Santander Rights Issue
Discussion
a rights issue is an issue of shares. The right to subscribe (buy) the shares is first offered to the existing shareholders in proportion to their holdings, so if the bank has 1m shares outstanding, you hold 10 shares and it makes a one for ten rights issue, you have the right to buy one share because you already own ten. Somebody with 100 shares would have the right to buy ten shares. The shares are offered at less than the market price on the day of announcement, so if the share price stays above the rice of the offer, the right to buy the shares has value in itself, equal in theory to the difference between the market price of the shares and the offer price in the rights issue.
You have three choices: buy the shares; do nothing, in which case the rights will be sold on your behalf if the market price remains above the offer price and you will receive the difference between the two prices for each share you are entitled to buy; or finally you can ask for sufficient rights to be sold from your entitlement to give you enough cash to buy the rest of your entitlement from the proceeds of sale - this last option is referred to as "tail-swallowing" or "cashless take-up".
If the market price of the shares drops below the offer price, you should do nothing and you will receive nothing.
You have three choices: buy the shares; do nothing, in which case the rights will be sold on your behalf if the market price remains above the offer price and you will receive the difference between the two prices for each share you are entitled to buy; or finally you can ask for sufficient rights to be sold from your entitlement to give you enough cash to buy the rest of your entitlement from the proceeds of sale - this last option is referred to as "tail-swallowing" or "cashless take-up".
If the market price of the shares drops below the offer price, you should do nothing and you will receive nothing.
Ok, that bit I get. Now, Santander are selling our rights, as the timescale didn't allow them to consult us as to whether we wanted to sell or not.
So this might be a good thing or a bad thing depending on the offer price and how much they sell our rights for?
We're not talking life-changing sums of money here, I'm just trying to understand it!
So this might be a good thing or a bad thing depending on the offer price and how much they sell our rights for?
We're not talking life-changing sums of money here, I'm just trying to understand it!
Mrs Cuchillo said:
Ok, that bit I get. Now, Santander are selling our rights, as the timescale didn't allow them to consult us as to whether we wanted to sell or not.
So this might be a good thing or a bad thing depending on the offer price and how much they sell our rights for?
We're not talking life-changing sums of money here, I'm just trying to understand it!
Hmm, are you sure? I'm not a Santander shareholder so I haven't seen what you have been send, but I don't think they are selling any rights. They are issuing new share capital, as previously explained that is called a rights issue. Meaning that you have the right to buy some of the new shares. So this might be a good thing or a bad thing depending on the offer price and how much they sell our rights for?
We're not talking life-changing sums of money here, I'm just trying to understand it!
i'm surprised they are selling them as the market default is to lapse, and I doubt very much you will get lapsed rights proceeds either.
You should have been given the option to exercise, the deadline for this is not until 25th Nov into crest in the UK.
You should have been given the option to exercise, the deadline for this is not until 25th Nov into crest in the UK.
Edited by mr brightside on Wednesday 19th November 08:48
It's all explained in the letter you should have received from Santander.
The "Rights" issue is 1 share for every 4 shares you already hold in Santander. So if you have 100 shares you have the Rights to 25 more shares. If you do nothing Santander will sell these rights on your behalf and you will get paid some money. Alternatively you can buy the 25 shares at the market price to increase you holding in Santander.
Shares where about £5.00 each last time I looked.
The "Rights" issue is 1 share for every 4 shares you already hold in Santander. So if you have 100 shares you have the Rights to 25 more shares. If you do nothing Santander will sell these rights on your behalf and you will get paid some money. Alternatively you can buy the 25 shares at the market price to increase you holding in Santander.
Shares where about £5.00 each last time I looked.
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