I hold these shares and did not take up the rights issue (a mistake I think but I was away with work). TDwaterhouse have now credited my account with over 100 due to this lapsed rights isssue. Have I just recieved money for nothing ? I realise a rights issue issues more shares, so have I been compensated for the lower share value of meggitt due to the increased number of shares or have they taken something away from my holding & compensated for that.
TIA
In message , Tracy Ramsden writes
A 'rights' issue gives a shareholder the right to buy more shares at a stated price. If you dont take up that right, then the broker sells the right to somebody else and you get what the purchaser of that right paid for it.
Bitstring , from the wonderful person Tracy Ramsden said
the former.
Simple example .. meggitt was worth £1000 with 1000 shares in issue, and you owned 20 of them (hence £20). They issued another 1000 shares at 80p (£800 worth) and you could have bought 20 of them .. you'd then have had
40 shares, out of 2000, in something that ought be worth (£1000+£800) .. i.e. £36 worth, but you'd have coughed up the extra £16 to buy them.Since you didn't, you now own 20/2000 of (£1000+£800), £18 worth. You are thus £2 out of pocket .. however someone bought those 20 shares, which you had the rights to, for £16, and they're worth £18 too .. the buyer is thus £2 up.
So the £2 is the value of the 'right' to buy the 20 shares, and that's what TDW have credited you with.
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