International Consolidated Airlines Group SA (IAG)

[88V8]

Anyone holding IAG?

The 3 for 2 rights issue is live.

There is no payment for lapsed rights.
One must exercise the rights, or sell them.

I sold mine this morning for 68p. The ticker is IAGN. At the current price, it was not worth taking them up.

Different brokers will have different deadlines, my broker requires action by the 22nd.

If one does nothing, that will be a loss of c68p per share.

V8

[dealtn]

See

https://www.investegate.co.uk/intl-con- ... 00106608Y/

and

https://www.investegate.co.uk/intl-con- ... 32068853Y/

Although listed in London this is subject to Spanish Law

[JohnB]

Mum has a small ammount of them, and doesn't want to put more money in, or all the bother. We understand that her holding will be diluted, but is the lost of 68p just because someone thinks the right to put more money in at those terms is worth 68p?

The prospectus was as clear as mud on this.

[daveh]

I was about to say that if you let the rights lapse you would get the value of the lapsed rights, which is what usually happens. The company sell the rights, take the subscription price for the new shares and give you what is left. But that doesn't look to be the case here. Having briefly read through the prospectus it seems if you don't take up the rights they lapse with no value. So if you don't want to subscribe for more shares the only way to not lose out is to sell the rights before they lapse. I get a quoted price of 68p on the LSE site. If the IAG shares are held with an on-line broker a new holding of IAGN should have appeared which you should be able to sell. Alternatively there may be a corporate action notice that will tell you what you can do with the rights.

[JohnB]

The clear as mud prospectus pointed to a website, when I expected to be asked Mum's bra size. But it just wanted 2 numbers on the accompanying letter a NI number and I could put the rights up for sale with computershare. Surprisingly easy.

[spasmodicus]

I was about to say that if you let the rights lapse you would get the value of the lapsed rights, which is what usually happens. The company sell the rights, take the subscription price for the new shares and give you what is left. But that doesn't look to be the case here. Having briefly read through the prospectus it seems if you don't take up the rights they lapse with no value. So if you don't want to subscribe for more shares the only way to not lose out is to sell the rights before they lapse. I get a quoted price of 68p on the LSE site. If the IAG shares are held with an on-line broker a new holding of IAGN should have appeared which you should be able to sell. Alternatively there may be a corporate action notice that will tell you what you can do with the rights.

I've got some of this stuff, a result of failing to appreciate the degree of funk that would result from COVID.
According to Hargreaves Lansdowne, the "do nothing" option is

If you don’t sell or take up your Rights by the deadline of noon Tuesday 22 September 2020 Hargreaves Lansdown will attempt to sell them on your behalf to ensure they don’t lapse without value. We’ll group your Rights with other Hargreaves Lansdown clients and attempt to place one trade in the market. Any proceeds from this bulk sale will then be distributed pro rata to you and other entitled holders. Please note that on occasion a lower price may be obtained on a bulk sale than that available on a smaller trade. The bulk sale is expected to be completed on Wednesday 23 September 2020 and the cash credited on Thursday 24 September 2020. Please note that although it is expected that a market will continue to exist in the Rights up to Wednesday 23 September 2020 it can’t be guaranteed. If we’re unable to sell the Rights they will lapse for no value and be removed from your portfolio. To be certain of selling your Rights, and to know in advance what price you’d be selling at, you should do so before noon Tuesday 22 September 2020.

I have 620 shares/Rights (for which I originally paid about £1500), so would be entitled to buy 620 * 3/2 more shares i.e. 930 shares @ Eu0.92 = Eu 855.6 worth, i.e. about £788 worth. Prior to rights issue, share price was about 195p or 2.12 Euros, roughly, at exchg rate 1.085.
Market cap of IAG at that price was £3.86bn. Rights issue is said to be Eu2.75bn. Share price after issue would be expected to fall to 3.86/(3.86 + 2.75/1.085) or roughtly 0.6 of current value (Friday 12/09/20) i.e.to 195 x 0.6 = 117.7p. I would then have 1550 shares x £1.117 = 1824.35 for which I will have paid £ 1510.76 + 788 or £2298. I will then be 100x(1-1824/2298)% down, or about 21%. Before the rights issue I was about 19% down, so it wouldn't make much difference.

The alternative is to sell the rights on the market.
Currently, SP is about 116p and falling, so above prediction of recapitalised SP isn't far out. However, according to HL, my tradeable rights are only worth about £285. If I cashed them in for this amount, I would then own 620 shares effectively purchased for £ 1510-285 = £1225, i.e. 198p/share roughly, so I would be down about 41% on IAG.

Right now prospects for airlines do not look good. On the bright side, there is a high demand for air travel, albeit suppressed by HMG's futile attempts to suppress it and inability to get a half decent COVID testing regime in place. The question is really whether the improved capitalisation will allow IAG to survive through to better times. It's a pity that Willy Walsh is departing from BA - he would have helped to keep the lid on expenditure. I've got until 22nd to think about this.

S

[88V8]

IAG rights Wednesday - 72p
Yesterday - 68p
Today - 44p

Doomed, we're all doomed.

I had a mistimed punt on Travel & Leisure, so I hope we're not all doomed actually, or at least not yet.

V8

[spasmodicus]

IAG rights Wednesday - 72p
Yesterday - 68p
Today - 44p

Doomed, we're all doomed.

I had a mistimed punt on Travel & Leisure, so I hope we're not all doomed actually, or at least not yet.

V8

Me too. So now it's a race to the bottom between IAG, EZJ and TUI, who are also considering a rights issue. About as much fun as a Caribbean cruise with P&O and they have cancelled those until next February.

https://www.reuters.com/article/tui-outlook-debt/tui-considering-rights-issue-divestment-to-help-bring-down-debt-ceo-idUSL8N2FF2J1

sigh

S

[88V8]

Amazingly, to me, the rights issue was oversubscribed.

V8

[dspp]

I haven't seen anybody anywhere comment on this particular item which occurred to me as soon as I read it yesterday,

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS
on targeted contingency measures in the absence of an agreement
with the United Kingdom on a future partnership

https://ec.europa.eu/commission/pressco ... IP_20_2368

see the bottom of p7,

"(c) By contrast, as regards ownership and control of EU air carriers, the Commission will not
propose further contingency measures. Regulation (EU) 2019/502, adopted in February 2019,
did not become applicable save for some elements. Nevertheless, it foresaw a grace period
of six months so that air carriers could take the necessary action to ensure full compliance
with the ownership and control requirements. That grace period was conditional on air
carriers submitting a satisfactory plan for remedial action to the national competent
authorities. That obligation applied as of the entry into force of the Regulation. Some air
carriers have taken the necessary actions, and contingency measures should not give unfair
advantages to those stakeholders and business that may have omitted to adapt on time to the
new situation"

That appears to be quite pointed language. Which carriers does it apply to ? IAG perhaps ?

(Ryanair and Easyjet seem to have taken the necessary actions)

regards, dspp

[scrumpyjack]

Presumably the same sort of thing, the other way round, is going to apply to all those fishing boats that fish UK waters as 'British' but are not British owned?

But as IAG is, I think, a merger of BA and Iberia and had already made arrangements to avoid excess non EU shareholding (at that point obviously the UK counted as EU), they will be able to sort this out.

[monabri]

I noted this on the iWeb login page (disc - no holding in IAG).

"Due to a new financial transaction tax in Spain you will now make an additional tax payment when you buy some Spanish stocks e.g. Banco Santander and International Consolidated Airlines Group."

[idpickering]

IAG full year results 2022.

Strong recovery in profits in 2022

• In 2022 we saw a strong recovery in our core markets as COVID-19 restrictions were lifted, which drove revenue momentum and a return to profit with significantly positive operating cash flow

• Further recovery in profits expected in 2023, with full year operating profit before exceptional items expected to be in the range of €1.8 to €2.3 billion, based on current foreign exchange rates and jet fuel forward prices. However, we are mindful of uncertainty in the macro environment and fuel and non-fuel cost inflation

• Committed to generating long-term shareholder value and confident in returning to pre-COVID-19 levels of operating profit within the next few years

Luis Gallego, IAG Chief Executive Officer, said:

"2022 was a year of strong recovery, driven by sustained leisure demand and markets reopening. At this point of the year we continue to see robust forward-bookings, while also remaining conscious of global macro-economic uncertainties. We are transforming our businesses, with the intention of returning IAG to pre-COVID levels of profit within the next few years, through major initiatives to improve customer experience and operational performance. Our unique group structure allows us to maximise revenue and cost synergies, and invest capital to achieve strong returns, whilst continuing progress towards net zero by 2050.

"With the acquisition of Air Europa now agreed but subject to regulatory and other approvals which could take around 18 months, we are intending to welcome another leading airline to the Group. This acquisition will enable us to grow Madrid as a hub, offering a gateway to Latin America and beyond, with benefits for customers, employees and shareholders.

"I would like to thank the teams across IAG for their exceptionally hard work in addressing the challenges of ramping up the operation throughout the year."

And later;

Dividends

The Directors propose that no dividend be paid for the year to December 31, 2022 (2021: €nil).

The future dividend capacity of the Group is dependent on the liquidity requirements and the distributable reserves of the Group's main operating companies and their capacity to pay dividends to the Company, together with the Company's distributable reserves and liquidity.

Certain debt obligations place restrictions or conditions on the payment of dividends from the Group's main operating companies to the Company, including a loan to British Airways partially guaranteed by UKEF and loans to Iberia and Vueling partially guaranteed by the Instituto de Crédito Oficial (ICO) in Spain; these loans can be repaid early without penalty at the election of each company. In Spain, Iberia and Vueling are not permitted to make dividend payments in the reporting period in which they are in receipt of Expedientes de Regulación Temporal de Empleo or 'ERTE' (Temporary Employment Regulation Records). British Airways agreed with the Trustee of its main UK defined benefit pension scheme (NAPS) as part of the triennial valuation as at March 31, 2021 that, subject to the over-funding protection mechanism, no dividends will be paid to IAG before December 31, 2023 and that any dividends paid to IAG from January 1, 2024 through to September 30, 2025, will trigger a pension contribution of 50 per cent of the amount of the dividend. Further details on the British Airways dividend restrictions agreed with NAPS are given in note 32a.

https://www.investegate.co.uk/intl-con- ... 00029698Q/

Ian (No holding).