Evening, All.
On this matter, we've just been advised that we need to "elect" (via II in our case) what we wish to do as a consequence of the merger.
There are two options
1. The "Rollover" option, which is the default - convert HDIV to new HHI shares
2. The "Cash" option, which requires a positive election/decision
You can mix the two (you just need to say how many shares of each). Some key points to note ...
With the rollover option, the new HHI shares are (IMO) likely to be purchased above market price (though there are at least partial mitigations to this). From the circular
"Shareholders should note that the issue price for New HHI Shares under the Rollover Option may be above the market price of the HHI Shares if the HHI Shares continue to trade at a discount to their underlying net asset value. This discount was 7.41 per cent. as at 7 December 2023 (being the latest practicable date prior to the publication of the Circular)."
With the cash option, there is a 1% haircut from NAV. Also from the circular
"Shareholders who elect, or are deemed to elect, for the Cash Option will be entitled to receive the net realisation proceeds of such portion of the Cash Pool to which they are entitled. The appropriation of the Company's assets to the Cash Pool will be based on the value of the Company NAV per Share less a discount of 1.0 per cent. (the "Cash Option Discount") (the "Cash NAV per Share") multiplied by the number of Shares so elected (calculated to six decimal places). The value of the Cash Pool will be equal to the Cash NAV per Share multiplied by the number of Shares that have elected for the Cash Option (the "Cash Pool NAV"). As described below, the value arising from the application of the Cash Option Discount shall be allocated to the value of the Rollover Pool for the benefit of Shareholders electing, or who are deemed to have elected, for the Rollover Option."
In effect, I understand the 1% haircut for cash option takers goes into the pool for rollover option takers. However, it's more complex than that - one needs to read the circular in detail to understand it fully (I'm not going to try and explain it here, even if I do understand it):
https://www.londonstockexchange.com/news-article/HDIV/publication-of-circular/16249281I imagine there are a few TLF holders of HDIV - good luck with your choice. My thinking along with some other stuff can be found on this related thread:
https://www.lemonfool.co.uk/viewtopic.php?f=52&t=40910&p=619341&hilit=hdiv#p619341Regards, Newroad
