National Grid Rights Issue

[EthicsGradient]

The more I think about this, the less I can understand. How can National Grid set the Record Date for entitlements under the Rights Issue as the close of business on 20 May 2024, and not announce that until the start of the 23rd? Doesn't that mean that anyone who bought shares on the 21st or 22nd of May has paid a false, higher price for shares they had no way of knowing were about to be diluted?

I didn't see the 20th May declared as the Record Date in the announcement yesterday. I might have missed it but then to state it today seems wrong to me!

It was in the timetable of the announcement, without the explanation of passing on the rights (investegate link we first saw here: https://www.investegate.co.uk/announcem ... ue/8215977 )

Announcement of Rights Issue 23 May 2024

Publication of the Prospectus 23 May 2024

Record date for entitlement under the Rights Issue 6.00 p.m. on 20 May 2024

Despatch of Provisional Allotment Letters (to Qualifying Certificated Shareholders only) 23 May 2024

Admission and commencement of dealings in New Shares, nil paid, on the London Stock Exchange 8.00 a.m. on 24 May 2024

Existing Shares marked "ex-rights" by the London Stock Exchange 8.00 a.m. on 24 May 2024

Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters 11:00 a.m. on 10 June 2024

The explanation about passing on rights was in the full prospectus: https://www.nationalgrid.com/document/152061/download

[MrFoolish]

My nil paid rights have just appeared in my ii acount.

[MrFoolish]

I do wonder if a Labour government might have some benefits for NG. A lot of NG's plans are being hampered by the sorts of NIMBYs who go crazy at the thought of seeing a pylon on the horizon. The Tories have indulged and encouraged these people but I think Labour would be less likely to.

[EthicsGradient]

My nil paid rights have just appeared in my ii acount.

In mine too, plus the corporate action decision; either "do nothing" and wait to see what the lapsed rights cash payment is, or exercise the rights for some or all. There isn't a "sell enough nil-paid to exercise the rights for the remainder" automatic option - you have to work that out and arrange it yourself, manually (which will depend on the price you sell at). The full documentation has not yet appeared in Document History, however.

[Crazbe7]

My nil paid rights have just appeared in my ii acount.

Mine have appeared in my Halifax and AJ Bell accounts.

Halifax Share dealing easy to follow.

Totally flummoxed by AJ Bell. I only have a 'do nothing option' which is not what I want to do.

I await a timely response from my email

Crazbe7

[Grumpsimus]

Mine have appeared in my Halifax and AJ Bell accounts.

Halifax Share dealing easy to follow.

Totally flummoxed by AJ Bell. I only have a 'do nothing option' which is not what I want to do.

I await a timely response from my email

Crazbe7

I am with A J Bell as well. They sent a notification on 23rd May announcing the rights issue and giving basic details of the terms. The notification also said that they will be creating a seperate event to allow you to enter your choosen options. I am sure that this will arrive shortly. In any event, no need to get too excited as the markets are closed until Tuesday the 28th due to the bank holiday.

[spiderbill]

ii have the corporate actions in both my ISA and trading account holdings, and fortunately I have enough cash in both accounts to cover the purchases in full.

I also have some with HSBC and they have nothing on their site as yet. They like to send you a letter with a code you enter - given the short notice of the action and the bank holiday I have some doubts if that will arrive in time. You can sometime pick up enough details from a list of corporate actions - but it's empty!
I only have enough cash in that account to cover part of the purchase so will have to sell the rest of the rights. A nuisance.

Am I the only one who feels this has all been rather rushed through and not handled all that well? Why such a heavy discount and if it had been less would the price fall have been less than the current 21%-ish?
Wondering if the election has prompted them to go sooner than they planned for some reason?

cheers
Spiderbill

[TheMotorcycleBoy]

Hi,

Feeling a bit out of depth here…

As an ex-employee, I have far too many shares in NG (not being diversified is one for another day).

I’m trying to work out how this is likely to play out. Assumption is to offset the dilution from the extra shares, the preferred approach is to buy the nil-paid rights.

The problem is a combination of not having the cash or certainly being unable to access some quick enough to participate.

I’m trying to work out what the likely hit is going to be in real terms, recognising prices will be affected by other current factors. Is a simple rule of thumb that the share price will go down c. 22% reflecting the dilution. Buying the rights at a discount should then offset the paper loss? Or is this too simplistiic?

If the rights are not taken, then the options get sold, this may (or may not) result in a small return if the rights are sold in excess of the £6.45 discount price, which may offset some of the impact from the dilution?

As I don;t have the cash but now have rights regardless, I’m trying to understand whether there is any value in selling some of the existing shares if still above the £6.45 and using this cash to purchase the discounted shares. The FY24 final dividend on the sold shares will have to be sacrificed but need to work this through as to whether there is any compromise benefit doing this.

Alternatively I do nothing and see how it all plays out on impact and take this as a lesson to diversify!

Can anyone put me straight on tall things Right Issue?

Many thanks.

Ah yes, a Rights issue. Not had one of these for a while.

It's at times like this that I miss the late Gengulphus, who used to produce comprehensive posts about matters such as Rights issues.

One possibility you need to consider is "tail swallowing". (Sell some of the rights to give you cash to buy the rest of the rights)
See tis post by Gengulphus for a previous Rights issue.
https://www.lemonfool.co.uk/viewtopic.php?t=12578&start=20

Further comment on that SMDS Rights issue https://www.lemonfool.co.uk/viewtopic.php?f=15&t=12246#p146652

Adrian

We have a few NG. shares in various accounts. For my iWeb account, we have these options:

1. I elect to take up my Rights to buy 33 NATIONAL GRID shares.
2. I elect to sell my NATIONAL GRID Nil Paid Rights. I have read, understand and agree to the conditions to sell the Rights.
3. I elect to sell sufficient of my NATIONAL GRID Nil Paid Rights to exercise the remaining Rights.

Is option 3. the "tail-swallow" option then?

thanks Matt

[ReformedCharacter]

We have a few NG. shares in various accounts. For my iWeb account, we have these options:

1. I elect to take up my Rights to buy 33 NATIONAL GRID shares.
2. I elect to sell my NATIONAL GRID Nil Paid Rights. I have read, understand and agree to the conditions to sell the Rights.
3. I elect to sell sufficient of my NATIONAL GRID Nil Paid Rights to exercise the remaining Rights.

Is option 3. the "tail-swallow" option then?

thanks Matt

Within my iWeb account, I have 4 options under 'Making my Decision', but yes, option 3 (as you list it) is the 'tail-swallowing' option.

RC

[TheMotorcycleBoy]

We have a few NG. shares in various accounts. For my iWeb account, we have these options:

1. I elect to take up my Rights to buy 33 NATIONAL GRID shares.
2. I elect to sell my NATIONAL GRID Nil Paid Rights. I have read, understand and agree to the conditions to sell the Rights.
3. I elect to sell sufficient of my NATIONAL GRID Nil Paid Rights to exercise the remaining Rights.

Is option 3. the "tail-swallow" option then?

thanks Matt

Within my iWeb account, I have 4 options under 'Making my Decision', but yes, option 3 (as you list it) is the 'tail-swallowing' option.

RC

Thanks. Yes I'd have 4. options. I thought that 1. and 2. were identical, but actually now that I'm re-reading the last sentence of option 2.

1. I elect to take up my Rights to buy 33 NATIONAL GRID shares.

2. Please ensure you have funds available as detailed in 'How Will Payment Be Made?' section.
I elect to take up my Rights to buy 33 NATIONAL GRID shares (the quantity you enter below should be the total number of shares you wish to apply for).
Please ensure you have funds available as detailed in 'How Will Payment Be Made?' section.
Please enter the total quantity required: ___

Oh, there's a subtle difference. Is option 2. available for the occasion in which someone wants purchase all their entitled rights and maybe a few extra thinking that the additional shares will have a (shallower) discount too? Or if they want to buy less than the entitled number, and wish the rights to lapse for the remainder, and for NG. to credit their account later with the value of the lapsed rights?

thanks Matt

[ReformedCharacter]

Oh, there's a subtle difference. Is option 2. available for the occasion in which someone wants purchase all their entitled rights and maybe a few extra thinking that the additional shares will have a (shallower) discount too? Or if they want to buy less than the entitled number, and wish the rights to lapse for the remainder, and for NG. to credit their account later with the value of the lapsed rights?

thanks Matt

Your second interpretation for option 2 - less than the entitlement I think.

RC

[monabri]

Anyone have a view on how NG fits in with Labour's plans for GB Energy?

[MrFoolish]

Are all options equally "worthy"? In other words, it's just a decision on the ultimate size of your NG stake?

Or is there some complicated non-linearity where you are punished for not taking up your rights should NG do well?

[IanTHughes]

Are all options equally "worthy"? In other words, it's just a decision on the ultimate size of your NG stake?

Or is there some complicated non-linearity where you are punished for not taking up your rights should NG do well?

Surely it is a decision as to whether to invest more funds into National Grid PLC (NG) - exercise the rights - or invest that money elsewhere. Just like any other investment decision when funds are available. Alternatively, one could decide to retrieve some money from your holding of NG - sell the rights - to invest elsewhere or take as income.

Just like any other decision, only the future will determine whether the decision was right or wrong.

Enjoy!


Ian

[TheMotorcycleBoy]

Are all options equally "worthy"? In other words, it's just a decision on the ultimate size of your NG stake?

Or is there some complicated non-linearity where you are punished for not taking up your rights should NG do well?

Surely it is a decision as to whether to invest more funds into National Grid PLC (NG) - exercise the rights - or invest that money elsewhere. Just like any other investment decision when funds are available. Alternatively, one could decide to retrieve some money from your holding of NG - sell the rights - to invest elsewhere or take as income.

Just like any other decision, only the future will determine whether the decision was right or wrong.

Enjoy!


Ian

Hi Ian,

So in other words: it's a reasonable situation either way? that is:

1. either buy, and get some NG. on the cheap
2. sell the "nil-paid rights" and get a bit of extra cash, but no change to one's existing holding size
3. or "tail-swallow" which combines both?

Sorry to appear to be slow. But this is my first "rights issue", and hence still on the learning curve.

thanks Matt

[Newroad]

Hi Matt.

Same for me (too many years of collective investments only)

I was interested to hear of the various options above. IBKR are offering two only

1. Take no action (Default)
2. Quantity of rights to submit for exercise (Basic Offer)

You choose a quantity and it expressed that as a percentage - I'm exercising the lot for what it's worth. Not sure what happens in the event you don't exercise - maybe IBKR profit? There is not a

3. Resell all option, or
4. Resell enough to take the balance of the rights option

Option (4) is the kind of one that is often available in company schemes - allowing employees cashless exercise.

Regards, Newroad

[TheMotorcycleBoy]

Hi Matt.

Same for me (too many years of collective investments only)

I was interested to hear of the various options above. IBKR are offering two only

1. Take no action (Default)
2. Quantity of rights to submit for exercise (Basic Offer)

You choose a quantity and it expressed that as a percentage - I'm exercising the lot for what it's worth. Not sure what happens in the event you don't exercise - maybe IBKR profit? There is not a

3. Resell all option, or
4. Resell enough to take the balance of the rights option

Option (4) is the kind of one that is often available in company schemes - allowing employees cashless exercise.

Regards, Newroad

Hi NR,

Well this is a copy of all the blurb we got from iWeb. If you look at the bit right near the bottom you'll see text I've enboldened. I think it basically means that the rights aren't exercised, but by default get sold. I can't see that your broker would get the proceeds, though! Pretty sure it would end up in your account. Hopefully someone else on TLF, with more knowledge will be able to help you out.

Matt

NATIONAL GRID - Rights Issue

NATIONAL GRID is undertaking a Rights Issue on the following basis:

National Grid Plc (National Grid) is undertaking a Rights Issue on the following basis:

7 Rights for every 24 National Grid Ordinary shares held on the Ex-entitlement Date of 24th May 2024.

Each Subscription Right entitles the holder to subscribe for 1 New National Grid Ordinary share at a price of 645 pence per New share.

Holders of Rights have the following options:

Option 1 - Take up their Rights.

Option 2 - Partial take up of their Rights.

Option 3 - Sell their Rights.

Option 4 - Cashless take up of their Rights.

HOLDERS WHO WISH TO SELL THEIR RIGHTS ARE ADVISED TO DO SO THROUGH NORMAL TRADING CHANNELS.

The Rights were admitted to and commenced trading on the London Stock Exchange on 24th May 2024.

The availability of the options that involve selling Rights is dependent on there being a market for the Rights. If we are not able to sell the Rights on your behalf, we will allow them to lapse and you may receive lapsed proceeds.

If you wish to sell your Rights, please do so before our Advice Date of 4th June 2024. We will not be able to action any sale requests made after this date.

If you make your elections by post, your election must reach us by no later than 4th June 2024. If you have any concerns that your election will not reach us in time, please contact us by phone prior to the deadline and we can log your election.

Please be aware that there is no Excess Facility under the Offer.

We recommend you read the Rights Issue prospectus in full as this contains further information regarding the event and the voting rights of the new shares. The prospectus can be found on the Company website, http://www.nationalgrid.com/investors/

How This Affects You:

Based on your holding of 338 NATIONAL GRID ORD GBP0.12431289 shares on 24 May 2024, which was the Rights Issue Ex Date, you have received an entitlement to 98 NATIONAL GRID New Ordinary shares.

You Have The Following Options:
1 Take up your Rights to buy 98 NATIONAL GRID shares at a cost of 632.10 GBP.

We will process your instruction on or after 04 June 2024 23:59.Your election will be applied to your holding of Nil Paid Rights at this time and based on the terms of the Offer. Please ensure funds to take up your Rights are available as detailed in the 'How Will Payment be Made?' section.

If you do not have sufficient cleared funds to take up all of the specified number of shares then we will take up the maximum number of shares we can based on the funds available.
2 Take up your Rights to buy a specified number of NATIONAL GRID shares.

We will process your instruction on or after 04 June 2024 23:59.Your election will be applied to your holding of Nil Paid Rights at this time and based on the terms of the Offer. Please ensure funds to take up your Rights are available as detailed in the 'How Will Payment be Made?' section.

If you do not have sufficient cleared funds to take up all of the specified number of shares then we will take up the maximum number of shares we can based on the funds available.
3 Sell your NATIONAL GRID Nil Paid Rights.

If you wish to sell your Rights, the following conditions will apply:

Your Nil Paid Rights will be sold on the next working day after we receive your instruction and will be based on your holding of Nil Paid Rights at that time.
We will only attempt to sell your Nil Paid Rights once. No further attempts will be made.
A contract note will be made available confirming the sale details.
We may aggregate your sale order with orders from other NATIONAL GRID shareholders opting to sell NATIONAL GRID Nil Paid Rights; this may result in a slightly more or less favourable price than a sale of your Rights alone. The price obtained will be the best price available at the time we execute your deal in the market.
Our standard dealing charges will apply.
The availability of this option is dependent on there being a market for the Nil Paid Rights. If there is no market available we will not be in position to sell the Nil Paid Rights on your behalf. Should we not be able to sell the Nil Paid Rights we will instead allow the Nil Paid Rights to lapse.
4 Fund the take up of the Rights by selling some of your NATIONAL GRID Nil Paid Rights.

If you wish to sell some of your Rights in this way, the following conditions will apply:

We will sell sufficient Rights to take up the Rights on the remainder.
Your Nil Paid Rights will be sold on the next working day after we receive your instruction and will be based on your holding of Nil Paid Rights at that time.
We will only attempt to sell your Nil Paid Rights once. No further attempts will be made.
A contract note will be made available confirming the sale details.
We may aggregate your sale order with orders from other NATIONAL GRID shareholders opting to sell NATIONAL GRID Nil Paid Rights; this may result in a slightly more or less favourable price than a sale of your Rights alone. The price obtained will be the best price available at the time we execute your deal in the market.
Our standard dealing charges will apply.
The remaining Rights will be taken up under the terms of the Rights Issue.
The availability of this option is dependent on there being a market for the Nil Paid Rights. If there is no market available we will not be in position to sell the Nil Paid Rights on your behalf. Should we not be able to sell the Nil Paid Rights we will instead allow the Nil Paid Rights to lapse.

Lapse - If you decide to take no action your Rights will expire or lapse after the Offer closes.

The Company will arrange for the shares that these Rights entitled you to buy to be offered for sale in the market. Any premium obtained above the Rights Issue price, less expenses, will then be paid to you. The total number of shares you will own will stay the same. However, the proportion of the company you own will reduce as more shares will be in issue.

Important Information & Other Key Dates:

On 23rd May 2024, National Grid announced that the Company intends to raise net proceeds of approximately GBP 6.8 billion by way of a fully underwritten Rights Issue.

This is part of a comprehensive financing plan to allow the Group to fund a significant increase in capital investment, maintain its strong investment grade rating, deliver for customers and continue to achieve attractive shareholder returns.

The book cost of your underlying Ordinary shares will be adjusted to reflect the credit of Rights to your account. A portion of your book cost will be removed from your Ordinary shares and allocated to your Rights. The percentage of book cost allocated to the Rights is calculated based on the ratio of Rights to Ordinary shares, and the opening prices of both the Rights and the Ordinary shares on the day the Rights commence trading on the LSE.

If you elect to take up some or all of your Rights, the book cost apportioned to those Rights, together with the cost to take up those Rights, will be added back to the overall book cost of your Ordinary shares when the New Ordinary shares are credited.

Should you choose to sell some or all of your Rights, or allow them to lapse, the book cost given to those Rights will be removed when the Rights are removed from your account.

The Company may issue Lapsed Proceeds for any Rights not taken up at the end of the Rights Issue. If lapsed proceeds are issued, we will update your account when we receive the cash.

If you accept the Rights Issue, the New Ordinary shares are expected to be credited to your account on or after 12th June 2024.

Unless you hold your shares in a ShareBuilder account, entitlements to New Ordinary shares will be rounded down to the nearest whole number.

If you wish to accept the Rights Issue and intend to fund the take up of your Rights by selling existing shares held in your portfolio you will need to ensure that the trade is executed on or before 4th June 2024 in order to ensure funds are available by our deadline.

If you make your elections by post your election must reach us by no later than 4th June 2024. If you have any concerns that your election will not reach us in time, please contact us by phone prior to the deadline and we can log your election.

How Will Payment Be Made.

Any funds required for the take up of the Rights Issue will need to be in the relevant Share dealing account by the close of business on the 4th June 2024. The payment will be ringfenced shortly after 4th June 2024 and debited from the account thereafter.

If you do not have sufficient funds then we will take up the maximum number of Rights we can based on the funds available.

Should you wish to find more information please visit the website, http://www.nationalgrid.com/investors/

What Happens If I Don't Elect ?

If we do not receive a valid election from you, your Rights will lapse. Should lapsed proceeds be issued, we will credit your account as soon as payment is received.

When Is The Last Time I Can Elect ?
Please ensure you submit your option before 04 June 2024 23:59 to enable us to process your instruction in accordance with the Company's current published timetable for this event. This timetable may change as explained above.

[IanTHughes]

Surely it is a decision as to whether to invest more funds into National Grid PLC (NG) - exercise the rights - or invest that money elsewhere. Just like any other investment decision when funds are available. Alternatively, one could decide to retrieve some money from your holding of NG - sell the rights - to invest elsewhere or take as income.

Just like any other decision, only the future will determine whether the decision was right or wrong.

So in other words: it's a reasonable situation either way? that is:

1. either buy, and get some NG. on the cheap
2. sell the "nil-paid rights" and get a bit of extra cash, but no change to one's existing holding size
3. or "tail-swallow" which combines both?

You are correct in that those are the three options open to you and, if you do nothing, option 2) is the default, with the rights being hoovered up for the underwriters to exercise. But what I was trying to suggest was that this is an investment decision, just like any other.

In other words, assuming you have the money to invest in your portfolio, should you invest it in NG? The price - 645p per share - looks attractive, but don't forget that you would be giving up the value of those rights, as well as paying the Exercise price. The overall cost would be (645p x no. of rights) + value of those rights. This is an investment decision like any other, Is this share worth buying at the cost?

Select option 1) only if you want to add new money to your NG holding. Select option 3) if you want to add to your NG holding, but do not have extra funds available. If there are better possibilities for your money, select option 2). I guess what I am saying is, do not get drawn into believing that NG is the only home possible for your available funds. If NG fails your screening criteria, don't buy any more of it.

Whatever you decide, I wish you luck

Enjoy!


Ian

[TheMotorcycleBoy]

You are correct in that those are the three options open to you and, if you do nothing, option 2) is the default, with the rights being hoovered up for the underwriters to exercise. But what I was trying to suggest was that this is an investment decision, just like any other.

In other words, assuming you have the money to invest in your portfolio, should you invest it in NG? The price - 645p per share - looks attractive, but don't forget that you would be giving up the value of those rights, as well as paying the Exercise price. The overall cost would be (645p x no. of rights) + value of those rights. This is an investment decision like any other, Is this share worth buying at the cost?

Select option 1) only if you want to add new money to your NG holding. Select option 3) if you want to add to your NG holding, but do not have extra funds available. If there are better possibilities for your money, select option 2). I guess what I am saying is, do not get drawn into believing that NG is the only home possible for your available funds. If NG fails your screening criteria, don't buy any more of it.

Whatever you decide, I wish you luck

Enjoy!


Ian

Thanks Ian

This suddenly became more confusing. At first, when I was looking at iWeb's corporate action page, it seemed clearly, in so far as I needed to select one of the options there and the iWeb would deal with everything. However then I looked at my portfolio valuation breakdown I'm now seeing:

NATIONAL GRID NEW ORD 12 204/473PNP 10/06  (NGPN) 	
98 	242.551p 	£237.70 	*204.30p 	£200.21 	£-37.49 	-15.77%
NATIONAL GRID ORD GBP0.12431289  (NG.) 	
446 	955.5897p 	£4,261.93 	*889.40p 	£3,966.72 	£-295.21 	-6.93%

I assume that the top entry (NGPN x 98) is the nil paid rights, and each right is currently valued at 204.3p . So now:

1. if I choose the option to "exercise my rights" then will the NGPN line vanish when I choose to buy on the corporate action options page?
2. or does that holding remain in my account until I either manually sell it before the lapsing of the offer, or when (if I allow it to lapse) NG. settles the value of the rights and exchanges the rights for cash?

Many thanks, Matt

[EthicsGradient]

You are correct in that those are the three options open to you and, if you do nothing, option 2) is the default, with the rights being hoovered up for the underwriters to exercise. But what I was trying to suggest was that this is an investment decision, just like any other.

In other words, assuming you have the money to invest in your portfolio, should you invest it in NG? The price - 645p per share - looks attractive, but don't forget that you would be giving up the value of those rights, as well as paying the Exercise price. The overall cost would be (645p x no. of rights) + value of those rights. This is an investment decision like any other, Is this share worth buying at the cost?

Select option 1) only if you want to add new money to your NG holding. Select option 3) if you want to add to your NG holding, but do not have extra funds available. If there are better possibilities for your money, select option 2). I guess what I am saying is, do not get drawn into believing that NG is the only home possible for your available funds. If NG fails your screening criteria, don't buy any more of it.

Whatever you decide, I wish you luck

Enjoy!


Ian

Thanks Ian

This suddenly became more confusing. At first, when I was looking at iWeb's corporate action page, it seemed clearly, in so far as I needed to select one of the options there and the iWeb would deal with everything. However then I looked at my portfolio valuation breakdown I'm now seeing:

NATIONAL GRID NEW ORD 12 204/473PNP 10/06  (NGPN) 	
98 	242.551p 	£237.70 	*204.30p 	£200.21 	£-37.49 	-15.77%
NATIONAL GRID ORD GBP0.12431289  (NG.) 	
446 	955.5897p 	£4,261.93 	*889.40p 	£3,966.72 	£-295.21 	-6.93%

I assume that the top entry (NGPN x 98) is the nil paid rights, and each right is currently valued at 204.3p . So now:

1. if I choose the option to "exercise my rights" then will the NGPN line vanish when I choose to buy on the corporate action options page?
2. or does that holding remain in my account until I either manually sell it before the lapsing of the offer, or when (if I allow it to lapse) NG. settles the value of the rights and exchanges the rights for cash?

Many thanks, Matt

I would expect that, if you select "exercise my rights", the 98 nil-paid shares will remain in view until the date the decision closes (5th June on II, I think, around hen too for IWeb, I imagine). They may then stay as "NGPN", or they may change to "NGPF" (the fully paid ticker, which seems to be ready for that - see https://www.londonstockexchange.com/sto ... mpany-page - when the money is taken from your account. On 12th June, I'd expect the holding in NGPF to be amalgamated into the NG. holding.

If you don't exercise your rights, it will disappear - possibly as early as 6th June, possibly not until the 10th or 12th, and cash will be added to your account once the rights have been exercised by the underwriters.