As the subject line says.... And I've done a quick google search but turned up nothing that would give me a clue as to the worth of the deal. (And yes I've really not much idea what the deal is.... :-) mikej
If you take up a rights issue like this you are being asked to throw good money after bad.
If you don't take it up you lose as well because either your shareholding is diluted or it becomes crystal clear that it is worthless.
There have been months of dire predictions about B&B - the only people left holding shares (present company excepted of course) are the the very lethargic and the terminally stupid.
The latter will take up the rights issue and the the former will sit on their hands.
er or a third possibility they didn't know they had any B&B shares until an email arrived to say would they like to take up the offer.... I can't even remember how or why I have ended up with them.
Also presumably its too late to get rid of them.... mikej
er no it didn't - the shares were put with Hargreaves Landsdown for management (not by me) and they emailed. Why would an email from BB be of any interest? mikej
To expose yourself to the movements in B&B shares, you have two options at the moment. You can either buy a share at 56p (correct at the time of writing), or buy a nil paid right at 2.5p, and keep the rest of the money in the bank.
If the share price falls to 30p at the date the rights are exercised, then if you bought the share, you would lose 26p; whereas if you bought the right, you would lose only 2.5p. On the other hand, if the share price rose to £1, you would gain 44p if you bought the share, or 42.5p if you bought the right. People are happy to take a small hit on the upside potential gain in order to substantially limit the downside risk, so that explains the rights price. Or alternatively, you could put all 56p in B&B rights and have a much bigger potential upside in exchange for a much bigger risk of losing everything.
HBOS rights had a non-zero value even when the shares were below the rights price, and this is the reason for it.
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