Oaxaca

Deleted.

dddc

Bit of a novice to sharedealing. Only bought my parcel to get the 10% shareholders discount (RIP). But is what your saying above different to or in contrast to this that was in the email? I had read somewhere that even if we didn't buy you'd get something for the rights. But this seems to counter it:The offer I got I worked out to was for about 85p per new share. Is that right?

alex67500

The price was 0.92 euros so I guess that works with the current exchange rate.

:D!

Yes - it's quoted on the LSE, a UK exchange, so you pay UK stamp duty

Basically my understanding is, for every 2 shares you held on Friday, you have to either pay 255p to buy 3 new shares, or you can sell the 3 rights which would get approx current SP 135p - 1.5Ũ85p = 7.5p each Ũ3 = 22.5p

Or you can sell most of the rights to raise enough money to exercise the remainder without adding new funds (but it may be taxable if not held in an ISA?)

Will100

Must not be on HL as mine showed a massive loss today. Had a slight moment before I remembered the email they sent saying it would look odd until Thursday.

Will100

So based on your calculations (and the 1.35 price) the scales are tipped in favour of exercising your rights?

It is either take the 22.5p for every 2 held or take the discount & buy more at 88p each which is a discount of 47p a pop.

Am I reading this right?

hearingdouble

Assuming you hold CDIs, IAG have published quite a helpful Shareholder Guide on the Capital Increase section of their website.

IAG's capital raise not technically a UK Rights Issue, but it's being structured similarly to one (albeit with some tweaks). Suppose the market value of IAG shares was Ģ1.00, and the subscription price being offered was Ģ0.60.

You would have essentially three options (although you are allowed to mix and match between them):

• Take up your Subscription Rights: Buy shares at Ģ0.60 each, at a discount of Ģ0.40 to the market value.
• Sell your Subscription Rights: Sell the subscription rights in the market. In a perfectly rational market someone will buy the right off you for (just under) Ģ0.40, as it allows then to buy shares at a Ģ0.40 discount. The proceeds are released to you as cash.
• Do nothing: The rights lapse and you get nothing. (This is slightly different to a normal UK Rights Issue, as typically investors who do not respond are defaulted into the second bucket automatically and are sent a cheque).

Point here is that you don't need to choose to invest in IAG to take the benefit of the Rights Issue -- you can sell the subscription rights and trouser the benefit (in the form of cash) without committing further capital, if you would prefer. It's not like your only options are to invest or not invest.

One 'mix and match' variant which IAG is offering, and which will appeal to a lot of small investors, is a balanced mix of options 1 and 2, so that enough of your subscription rights are sold in the market to fund the purchase of shares with the remaining subscription rights. This option results in neither a payment out of cash, nor a need to pay in, but the shareholder does gain some extra IAG shares as a result. (Not enough to offset the dilution, mind -- but it's still better than letting the rights lapse and getting nowt!)

* This is not financial advice and you should also consider the tax implications of any decision.

JessicaB

I am with IG and they explained it to me like this today. I can either buy the shares on October 7th, that's when the shares will be credited to my account and th money will be taken. Or I can sell the rights to buy them, which will sell for slightly less than today's share price, less the price I can buy them at (i.e. 135p share price today less 85p rights price, so 50p per share, a bit less obviously to leave some profit in for the person who buys the right). The key thing I need to decide is if the price is likely to be higher on October 7th - or when I want to sell them - than it is today. If I think the share price will go up, then it's worth exercising the rights and buying the shares on October 7th. If not, sell the rights and take the cash now.

They mentioned that the whole thing had been quite chaotic, poor communication, and a lot of people were very confused.

JessicaB

No I don't think you are. The maths I was given, and the maths from the BA website, are different. It's more like 50p per share that you have a right to buy, which is 1.5 times the number of shares you were holding at Friday close.

JessicaB

I think your maths is wrong. It's not SP - 1.5 x 85p, it's just SP - 85p as you have the right to buy each new share at 85p. So it's your holding at close on Friday x 1.5 x (SP - 85p).

Helsinki Flyer

Exactly that. I have been trading for a living for almost 2 decades. I have never even looked at the uk market because the stamp duty makes it impossible for me to trade profitably. Therefore I have no idea if it applies to IAG or not. Enough opportunities elsewhere.

Helsinki Flyer

So you all have to do something or you will lose money. Thatīs the most important advice.

Then starts the speculation part. Usually the stock will trade lower during the subscription period, because many decide not to invest more money and therefore will sell their rights. That of course puts pressure to the rights, which translates into pressure to the share itself. These general rules differ somewhat depending on the size of the rights issue. A company raising 10% more capital isnīt under much pressure. A company trying to raise 100% more capital is under huge pressure.

Then there are rules and regulations about state ownership, mandatory offers if you hold too many shares etc, which are usually relevant with legacy airlines. Letīs say the Spanish government owns 20% of the company. But the Spanish parliament hasnīt given the government the permission to invest more money. That leaves the Spanish gov. selling their rights and if thereīs 20% of rights to be sold, the price is going down a lot. I have no idea about the ownership structures of IAG or how the stock might perform.

'* This is not financial advice and you should also consider the tax implications of any decision.

djtriggz

IAG is both on the London Stock Exchange and the Madrid Stock Exchange

Swanhunter

OT but does 0.5% tax really make that much difference to your trading? You must trade really thin margins in great volume. I do understand though, the withholding taxes on many European bourses make their shares unattractive as a income investments.

Helsinki Flyer

0,5% is an absolute dealbreaker. Iīm happy if I get a 1-2% profit/trade. Iīd get half if I paid 0,5% as a tax. But even thatīs not the issue. The issue is that Iīm happy if I get 60% of time a 1% win and 0% of time a 1% loss. That 1% loss would become a 1,5% loss with tax. That really kills the deal.