denominator.The lower figure produces a revised ex-rights SP of c.691p allowing for some degree of cost incurred by the exercise.The 691p figure is actually provided by PHNX in the original RNS, so I'm pretty sure it's there or thereabouts.
PrefInvestor1
01 Jun 2018
Re: Too good to be true ???? - bowman Hi bowman,Well i see your logic but i am not sure about the XR figure of 691 that you mention.I’ve done a few calculations based on the info on page 69 of the prospectus regarding share numbers:-Number of shares right now 393,262,255Share price at cob today 780pMarket cap today = £3,067,445,589Rights issue £937,000,000Market cap post RI £4,004,445,589Total number of shares post RI 720,890,689Estimated share price post RI 555p = (£4,004,445,589/720,890,689)So it seems to me that if you take up the rights thena) You make 555 – 518 = 37p on the RI shares (7 / 15 of your existing shares)b) You lose 780 – 555 = 225p on ALL of your existing shares.Maybe I’ve got that wrong but if so I don’t immediately see why.Think I’ll be selling all mine on monday and will buy back in when this is all done and dusted !.ATBPref
Bowman
01 Jun 2018
Re: Too good to be true ???? Prefs,I think your projection of a big profit from the RI is incorrect.Let us say you currently hold 15 shares. These at the SP prevailing at close of business on May 29th (772) would have been worth £115.80. If you then took up your allocation of 7 shares at 518 would cost you £36.26. This would give you 22 shares for a total cost of £152.06. Dividing £152.06 by 22 gives 691p, which is the theoretical XR price mentioned in the RNS.If you were to hold 15 shares and then not take up the RI then the value of your holding would decrease by £12.27 (15*772 - 15*691). However taking up the RI would give you a £12.27 profit on the RI shares (7*691 - 7*518). The loss and profit on the two segments cancel themselves out.The above was calculated to show the basis for the XR price quoted by PHNX in their announcement.In reality the XR price will be determined by the SP at the close of business on June 22nd. The price at which the XR shares will trade on June 25th will depend on the market sentiment at the time. Currently it appears to view the deal with SLA positively, and I suspect that this will provide positive support in the run up to June 22nd. The RI is fully underwritten so there will be a full take up whatever happens. However, if the investor take up is significantly lass than 100% then the underwriters will be forced to take up the slack, and they will want to sell this in the market after the RI. If this happens then the post-RI sp is liable to drop quite a bit.Anybody that holds to the RI and then does not take up their allocation will see a loss on their old holding after June 22nd. There will be some compensation since their unused allocation will normally be sold in the open market and the proceeds passed to the holder (minus some costs), but this has a higher inherent risk since very often the sp drops slightly after the XR date.I believe the RI itself is not a way to make money, but rather the underlying investment case where the potential for a re-rating of PHNX will yield a higher SP and hence a profit on the original purchase.
strapuk
01 Jun 2018
Re: Too good to be true ???? The ex-rights SP was calculated to be theoretically 691p assuming no change in circumstances from the date of the announcement to start of ex-rights dealings.
Windlesham Don
01 Jun 2018
Re: Too good to be true ???? (Correction... Pref - TBH I don't see this company as a short term trading stock, rather one to tuck away for the long term. The large and relatively safe dividend will keep me warm at night.Of course, the SP is liable to slip with the Rights Issue, but I see a fall in SP simply being an increase in yield, so nothing to worry about.
PrefInvestor1
01 Jun 2018
Re: Too good to be true ???? (Correction) 247 should have been 267 (oh for an edit function !)
PrefInvestor1
01 Jun 2018
Too good to be true ???? Hi All,Well at 518 for a share currently trading at 785 that a profit of 247 for each RI share that you get, which is 7/15ths of how ever many PHNX you hold on the shareholders on the register by cob 22/6.Thats a serious profit and makes you wonder whether its worth loading up on PHNX to get more shares allocated at the RI price.However things that look too good to be true often are. Often on a RI the price of the shares falls towards the RI price, not always significantly - but pretty frequently. So if you buy a whole load at 785 which then move downwards significantly towards 518 you could lose a lot on your main holding.And if they move a lot towards 518 the only way to prevent a loss is to sell before the price drop gets started. So what to do ?. Well as I see it it all comes down to the price movement on the PHNX shares on / after the RI gets underway. To me thats an unknown quantity so not planning to load up on PHNX right now or sell them all either. Going to wait a while and see what happens.ATBPref
Medway Man
31 May 2018
Re: Details of offer Thanks for responding........... discovered this morning that the PDF viewer I was using, has had its settings knocked out following recent Windows update.
Bowman
30 May 2018
Re: Details of offer I had no difficulty downloading the PDF document, so I do not think it is corrupt.Anyway; Details of the Rights Issue are."7 New Shares at 518 pence per New Share for every 15 Existing SharesPursuant to the Rights Issue, the Company is proposing to offer 183,522,385 New Shares by way of rights to Qualifying Shareholders as at the close of business on 22 June 2018 (the “Record Date”
. The offer is to be made at 518 pence per New Share (the “Issue Price”, payable in full on acceptance by no later than 11.00 a.m. on 9 July 2018. The Rights Issue is expected to raise gross proceeds of approximately £950 million. The Issue Price represents a 25.1 per cent. discount to the theoretical ex-rights price of 691 pence per Share Phoenix Group Holdings: Rights Issue Announcement 30 May 2018 calculated by reference to the Closing Price on 29 May 2018. "Hope that helps!
