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BHP Group Determination of in special dividend in connection with the Woodside Merger..

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idpickering
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BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501637

Postby idpickering » May 20th, 2022, 7:13 am

The Board of BHP Group (BHP) has determined to pay to BHP shareholders an in specie dividend in the form of Woodside Petroleum Ltd (Woodside) shares in connection with the merger of BHP's oil and gas portfolio with Woodside (Merger).

The in specie dividend is scheduled to be paid on 1 June 2022 and will be fully franked.

BHP shareholders' entitlement to, and the payment of, the in specie dividend is subject to completion of the Merger.

BHP will receive 914,768,948 Woodside ordinary shares as part of the Merger. Eligible BHP shareholders will receive one newly issued Woodside share for every 5.5340 BHP shares they hold at the close of business on 26 May 2022 (Record Date). Holders of BHP American depositary shares (ADSs) will be entitled to receive one Woodside ADS for every 2.7670 BHP ADS they hold at the Record Date (with each Woodside ADS representing one Woodside share), subject to payment of taxes and applicable fees and expenses.

BHP ADS holders should note that the BHP ADSs will trade with "due bills" from the opening of business in New York on 25 May 2022 until 2 June 2022. BHP ADSs trading with due bills carry the right to receive the Woodside ADSs distributed in connection with the Merger. Ex-dividend trading in the BHP ADSs will commence at the opening of business in New York on 2 June 2022.

The BHP Dividend Reinvestment Plan will not operate in respect of the in specie dividend.

Eligibility to receive Woodside shares and related sale facility

BHP shareholders will be eligible to receive the in specie dividend in the form of Woodside shares if their address on the BHP register is in one of the following jurisdictions: Australia, Canada, Chile, France, Germany, Ireland, Italy, Japan, Jersey, Luxembourg, Malaysia, Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom and United States. Certain South African BHP shareholders may also validly elect to receive Woodside shares in accordance with the instructions previously announced on 8 April 2022.

BHP shareholders with a registered address in any other jurisdiction will generally be 'Ineligible Overseas Shareholders' and instead have their entitlements transferred to a sale agent to be sold in a sale facility. Proceeds are expected to be remitted to them within 12 weeks of completion of the Merger.

Eligible small BHP shareholders holding 1,000 ordinary BHP shares or UK depositary interests or less may also elect to have the Woodside shares they are entitled to receive sold by the sale agent under the sale facility, with payments also expected within 12 weeks of completion of the Merger.

Rounding of entitlements

BHP shareholders will be entitled to a whole number of Woodside shares, with any entitlement to a fraction of a Woodside share being rounded down to the nearest whole share. This includes BHP UK depositary interest holders and shareholders on the BHP South African branch share register.

The arrangements governing the BHP ADS and the BHP Corporate Sponsored Nominee Facility contemplate rounding of entitlements, and the rounding of the in specie dividend will occur according to the terms and conditions of those arrangements.

Further information and key dates

Last day BHP shares trade on ASX and LSE, cum-entitlement to Woodside shares

Tuesday 24 May 22.

First day BHP shares trade ex-dividend on ASX and LSE

Commencement of trading Wednesday 25 May 22


https://www.investegate.co.uk/bhp-group ... 00041870M/

Also posted on Company News here; viewtopic.php?p=501636#p501636

Ian.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501662

Postby IanTHughes » May 20th, 2022, 9:02 am

I have been doing some calculating as to how many Woodside Petroleum Limited (WPL) shares a holding of BHP PLC (BHP) will be entitled to, and what that “dividend” will be worth in GBP terms.

The below calculations have been made for the two “virtual” portfolios that I am currently managing – PYAD HYP 2019_04 REINVEST & PYAD HYP 2019_04 DRAWDOWN. I have also included a further fictional “100 BHP Share” portfolio, for informational purposes.

The calculations are based on the following current data:

WPL Price in AUD & GBP/ AUD FX Rate

WPL Price (AUD) |    28.7700
GBP/AUD FX Rate | 1.7660
WPL Price (GBp) | 1,629.1053


WPL Share Entitlement for BHP Shareholders

Holding | Current BHP | New WPL
# | 5.5340 | 1.0000


Portfolio Entitlements

Portfolio  | BHP Shares (#) | WPL Shares (#) | Fraction Left (#) | WPL Price (p) | WPL Value (£) | Fraction Value (£) | Total Value (£)
REINVEST | 838 | 151 | 0.4275 | 1,629.1053 | 2,459.95 | 6.96 | 2,466.91
DRAWDOWN | 838 | 151 | 0.4275 | 1,629.1053 | 2,459.95 | 6.96 | 2,466.91
100 Shares | 100 | 18 | 0.0701 | 1,629.1053 | 293.24 | 1.14 | 294.38


I believe that:

- The GBP value of the dividend will be the Total Value listed above.
- The Initial cost of the new Woodside Petroleum Limited holding will be the WPL Value (£) amount listed above.

If anyone believes I am making any mistakes, please do let me know.

Fortunately, I hold BHP within a “real” portfolio, so any mistakes can be rectified once my actual holdings have been processed by my broker.

Enjoy!


Ian

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501865

Postby Arborbridge » May 21st, 2022, 7:08 am

In my Halifax account:

Under the terms of the Distribution, Eligible Small Shareholders are being offered an opportunity to participate in a Sale Facility, however, please note we are unable to offer this Option to Small Shareholders, due to operational reasons. You will be able to sell your Woodside shares through our normal trading channels.


So, touch love - this at least clarifies my choices by cutting them down :)

I'll end up with some shares I don't particularly want, and will sell in due course, most likely.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501870

Postby IanTHughes » May 21st, 2022, 8:13 am

Arborbridge wrote:In my Halifax account:

Under the terms of the Distribution, Eligible Small Shareholders are being offered an opportunity to participate in a Sale Facility, however, please note we are unable to offer this Option to Small Shareholders, due to operational reasons. You will be able to sell your Woodside shares through our normal trading channels.

So, touch love - this at least clarifies my choices by cutting them down :)

I'll end up with some shares I don't particularly want, and will sell in due course, most likely.

Why do you not want a holding in Woodside Petroleum Ltd (WPL)? By my calculations, with a current price of AUD 28.77, the Trailing and Forecast Yields can be calculated as follows:

WPL Yield      | Trailing | Forecast
Price (AUD) | 28.7700 | 28.7700
Dividend (AUD) | 1.3500 | 1.8700
Yield (%) | 4.69% | 6.50%

Price and Dividend Data taken from: https://finance.yahoo.com/quote/WPL.AX/ ... s?p=WPL.AX

To me, it certainly appears to be well in HYP territory and, with the planned London Stock Exchange (LSE) listing, it should be no more difficult to manage than the BHP Group (BHP) holding already within the portfolio, where of course this new holding comes from.


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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501874

Postby Arborbridge » May 21st, 2022, 9:02 am

IanTHughes wrote:
Arborbridge wrote:In my Halifax account:

Under the terms of the Distribution, Eligible Small Shareholders are being offered an opportunity to participate in a Sale Facility, however, please note we are unable to offer this Option to Small Shareholders, due to operational reasons. You will be able to sell your Woodside shares through our normal trading channels.

So, touch love - this at least clarifies my choices by cutting them down :)

I'll end up with some shares I don't particularly want, and will sell in due course, most likely.

Why do you not want a holding in Woodside Petroleum Ltd (WPL)? By my calculations, with a current price of AUD 28.77, the Trailing and Forecast Yields can be calculated as follows:

WPL Yield      | Trailing | Forecast
Price (AUD) | 28.7700 | 28.7700
Dividend (AUD) | 1.3500 | 1.8700
Yield (%) | 4.69% | 6.50%

Price and Dividend Data taken from: https://finance.yahoo.com/quote/WPL.AX/ ... s?p=WPL.AX

To me, it certainly appears to be well in HYP territory and, with the planned London Stock Exchange (LSE) listing, it should be no more difficult to manage than the BHP Group (BHP) holding already within the portfolio, where of course this new holding comes from.


Ian


You make a good case, but I hadn't thought to hold it, TBH. Does it count as a "foreign" share? Would I want a tiny "rump" holding? - could I be bothered with it, or would it be better to sell out and add to one of my other holdings. In recent years, I've been content to have fewer and large holdings as it's just more convenient.
Yet another holding and I would feel almost obliged to top it up or ignore it.

Held in a SIPP or ISA - would this mean not having to declare foreign income?

Arb.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501879

Postby Gersemi » May 21st, 2022, 9:45 am

Arborbridge wrote:

You make a good case, but I hadn't thought to hold it, TBH. Does it count as a "foreign" share? Would I want a tiny "rump" holding? - could I be bothered with it, or would it be better to sell out and add to one of my other holdings. In recent years, I've been content to have fewer and large holdings as it's just more convenient.
Yet another holding and I would feel almost obliged to top it up or ignore it.

Arb.


I ended up with a holding of Thungela Resources Ltd following it's demerger from Anglo American which I haven't bothered to do anything with yet. Luckily (!) they haven't paid any dividend (given that it's in my taxable account), but it has risen by over 2000% since I acquired it. Sadly as it's a very small holding it hasn't made me rich.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501924

Postby tlf67482 » May 21st, 2022, 12:04 pm

Any ideas how to best record this special dividend in "spreadsheets" you may be using to keep of track of portfolios?

I am tempted to calculate the value of the Woodside shares that have been issued, record that as a normal cash dividend against BHP and then use that dividend cash to purchase the Woodside shares (all obviously on paper).

This would still leave me with the question of what I should be using as the original purchase price either using my weird method above or should I just be adding the Woodside shares to my portfolio with an original purchase of £0 or approx £16.50? Either method just doesn't seem to "correct".

I do wish things were just kept simple.

If anyone has any ideas of how they will be keeping track of a dividend paid with shares in whatever method they use to track their portfolio they would be welcome :D

Thanks

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501935

Postby Gostevie » May 21st, 2022, 12:31 pm


Under the terms of the Distribution, Eligible Small Shareholders are being offered an opportunity to participate in a Sale Facility, however, please note we are unable to offer this Option to Small Shareholders, due to operational reasons.


To my simple brain this sentence seems to contradict itself. Could anybody clarify it for me please?

Gostevie

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501938

Postby Darka » May 21st, 2022, 12:39 pm

BHP are offering the small shareholder sale facility, however some brokers cannot or will not support that, due to "operational reasons"... whatever they are :)

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501977

Postby Arborbridge » May 21st, 2022, 2:56 pm

Gostevie wrote:
Under the terms of the Distribution, Eligible Small Shareholders are being offered an opportunity to participate in a Sale Facility, however, please note we are unable to offer this Option to Small Shareholders, due to operational reasons.


To my simple brain this sentence seems to contradict itself. Could anybody clarify it for me please?

Gostevie


As Darka says, the terms do allow for small shareholders (under a 1000 shares, I seem to remember) to have cash, but only if their particular broker is willing to run a scheme. In Halifax's case, they've decided not to offer the cash alternative. For operational reasons means "we can't be bovvered 'cos it's too expensive".

So, Halifax holders will be issued shares.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#501979

Postby Arborbridge » May 21st, 2022, 2:59 pm

tlf67482 wrote:Any ideas how to best record this special dividend in "spreadsheets" you may be using to keep of track of portfolios?

I am tempted to calculate the value of the Woodside shares that have been issued, record that as a normal cash dividend against BHP and then use that dividend cash to purchase the Woodside shares (all obviously on paper).

This would still leave me with the question of what I should be using as the original purchase price either using my weird method above or should I just be adding the Woodside shares to my portfolio with an original purchase of £0 or approx £16.50? Either method just doesn't seem to "correct".

I do wish things were just kept simple.

If anyone has any ideas of how they will be keeping track of a dividend paid with shares in whatever method they use to track their portfolio they would be welcome :D

Thanks


I think I go to sleep on it until it happens! I will make sure I have all the various values around the time of the "happening" so I can study the options.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502006

Postby scrumpyjack » May 21st, 2022, 5:11 pm

tlf67482 wrote:Any ideas how to best record this special dividend in "spreadsheets" you may be using to keep of track of portfolios?

I am tempted to calculate the value of the Woodside shares that have been issued, record that as a normal cash dividend against BHP and then use that dividend cash to purchase the Woodside shares (all obviously on paper).

This would still leave me with the question of what I should be using as the original purchase price either using my weird method above or should I just be adding the Woodside shares to my portfolio with an original purchase of £0 or approx £16.50? Either method just doesn't seem to "correct".

I do wish things were just kept simple.

If anyone has any ideas of how they will be keeping track of a dividend paid with shares in whatever method they use to track their portfolio they would be welcome :D

Thanks


Legally that is correct. You receive a non cash dividend (Woodside shares) so the correct treatment is as if it was a cash dividend which you then invested in Woodside shares. The 'cost' of your BHP holding remains unchanged. If in a taxable account you will be taxed on the basis that you received that dividend in cash (the amount being the market value of the Woodside shares at the appropriate date).

This is the correct treatment whenever you receive an 'in specie' dividend. I was unable to get that fact through to the numbskulls at Hargreaves Lansdown in respect of the Jackson Financial demerger from Prudential which was also an in specie dividend. They insisted on apportioning the cost of my Pru holding which was crazy. (In spite of Pru having issued an RNS setting this out!)
Last edited by scrumpyjack on May 21st, 2022, 5:23 pm, edited 1 time in total.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502009

Postby tjh290633 » May 21st, 2022, 5:20 pm

tlf67482 wrote:Any ideas how to best record this special dividend in "spreadsheets" you may be using to keep of track of portfolios?

I am tempted to calculate the value of the Woodside shares that have been issued, record that as a normal cash dividend against BHP and then use that dividend cash to purchase the Woodside shares (all obviously on paper).

This would still leave me with the question of what I should be using as the original purchase price either using my weird method above or should I just be adding the Woodside shares to my portfolio with an original purchase of £0 or approx £16.50? Either method just doesn't seem to "correct".

I do wish things were just kept simple.

If anyone has any ideas of how they will be keeping track of a dividend paid with shares in whatever method they use to track their portfolio they would be welcome :D

Thanks

I have had a few of these over the years. The simplest was when ICI and Zeneca split, and the shares were split 50/50, with equal values.

In the absence of a share consolidation, then the value of the new shares will be the fall in value of the donor shares, and their cost will be a proportion of the cost to you of the donor shares. How you deal with this is up to you. My choice is to deduct the value of the donated shares from the cost of the donor shares, but being in an ISA, I do not have CGT worries. The purists will no doubt disagree.

As to what to do with the donated shares, my choice is to build them up to the median holding value of my portfolio. Some I have dumped, as when Centrica split from BG Group. I have never been a fan of British Gas and switched out of them as a supplier when that became possible. On the other hand, I kept Lattice and they merged with National Grid, which is how I come to hold NG.

Just what you do is purely a matter of choice.

TJH

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502028

Postby tlf67482 » May 21st, 2022, 6:59 pm

tjh290633 wrote:I have had a few of these over the years. The simplest was when ICI and Zeneca split, and the shares were split 50/50, with equal values.

In the absence of a share consolidation, then the value of the new shares will be the fall in value of the donor shares, and their cost will be a proportion of the cost to you of the donor shares. How you deal with this is up to you. My choice is to deduct the value of the donated shares from the cost of the donor shares, but being in an ISA, I do not have CGT worries. The purists will no doubt disagree.

As to what to do with the donated shares, my choice is to build them up to the median holding value of my portfolio. Some I have dumped, as when Centrica split from BG Group. I have never been a fan of British Gas and switched out of them as a supplier when that became possible. On the other hand, I kept Lattice and they merged with National Grid, which is how I come to hold NG.

Just what you do is purely a matter of choice.

TJH


As it is specified as a dividend I am going to go for the work out the cash equivalent and "buy" the Woodside shares (ie if I received a normal cash dividend I wouldn't start deducting the value of this cash dividend from the donor shares).

Yes luckily I am also in an ISA so it probably doesn't matter but that doesn't help how to get my antiquated "paper" system to accommodate this weirdness :D

Now all* that needs to happen is to come up with the figure of the value of a single Woodside share. If this isn't published I guess the opening price on the day the shares get (1) issued (2) tradable? I will see what everyone else uses :D

* apart from doing research and see who the frick Woodside is...........?

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502031

Postby Alaric » May 21st, 2022, 7:04 pm

tlf67482 wrote:[

Now all* that needs to happen is to come up with the figure of the value of a single Woodside share. ?


Normal practice is for the Company to agree a value with HMRC. That will be needed for everyone with a taxed account as the value is potentially subject to dividend taxation.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502037

Postby scrumpyjack » May 21st, 2022, 7:42 pm

Alaric wrote:
tlf67482 wrote:[

Now all* that needs to happen is to come up with the figure of the value of a single Woodside share. ?


Normal practice is for the Company to agree a value with HMRC. That will be needed for everyone with a taxed account as the value is potentially subject to dividend taxation.


and to complicate it further, you may get a cash payment for the fractional entitlement :D

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502046

Postby IanTHughes » May 21st, 2022, 10:22 pm

Arborbridge wrote:You make a good case, but I hadn't thought to hold it, TBH. Does it count as a "foreign" share? Would I want a tiny "rump" holding? - could I be bothered with it, or would it be better to sell out and add to one of my other holdings. In recent years, I've been content to have fewer and large holdings as it's just more convenient.
Yet another holding and I would feel almost obliged to top it up or ignore it.

Held in a SIPP or ISA - would this mean not having to declare foreign income?

It is true that the company, Woodside Petroleum Limited, is an overseas company, headquartered in Australia. However the newly created shares of Woodside Petroleum Limited (WPL), or whatever they will call it in the UK, will be listed on the London Stock Exchage (LSE), with a UK-based Share Register, under the auspices of the UK's Financial Conduct Authority (FCA). Any Dividends will, by default, be dispensed in GBP and processed in the same way as any other UK dividend. They will not constitute "foreign" income, rather UK Dividend Income.

Just like the BHP Group (BHP) shares in fact.

Yes, the value of the initial holding will only be about 10% of one's current BHP holding, so not a large holding by any means, save for those millionaires amongst us. But one extra holding, sitting quietly as one extra row in the spreadsheet. while receiving a dividend with a current yield possibly in excess of 6.00% per year, is not to be simply dumped in my opinion.

And who knows, another high yielder involved in Oil & Gas supplies .... one might even be tempted to increase one's investment.


Ian

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502056

Postby scrumpyjack » May 22nd, 2022, 8:13 am

IanTHughes wrote:
Arborbridge wrote:You make a good case, but I hadn't thought to hold it, TBH. Does it count as a "foreign" share? Would I want a tiny "rump" holding? - could I be bothered with it, or would it be better to sell out and add to one of my other holdings. In recent years, I've been content to have fewer and large holdings as it's just more convenient.
Yet another holding and I would feel almost obliged to top it up or ignore it.

Held in a SIPP or ISA - would this mean not having to declare foreign income?

It is true that the company, Woodside Petroleum Limited, is an overseas company, headquartered in Australia. However the newly created shares of Woodside Petroleum Limited (WPL), or whatever they will call it in the UK, will be listed on the London Stock Exchage (LSE), with a UK-based Share Register, under the auspices of the UK's Financial Conduct Authority (FCA). Any Dividends will, by default, be dispensed in GBP and processed in the same way as any other UK dividend. They will not constitute "foreign" income, rather UK Dividend Income.

Just like the BHP Group (BHP) shares in fact.

Yes, the value of the initial holding will only be about 10% of one's current BHP holding, so not a large holding by any means, save for those millionaires amongst us. But one extra holding, sitting quietly as one extra row in the spreadsheet. while receiving a dividend with a current yield possibly in excess of 6.00% per year, is not to be simply dumped in my opinion.

And who knows, another high yielder involved in Oil & Gas supplies .... one might even be tempted to increase one's investment.


Ian


BHP dividends are now 'foreign' dividends as will be Woodside ones. Having a secondary listing on the LSE and having an option to be paid in GBP does not change that. However if in a Sipp or ISA you do not need to complete a tax return and so do not need to concern yourself about whether a dividend is foreign or not.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502065

Postby Arborbridge » May 22nd, 2022, 9:16 am

Ok, previous two posts convince me that I do not have to do anything - at least should be in no hurry to do anything.
The remaining question is just whether I need another company in the register in this sector. Of course, one might say it was always there, but hidden within BHP - but having a separate entity makes it another matter.
Honestly, I would rather not bother, but like other companies there may be no rational reason for getting rid of it - just my own convenience. At least will be a bigger "rump" than some other separate floats we have had in the past, but by the nature of HYPTUSS it will demand its own attention for more capital. Yes, I know, one can ignore that! - but I am attracted to neatness in my HYP.

Arb.

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Re: BHP Group Determination of in special dividend in connection with the Woodside Merger..

#502102

Postby IanTHughes » May 22nd, 2022, 12:03 pm

tlf67482 wrote:Any ideas how to best record this special dividend in "spreadsheets" you may be using to keep of track of portfolios?

I am tempted to calculate the value of the Woodside shares that have been issued, record that as a normal cash dividend against BHP and then use that dividend cash to purchase the Woodside shares (all obviously on paper).

This would still leave me with the question of what I should be using as the original purchase price either using my weird method above or should I just be adding the Woodside shares to my portfolio with an original purchase of £0 or approx £16.50? Either method just doesn't seem to "correct".

I do wish things were just kept simple.

If anyone has any ideas of how they will be keeping track of a dividend paid with shares in whatever method they use to track their portfolio they would be welcome :D

Thanks

Personally, for the portfolos under my control, I shall be recording what I call a Internal sale (SINT) for the BHP position. Zero shares will be sold for a net receipt of the value of the received WPL shares. Conversely, an Internal purchase (PINT) will be used to create the new holding of WPL, using the same amount as for the BHP sale. i.e. no cash movement created.

This will ensure that the BHP holding has a record of the "cash" received, which I consider a Return of Capital (ROC) rather than a dividend. This will decrease the "cost" of the BHP holding, which "decrease" amount is effectively transferred to be the "cost" of the new WPL holding. The amount to be used for the two Internal Transactions will be the value of the new WPL shares, plus any fractional sale proceeds that the portfolio recieves, just as soon as I have those details available. Initially I suspect that I shall be estimating this value.

Please note, I am not suggesting that the above is the correct way to record this Corporate Event, only that it makes sense to me.

Enjoy!


Ian


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