National Grid Rights Issue

[EthicsGradient]

I'm still dithering and hoping to see some comments as regards the advisability of taking up the rights if one has sufficient free cash to do so. Is this likely to prove a good investment or a damp squid? Has this been discussed earlier in the thread?

Nobody can ”advise” you what to do without knowing full details of your Investment Aims, your attitude to risk, requirements vis a vis capital availability … etc … etc … One would also need to know full details of all your current investments. Without this information all anybody can do is inform as to what they will do for their own portfolio, which may be relevant to your situation, but maybe not.

What I will say is that, at current prices, Exercising the Rights would entail your purchasing 176 shares of National Grid PLC (NG) at a price of 841.05p – 645.00p + value of the right 196.05p. This represents a discount to NG’s current price – 882.40p - of 4.69%. NG have indicated that the initial annual dividend will be 45.30p, making the yield on these new shares 5.39%. The yield on your new holding would be 5.13%.

There are of course no guarantees of future dividends, but NG have committed to increasing the annual payout by at least the value of consumer inflation. In the past NG have shown themselves very capable of doing as promised in this regard.

I have no holding of NG, and therefore no skin in this particular game but, if I did, I would not Exercise these Rights, preferring to invest the extra funds in one of the many higher yields currently available. But of course, that is just me, an income investor. Another investor might do differently.

In other words, it does look like they are offering a fairly attractive return over the next few years, with an increasing dividend that does look sustainabe. But only you can decide if it fits in with your portfolio and your investment strategy.

Enjoy!


Ian.

The old shares are with-dividend (39.12p), the fully-paid new ones are ex-dividend. So using those prices, it's 841.05p compared to 882.4p-39.12p = 843.28p.

[Bouleversee]

Ian Hughes:

Thanks for your response but I think mine to EG explains why all my info is irrelevant. I already had the purchase costs etc. but hadn't had time (too many domestic disasters and medical issues to deal with) to go into whether what they were planning to do with the dosh made sense.

[IanTHughes]

Nobody can ”advise” you what to do without knowing full details of your Investment Aims, your attitude to risk, requirements vis a vis capital availability … etc … etc … One would also need to know full details of all your current investments. Without this information all anybody can do is inform as to what they will do for their own portfolio, which may be relevant to your situation, but maybe not.

What I will say is that, at current prices, Exercising the Rights would entail your purchasing 176 shares of National Grid PLC (NG) at a price of 841.05p – 645.00p + value of the right 196.05p. This represents a discount to NG’s current price – 882.40p - of 4.69%. NG have indicated that the initial annual dividend will be 45.30p, making the yield on these new shares 5.39%. The yield on your new holding would be 5.13%.

There are of course no guarantees of future dividends, but NG have committed to increasing the annual payout by at least the value of consumer inflation. In the past NG have shown themselves very capable of doing as promised in this regard.

I have no holding of NG, and therefore no skin in this particular game but, if I did, I would not Exercise these Rights, preferring to invest the extra funds in one of the many higher yields currently available. But of course, that is just me, an income investor. Another investor might do differently.

In other words, it does look like they are offering a fairly attractive return over the next few years, with an increasing dividend that does look sustainabe. But only you can decide if it fits in with your portfolio and your investment strategy.

The old shares are with-dividend (39.12p), the fully-paid new ones are ex-dividend. So using those prices, it's 841.05p compared to 882.4p-39.12p = 843.28p.

Date      | NG Price | Ex-Dividend | Cash  | Total  | Comment               
30-May-24 |   882.40 |        0.00 |  0.00 | 882.40 | Today                 
06-Jun-24 |   843.28 |       39.12 |  0.00 | 882.40 | Share goes Ex-Dividend
19-Jul-24 |   843.28 |        0.00 | 39.12 | 882.40 | Dividend Payment      

I am of course assuming that cash has a value.

Enjoy!


Ian.

[Gerry557]

Not disagreeing with what you have calculated but my measure was the change from previous announcement SP to post announcement SP as the OP asked. You are correct there is not much difference in collecting the rights or buying the discounted shares I just assumed buying the discount and them correcting to the then share price.

Actually, what you posted was:

I think if you take up the rights you are only 15% worse off or 22% worse off if you don't. Assuming the SP remains at this level.

The clear implication being that only Exercising the Rights would prevent one being ”worse off” by a further 7.00%. Very obviously a false statement.

There are people on this site who, not knowing the ins and outs of managing a Rights Issue, might be persuaded by such a statement to Exercise their Rights, in the false belief that such action was the only way that would stop further losses.

I hope you will agree that such a statement, being demonstrably false, must be robustly challenged. Only by presenting a true picture of the options available, can those less experienced in the ins and outs of Rights Issues, at least be furnished with a proper idea of the possible consequences for each option.

I have noticed on this and other threads discussing this Rights Issue that, many of those calculating the value of their holding, ignore entirely the value of the Rights, which must be considered part of the holding, for value purposes. Now it appears that some even forget that cash has a value!

Ian

Ian, I replied to a general question and gave a general answer. I wouldn't expect people to be using it as a basis for something detailed for their own situation that has a completely different question.
I mean percentage change from your old holding I replied 22%
to

this new (temporary) combined holding. I imagine it will be negative

I replied 15% I didnt specify which of the various options to exercise your rights as there are several and the OP didnt specify a particular option either. You dont have an option "not" to not exercise your rights, even doing nothing has a default option picked for you. Your own figures matched my general 15% answer which includes taking into account that you have rights. The figures are a reply to the original general question not a percentage difference in the various options that you have in exercising your rights.

So my statement was accurate you just changed it to fit a different question.

[idpickering]

Results of Rights Issue

National Grid plc ("National Grid" or the "Company") today announces that the 7 for 24 Rights Issue of 1,085,448,980 New Ordinary Shares at 645 pence per New Ordinary Share announced on 23 May 2024 (the "Rights Issue") closed for acceptances at 11:00 am on 10 June 2024. The Company received valid acceptances in respect of 987,429,382 New Ordinary Shares, representing approximately 91% of the total number of New Ordinary Shares to be issued pursuant to the fully underwritten Rights Issue.

It is expected that the New Ordinary Shares will commence trading, fully paid, on the London Stock Exchange plc's main market for listed securities as soon as possible after 8:00 a.m. on 12 June 2024.

It is expected that the New Ordinary Shares held in uncertificated form will be credited to CREST accounts as soon as practical after 8:00 a.m. on 12 June 2024 and that share certificates in respect of New Ordinary Shares held in certificated form will be despatched by no later than 24 June 2024.

https://www.investegate.co.uk/announcem ... e-/8254519

Ian (No holding).

[Newroad]

Morning All.

Apologies for my apparent ignorance (haven't paid any attention to a rights issue for a long time) but I expected the shares acquired from exercise on the right issue to merge with my existing holding at 8am this morning. However, on my account, NGPF and NG. are still showing separately.

Is anyone able to clarify what I should expect and when?

Regards, Newroad

[kempiejon]

Morning All.

Apologies for my apparent ignorance (haven't paid any attention to a rights issue for a long time) but I expected the shares acquired from exercise on the right issue to merge with my existing holding at 8am this morning. However, on my account, NGPF and NG. are still showing separately.

Is anyone able to clarify what I should expect and when?

Regards, Newroad

Which broker are you with I'm seeing the same with Halifax but can't do anything with the rights.

[EthicsGradient]

Morning All.

Apologies for my apparent ignorance (haven't paid any attention to a rights issue for a long time) but I expected the shares acquired from exercise on the right issue to merge with my existing holding at 8am this morning. However, on my account, NGPF and NG. are still showing separately.

Is anyone able to clarify what I should expect and when?

Regards, Newroad

By now (9:50), the shares are shown for me on ii as one combined holding under "NG.". Until yesterday, that was split as "NG." for the old holding, and "NGPF" for the fully-paid new shares (which the LSE had shown as tradable, though I didn't attempt to trade on ii). Some brokers may have a batch update system, which might not happen until the end of the day.

[IanTHughes]

Apologies for my apparent ignorance (haven't paid any attention to a rights issue for a long time) but I expected the shares acquired from exercise on the right issue to merge with my existing holding at 8am this morning. However, on my account, NGPF and NG. are still showing separately.

Is anyone able to clarify what I should expect and when?

Which broker are you with I'm seeing the same with Halifax but can't do anything with the rights.

The Rights have expired, as at 11:00 on 10 June 2024. There is no longer a "right" to purchase any of the new shares and as such, one can no longer trade the Rights - the Rights have "Lapsed". Of course your broker, for administrative purposes, probably prevented you from taking up or trading your Rights some time last week.

The timetable at the time of the original publication of the Rights Issue was set out here:

https://www.nationalgrid.com/document/152016/download

INDICATIVE SUMMARY TIMETABLE OF PRINCIPAL EVENTS

               Event                                            |   Date   
Announcement of Rights Issue                                    | 23-May-24
Publication of the Prospectus                                   | 23-May-24
Record date for entitlement under the Rights Issue at 6:00 p.m. | 20-May-24
Despatch of Provisional Allotment Letters                       | 23-May-24
Admission and commencement of dealings in New Shares, nil paid  | 24-May-24
Existing Shares marked “ex-rights” by the London Stock Exchange | 24-May-24
Acceptance, payment in full and registration by 11:00 a.m.      | 10-Jun-24
Announcement of results of the Rights Issue                     | 12-Jun-24
Commencement of dealings in New Shares at 8.00 a.m.             | 12-Jun-24

I do not believe it has changed.

With regard to the now "Lapsed " Rights, the underwriters will now be busy selling the un-bought new shares into the market. The value received in excess of the Exercise price of 645.00p paid to National Grid PLC (NG), less charges incurred, will be paid to the holders of those "Lapsed " Rights, in due course. A week from now maybe?

Enjoy!


Ian.

[Newroad]

Hi Kempiejon.

In this case for me, IBKR is the broker (and, at time of writing, still split NG. and NGPF).

[IanTHughes] I took up the rights - it is simply how they are now represented which is in question.

Regards, Newroad

PS It will also be interesting to see if and how the P&L merges (NG. is showing a loss for me now, NGPF a profit)

[Newroad]

Morning All.

Finally done after (not at) the open this morning on IBKR.

On the P&L side, they have netted it off, which is good - so the P&L loss showing is now reduced.

Regards, Newroad

[EthicsGradient]

Can anyone who let their rights lapse confirm the price they were given for them? this says 190p, which seems rather low - themain shares traded mostly in the 865-875p range after going ex-dividend (now up to around 900p, but that was after a jump at the start of 18 June), and taking the 645p off that, you get 220-230p.

I ask because if that is the typical kind of price you get for lapsed rights, it does indicate that, as someone told me earlier, letting all rights lapse is rarely the best thing to do.

[kempiejon]

Mine lapsed, Halifax have told me to expect £1.90 (couched with a "we expect") but not before 24th June.
Following chatter on here I did think about the other options but without paying enough heed to the 10th June cut off date.
For me perhaps a default of do something rather than lapse, as you say £1.90 is a long way short of £2.30, for the brokers costs. Tail swallowing or selling rights might be investigated for another time. However I do not feel massively disadvantaged by letting rights them lapse, at portfolio level it's nigh silent and confirms my thoughts that nothing remains an option.

[tjh290633]

Can anyone who let their rights lapse confirm the price they were given for them? this says 190p, which seems rather low - themain shares traded mostly in the 865-875p range after going ex-dividend (now up to around 900p, but that was after a jump at the start of 18 June), and taking the 645p off that, you get 220-230p.

I ask because if that is the typical kind of price you get for lapsed rights, it does indicate that, as someone told me earlier, letting all rights lapse is rarely the best thing to do.

I have never let rights lapse. I have always sold in the market if I didn't want to take them up. The reason is that I get the cash earlier, and I am protected from a late fall in their price

TJH

[kempiejon]

I have never let rights lapse. I have always sold in the market if I didn't want to take them up. The reason is that I get the cash earlier, and I am protected from a late fall in their price

And as I have noticed on this occasion what the broker can get away with as costs. My dallying has cost about 20%.

[IanTHughes]

I have never let rights lapse. I have always sold in the market if I didn't want to take them up. The reason is that I get the cash earlier, and I am protected from a late fall in their price

And as I have noticed on this occasion what the broker can get away with as costs. My dallying has cost about 20%.

How much would the commission for the sales transaction have been - as a percentage? Also, when would you have sold them? Some of the time you would have recekived somewhat less thsn the £1.90 you are now going to receive - the price did dip to £1.50-£1.55.

You cannot assume that you would have got the highest price achieved during the period, or even the final day's price, and I doubt it would have been commission-free.

Enjoy!


Ian.

[kempiejon]

How much would the commission for the sales transaction have been - as a percentage? Also, when would you have sold them? Some of the time you would have recekived somewhat less thsn the £1.90 you are now going to receive - the price did dip to £1.50-£1.55.

You cannot assume that you would have got the highest price achieved during the period, or even the final day's price, and I doubt it would have been commission-free.

Thank you Ian. Then I'll revert to my previous position of no specific plan. My dealing costs would have been a few percent. I had not followed the prices.

[EthicsGradient]

And as I have noticed on this occasion what the broker can get away with as costs. My dallying has cost about 20%.

How much would the commission for the sales transaction have been - as a percentage? Also, when would you have sold them? Some of the time you would have recekived somewhat less thsn the £1.90 you are now going to receive - the price did dip to £1.50-£1.55.

You cannot assume that you would have got the highest price achieved during the period, or even the final day's price, and I doubt it would have been commission-free.

Enjoy!


Ian.

Though the price received should be based on the market price after the take-up of rights by existing owners was known, which was when they were sold. My point is the difference between that (call it 220p after the 645p is taken off) and the 190p - 14% or more below. That's considerably more than sales transaction for any notable amount. If that's a typical cost for lapsed rights, it's worth avoiding.

[IanTHughes]

How much would the commission for the sales transaction have been - as a percentage? Also, when would you have sold them? Some of the time you would have recekived somewhat less thsn the £1.90 you are now going to receive - the price did dip to £1.50-£1.55.

You cannot assume that you would have got the highest price achieved during the period, or even the final day's price, and I doubt it would have been commission-free.

Though the price received should be based on the market price after the take-up of rights by existing owners was known, which was when they were sold. My point is the difference between that (call it 220p after the 645p is taken off) and the 190p - 14% or more below. That's considerably more than sales transaction for any notable amount. If that's a typical cost for lapsed rights, it's worth avoiding.

You are right of course, the gap between where the price ended up, just before Lapse, and the £1.90 received, is significant. Of course the price offered has to be what the Underwriters are willing to pay.

However, all I was pointing out was that the alternastive to Lapsed Rights was Sold Rights. A sale at £1.55 would have shown the Lapse price of £1.90 to be rather good. Also, the size of the sales commission - as a percentage - is, i find, somewaht dependent on the size of holding!

Lapsing Rights might be worth avoiding, or might not! One wiill only know for sure with hindsight.

Enjoy!


Ian.

[tjh290633]

And as I have noticed on this occasion what the broker can get away with as costs. My dallying has cost about 20%.

How much would the commission for the sales transaction have been - as a percentage? Also, when would you have sold them? Some of the time you would have recekived somewhat less thsn the £1.90 you are now going to receive - the price did dip to £1.50-£1.55.

You cannot assume that you would have got the highest price achieved during the period, or even the final day's price, and I doubt it would have been commission-free.

Enjoy!


Ian.

The sale would have cost £11, less than 0.5% of the sale price. As to when I would have sold, usually later in the period from XR to closing date. As I said, I know what I am getting and when I will get it. On this occasion the price would have been higher than if I had let the rights lapse. Usually there are only a few coppers in it. Note that I took up my rights. There is no point in trying to hit the highest available price.

TJH