IAG €2.74 billion Rights Issue

Old Sep 13, 20, 1:27 pm
  #1  
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IAG €2.74 billion Rights Issue

Appreciate this may not be strictly allowed, please remove if so but...

What are people’s thoughts on this? Are you taking up your full quota?

Moderator edit :

Extract from FT article :
"SEPTEMBER 10 2020 31 Print this page British Airways owner IAG has launched a steeply discounted €2.75bn rights issue to help shore up its finances through the disruption caused by coronavirus.

IAG, which announced the emergency fundraising in July alongside a €2bn second-quarter loss, will issue nearly 3bn new shares at €0.92 each, a 36 per cent discount based on the new fully expanded share capital. Current shareholders will be entitled to buy three of the new shares for each two shares they currently own"

Last edited by Oxon Flyer; Sep 14, 20 at 3:53 am Reason: Add some explanatory text
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Old Sep 13, 20, 3:13 pm
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Full quota of what?
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Old Sep 13, 20, 4:16 pm
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Originally Posted by mikeyfly View Post
Full quota of what?
IAG shareholders were given an opportunity to purchase more shares at a discount as a way to raise cash for the group.
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Old Sep 14, 20, 1:57 am
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Depends what the discount was. The IAG share price dived 30% this morning.
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Old Sep 14, 20, 2:07 am
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Originally Posted by GlasgowCyclops View Post
Depends what the discount was. The IAG share price dived 30% this morning.
Yes I just spotted that. Has there been some poor trading results or outlook released today? Or a reaction by the markets to the news that Covid is rapidly on the rise again throughout the world?
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Old Sep 14, 20, 3:05 am
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Originally Posted by BOH View Post
Yes I just spotted that. Has there been some poor trading results or outlook released today? Or a reaction by the markets to the news that Covid is rapidly on the rise again throughout the world?
Well that levels out the 30% discount.
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Old Sep 14, 20, 3:50 am
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Originally Posted by GlasgowCyclops View Post
Depends what the discount was. The IAG share price dived 30% this morning.
It depends when the new shares are floated, it could be that it was today, or that the market has now priced the dilution -- has the market cap changed?
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Old Sep 14, 20, 3:54 am
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Iīd be surprised if the stock fell 30%. Most likely you donīt get the right to subscribe at a discount if buying today. I do not trade on UK stocks (thanks to the tax you charge), so not really an expert on those. But here in the mainland the right itself can be traded and theoretically the right plus the stock today should be more or less the same value as the stock was on friday.
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Old Sep 14, 20, 4:13 am
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If you hold IAG shares you x the number of shares you have by 1.5 and thats how many shares you can purchase. The purchase price will be 88p. Contact your broker for more details
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Old Sep 14, 20, 5:58 am
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I have no financial knowledge about shares and the like, somehow back in 2008 I managed to buy my 200 shares without coming to grief and wanted to participate in the capital increase. Computershare were very kind, I explained what I understood and how far I had got with the form and they reassured me that I had it all correct, continue with the form, pay and it was all sorted. Small victories
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Old Sep 14, 20, 6:06 am
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Originally Posted by alex67500 View Post
It depends when the new shares are floated, it could be that it was today, or that the market has now priced the dilution -- has the market cap changed?
Thatís what has happened this morning, see below extract from Hargreaves sent last week:

Please note, the price of IAG shares in the market will adjust down on Monday 14 September to take into account the Rights Issue. The Rights are expected to be issued to you on Thursday 17 September. As a proportion of the value of your investment in IAG will be represented by these Rights the overall value of your investment will appear lower from Monday until these Rights are credited on Thursday.
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Old Sep 14, 20, 6:27 am
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Originally Posted by Helsinki Flyer View Post
I do not trade on UK stocks (thanks to the tax you charge),
Do you mean stamp duty? IAG is a Spanish company, so do you even pay UK stamp duty in the first place?
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Old Sep 14, 20, 6:27 am
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Iím happy to take up for the mid to long term While I think demand is going to be depressed for several years, and the billion dollar JFK route days are likely gone for longer, IAG is a low cost operator and has done a good job (mostly) of allocating capital wisely. Out of the big 3 legacy airlines I think it is best placed for the long term as a result, Level experiments aside.

NB that doesnít necessarily mean I am supportive of management in the current labour dispute at BA.
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Old Sep 14, 20, 6:48 am
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Yes I think I will take up the offer on Thursday as well. Interestingly although today's price has reduced, the value of my holding hasn't changed very much. I assume there is some clever calculation which goes on in the background to manage the situation during the week of a rights issue.
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Old Sep 14, 20, 6:59 am
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Worth noting, of course, that because this is a Rights Issue shareholders will still receive the benefit of their option to subscribe at a discount, even if they choose not to subscribe. So itís not quite the same no-brainer investment decision as you would get on (say) a discounted Open Offer.
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