The Lemon Fool

HENDERSON INTL INC ORD GBP0.01
I refer to your holding of shares in the above security.
The Company has recently announced an open offer and the terms are 1 new C share for every 2 held at 100p per share. As you purchased the shares prior to the entitlement date you are able to subscribe for further shares.

As an existing holder of HINT IT's I have just received notification of the above offer. I don't know exactly what benefits the subs shares come with, so I'm not sure whether this is something I should jump at or not. Any appropriate thoughts would be appreciated.

Usually the only benefit that such subscription shares come with is an opportunity to buy new shares at a discount to the current market price. With an investment trust, that is most likely to be when the IT trades at a premium to NAV and the new shares are issued at or below NAV. I notice that this IT currently trades at about a 4% discount to NAV, so it's not clear to me how there is any free lunch here. But it depends on the actual details of the offer.

I would generally only take these up if it is an IT that I would like to buy more of anyway AND I think that management are good enough to be able to manage a larger fund at least as well as they can manage a small fund. So for example if Lindsell Train did an open offer at NAV I'd take it. Alliance? Not a chance.

Unlike rights or warrants, the subscription shares themselves usually have no value and cannot be traded. You either subscribe or you don't.

richfool wrote:I don't know exactly what benefits the subs shares come with...

Here you go: https://az768132.vo.msecnd.net/document ... 0.gzip.pdf

Thanks Lootman and Mc2fool. Some light reading for the weekend!

I didn't have any plans to add to that particular holding, which is of a reasonable size, and of a similar size to several other of my IT holdings, which enables me to make quick and easy comparisons between them in terms of dividend income and capital growth. So I may not take it up.

I just came across this article which gives a usesful insight into the issue of HINT "C" class shares:

http://citywire.co.uk/investment-trust- ... -news-list

It makes the point that the costs of the "C" shares issuance & set up will be borne by those shareholders, therefore one would effectively be buying at a slight premium. As the ordinary shares have recently been trading at a slight discount or a premium of under 1%, it would seem to be preferable, if one wants to be more shares, to buy those in the open market and not bother with the "C" shares (unless perhaps one was an institution or larger investor who might not be able to easily pick up a large enough holding in the open market.).

Same article on the aic:

http://www.theaic.co.uk/aic/news/citywi ... onsidering

It's a good article and finally cleared things up for me.

Congrats on 100 posts Richfool.