TheMotorcycleBoy wrote:IanTHughes wrote: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
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?
Most brokers will allow you to change your mind up to whenever is the date and time set by the organisers that all details must be submitted. In this case, some time before 10 Jun 2024. If you choose to Exercise, the transaction will take place on 10 Jun 2024. If on the other hand, you allow the offer to lapse, the Rights will be taken from you on the 10 Jun 2024, and the funds should be credited a couple of days later.
A couple of other points to consider:
1) The Exercise of rights does not attract Stamp Duty and, my broker at least, does not charge a commission.
2) Lapsing Rights is also commission-free.
3) You will not know the actual value of the lapsed rights until they are sold on your behalf. Until then the price of such Rights can swing wildly.
Enjoy!
Ian