Caterham wrote:Am I right in understanding that for every 50 shares I own I will be offered the right to buy 33 at £4.09?
Hence if I own 100 I would be offered 66 and so on....
If this is correct out of interest what would happen to somebody who didn’t own the required number of shares, would they simply not be offered any at the new price?
I know it often isn't expressed very well in short descriptions, but the calculations that the company does for rights issues (and other corporate actions) expressed on an "M for N" basis are invariably (*) done in practice by taking the shareholder's existing number of shares, multiplying by M/N and rounding the result down to the nearest whole number, so that the shareholder gets the largest number of rights (or whatever) they can subject to (a) only getting a whole number of them; (b) not getting more than their existing number of shares times M/N.
So in this case, the calculation would be that a shareholder with just 1 share gets RoundDown(1*33/50) = RoundDown(0.66) = 0 rights, a shareholder with 2 shares gets RoundDown(2*33/50) = RoundDown(1.32) = 1 right, a shareholder with 3 shares gets RoundDown(3*33/50) = RoundDown(1.98) = 1 right, a shareholder with 4 shares gets RoundDown(4*33/50) = RoundDown(2.64) = 2 rights, etc.
That does mean that each shareholder can lose out by a fraction of a right (in this case, up to 49/50ths of a right, as the shareholder who starts with 3 shares does) compared with what they would get if the M/N ratio were applied completely accurately. That's caused by the fact that as far as the company is concerned, only whole shares, rights, etc, exist. It does mean that when the company distributes the rights each shareholder is entitled to from the rights it split off from the total shares in issue, it's left with a number of rights equal to the total of the fractions each shareholder has missed out on. E.g. if MiniKier had just 150 shares in issue, split among 50 shareholders who each held 3 shares, and did a similar rights issue, then it would split off 150*33/50 = 99 rights from the shares in issue, distribute 1 right to each shareholder, and be left holding 49 rights - which is just the total of the 0.98 rights shortfalls of all the shareholders. This is of course a ludicrously unrealistic example, which I've done just to be able to illustrate the principle reasonably quickly, and its outcome of nearly half the rights remaining undistributed is similarly ludicrously unrealistic (though not the most possible in theory: if MiniKier instead had 150 shareholders holding 1 share each,
all the rights would remain undistributed!). In practice, the undistributed rights will generally be a small fraction of 1% of the rights.
What is done with those accumulated leftover fractions of rights (or of other securities in other types of corporate action) is usually that the company sells them on the market and either retains the proceeds (net of selling costs) for its own benefit or donates them to charity. Another possibility is that those proceeds are distributed to shareholders as "fractional entitlement" payments, in proportion to the fractions they've lost out by (so each shareholder gets a payment of roughly the value of their lost fraction), though usually with a minimum amount (£5 is common) for the payment and payments below that minimum being kept by the company or donated to charity, because lots of very small payments cost quite a lot in admin costs to distribute. All that said, however, I don't remember ever experiencing a rights issue that made fractional entitlement payments, so I strongly suspect it's standard practice not to make them on rights issues.
If you're interested in what happens to a fraction you miss out on in a specific rights issue / other corporate action, generally the best way (and often the only way that I know of) to find out is to obtain the
company's detailed documentation from the investor relations part of its website and find out what it has to say about them. It's usually very long and reading it fully would take a ridiculous amount of time, but doing a computer search for "fraction" will generally find the relevant bits for you to look through (plus maybe a few irrelevant ones for you to skip past). In this case, the document is
https://www.kier.co.uk/media/3126/right ... pectus.pdf (will probably need you to agree to a disclaimer to access it) and is 148 fairly dense pages in length, but the first hit on a search for "fraction" is on page 19 and tells one what one wants to know: "
Entitlements to New Shares will be rounded down to the nearest whole number and fractional entitlements will not be allotted to Shareholders but will be aggregated and issued into the market for the benefit of the Company." Further hits just repeat that and/or expand on it.
That's basically the full story as far as shareholdings that are
registered with the company are concerned - but for individual shareholders, that only applies directly to shares held as certificates or in CREST accounts. Most individual shareholders instead hold their shares in nominee accounts (and in particular, ISAs holding shares
must be nominee accounts), and that creates the complication that as far as the company is concerned, the shareholding is registered as being held by the broker's nominee company, not by the individual shareholder. It is possible for the broker's nominee company to register a separate shareholding for each of their individual clients that holds the shares by registering the shareholding as owned by the nominee company with an appended designation to identify the client (e.g. by "ABC Nominees Ltd a/c 123456") and in that case they just need to pass on rights, fractional entitlements, etc, that the company sends them to the individual client. I have once (but only once) used a broker who ran such 'individually designated' nominee accounts. But IIRC, they thought better of that system a few years after I opened my account and changed how they ran it, and they certainly abandoned the business of being a cheap online broker and transferred me to another online broker about 5 years after I opened my account, so I don't know of any broker who currently runs their nominee accounts in that way.
And certainly it's not common for brokers to run their nominee accounts that way: all others that I have looked at (and IIRC that one as well after they changed how they ran their nominee accounts) have run 'pooled' nominee accounts, in which they hold all their nominee clients' shareholdings combined as a single big registered shareholding with the company. That can create problems for them along the same "total of the fractions" lines as faced by the company - e.g. if PooledNominee has 50 clients who hold Kier shares, and each of them holds 3 shares, it faces a similar issue of getting 99 rights based on its 150-share holding, but each of its clients only having an obvious entitlement to one of them - so what does it do with the other 49?
That's generally spelled out in the broker's terms & conditions, though also generally in small-print legalese such as "
... or (if your holding is aggregated with those of other clients) we shall allocate such Benefit between all such holders in proportion to their holdings. In any case where such distribution is less than £5, or includes a fractional allocation of an Investment, such cash or fractional Investment shall not be so distributed but shall be retained for our benefit", well over a hundred numbered sections into them for that particular example! I don't think it will generally make much difference to the individual shareholder unless they might have received a fractional entitlement payment from the company if they'd held a registered shareholding themselves (which as I said, I've never known to be true for a rights issue).
But when a fractional entitlement payment is involved, it can make a difference, and occasionally a big enough difference to get small shareholders upset. The example of that I particularly remember is Shell's 2005 'unification', which involved a consolidation of existing shares into RDSA and RDSB shares priced in the region of £18 each at the time. The company paid fractional entitlement payments (probably with a minimum, though not one I can easily look up), and they could be up to about £18 - not major on say a £1k shareholding, but also by no means negligible. A number of brokers with terms & conditions along the same lines as the ones I've quoted tried to say "no, we're entitled under the terms & conditions you accepted to the benefit of the surplus 'accumulated fractions' shares we've received, and they don't require us to match the fractional entitlement payment you would have received from the company if you'd held your shares as a registered shareholding". After some pressure from clients, shareholder organisations, etc, and some delay, most or all of them backed down to the extent of saying "well, we still believe we're entitled to the benefit, but as a one-off concession in the interest of good customer relations, we'll make the expected fractional entitlement payments in this case".
The point of all that is: if (as is likely) you hold your shares in a 'pooled' nominee account, the calculations done by the company should be a reasonable guide to what you can expect your broker's terms & conditions to produce, but not necessarily an exact guide. And by the way, when there are differences, they're not necessarily in the broker's favour: one particular case is 'pooled' nominee accounts such as Halifax ShareBuilder that support fractional shares. That's purely done by the broker: they run the single big registered shareholding entirely normally as far as the company is concerned, with whole-numbers-of-shares holding sizes and transactions only (the company simply wouldn't accept anything else), but keep track of clients' entitlements to that registered shareholding in units of a millionth of a share, and have an entitlement to a fraction of a share themselves (which will change each time there's a client transaction involving a fractional share) to make the total up to a whole number. They do the same for rights, so if a client holds 3 Kier shares in their Halifax ShareBuilder account, they'll receive 1.98 rights in it rather than just 1. And there's basically never a question of a fractional entitlement payment (**) - there could in principle be one for a share priced high enough, but that means priced at over £5,000, and a good deal higher still for it to be enough more than 1p to be worth pursuing!
One final point to make here: rights in a rights issue probably have a financial value for you even if you decide not to take them up, because you can choose to sell them if you don't want to take them up, or if you decide neither to take them up nor to sell them, they'll lapse at the end of the rights issue and that will probably result in you receiving a lapsed-rights payment from the company. That's "probably" because in this case (a) the share price might drop below the 409p subscription price by the time the rights lapse, making them effectively worthless; (b) there is a minimum amount for lapsed-rights payments, which is also £5 - though payments of less than that amount will be donated to charity rather than being kept by the company as it does for accumulated fractions not distributed to registered shareholders. (That's discovered using the same technique I described, apart from searching for "lapse" in the big company document rather than for "fraction".)
(*) At least in my experience, which has included dozens of such corporate actions over about the last 20 years on the UK market and a few before that. So I'm certain it's completely standard practice in the UK. I'd be rather surprised if it wasn't also standard practice on all the major foreign markets, but I've no actual experience of them, so cannot say for certain that that's the case.
(**) Though an admin error on their part has resulted in me once receiving
both the fractional share
and a fractional entitlement payment!
Caterham wrote:Also it says the record date was the 30/11 but then in prospectus I read it that anybody buying shares up to the 5/12 would be eligible for the rights issue. If this is the case am I right in thinking if for example I owned 100 shares at present and bought another 50 on the 3/12 I would be offered 99 new shares?
Yes, that's what should happen, though there are some complications that ideally will remain invisible to you but
might not. To understand what to watch out for, one needs to understand exactly what the record and ex dates are (this applies to dividends and to other payments and share reorganisations by the company as well as to rights issues). Basically, the record date is significant to the
company and the ex date to the
market:
* The record date is when the company (or to be precise, the keeper of its share register, generally its registrar for listed companies) decides who to send payments to and/or changes the registered holdings. It generally does so
after any other changes on that day, which are generally caused by trades
settling (rather than them being agreed on the market). In this case, it's 6pm on 30/11 (i.e. last Friday) - see the expected timetable on page 41 of the company document.
* The ex date is when the market shifts from doing trades on the contractual basis that what is being traded is the shares together with the payments and/or entitlements to securities, to it being the shares without those payments and/or entitlements. That shift happens
before any trading on that day (8am on 5/12 in this case), so trades agreed on or after the ex date are without them, while trades up to and including the day before the ex date are with them. (It is in principle quite possible to agree otherwise with the other investor who is buying your shares or selling your shares to you, but such deals have to be negotiated specially, generally requiring a much more expensive broking service. So as far as small investors are concerned, that's basically the fixed rule rather than something negotiable.)
For dividends, the ex date and record date are generally two consecutive trading days, to ensure that there are two full days of trading between the start of the ex date and the end of the record date. That's to fit in with the fact that standard practice is for trades to settle 2 days after they are agreed on the market, so the shareholder the company sends the dividend to is also the shareholder who is contractually entitled to it no matter when the trade is agreed. It is also generally the case that the ex date and record date are a Thursday/Friday pair, though there are exceptions to that for weeks when one or both of them are bank holidays, or when a company chooses to treat it as a special case - which isn't normally worth the trouble, but might be in special circumstances.
Things get more complicated when people trade with non-standard settlement periods (which are available to small shareholders using cheap online accounts, but only some brokers offer the option) or with other corporate actions than dividends, for which ex and record dates often aren't so carefully synchronised. That's the case for this rights issue: for market trades with the standard settlement period, any trade from Thursday 29/11 to Tuesday 4/12 (both ends inclusive) will have been agreed on the basis that the buyer is entitled to the rights as well as the shares, but the rights will actually be delivered to the seller's account or their nominee broker's account over this weekend. That
should be no problem: the brokers should make certain that settlement includes transferring both the shares and the rights from seller to buyer rather than just the shares. But it does involve a complication that doesn't arise on the vast majority of trades, which is something that always produces a greater chance that a mistake will be made... So if you do such a trade, I'd suggest you check that you've received the right number of rights when they appear in your account (which should happen on Wednesday, though brokers have been known to be a bit slow on such admin).
One other minor point is that it might result in your number of rights being 1 less than you expect. It wouldn't in your example, with both the existing holding and the number bought being an exact multiple of 50, but it could in other circumstances. For instance, if your existing holding was 90 shares and you bought 60 more, then you might think that your resulting holding would entitle you to 99 rights. But if your existing holding was held as a registered shareholding in a CREST account, the company would credit you with 59 rights (rounded down from 59.4) and if the shares you buy are the entirety of another such holding, the company would credit the seller with 39 rights (rounded down from 39.6). So when correct settlement transfers the seller's rights to you, you only end up with 98 rights. Things get more complicated if (as is highly likely) 'pooled' nominee accounts and/or a partial sale of the seller's holding are involved, and you can't tell anyway because you don't get any real information about the seller, but don't be surprised if the end result is that you receive a right less than you might have expected.
Caterham wrote:Also I trade entirely online with iweb share dealing and am currently away from my home address, is it safe to assume I will receive notification online of the rights issue offer or would I need the paper copy?
Assuming you hold your shares in a nominee account, it's safe to assume rather more than that, namely that everything crucial about the rights issue
will be dealt with via your broker. They will notify you about it, ask for your response and pass it back to the company (as part of a merged response from you and all their other Kier-holding nominee clients assuming it's a 'pooled' nominee account). You can get further information than the broker is at all likely to give you about the rights issue from the investor relations part of the company website (*), but you
cannot give the company instructions about your shares even if you do manage to get hold of a suitable form there, because you're not the registered holder of those shares.
(*) Generally a
lot more information - in my experience, that 148-page document is about a hundred times the total size of broker notifications for a rights issue, but huge amounts of the extra information is only good for satisfying one's curiosity (or not even that!).
Caterham wrote:On a different note I understand the new shares will dilute the current share price which has already taken a large fall. Generally once the new rights are issued does the market price fall to reflect the dilution or generally does the fall in price at the time of announcement already reflect the new diluted price.
The price will drop to reflect them going ex-rights between Tuesday and Wednesday. At the same time (give or take broker admin delays) your holding of rights will appear in your account, and the new value of your shareholding plus the value of your new holding of rights will be about the same as the value the shareholding had at the end of Tuesday, give or take normal share price fluctuations and responses to news. I.e. while the share price will drop noticeably, the total value of your portfolio isn't expected to change any more than it normally is overnight.
The share price drop that happened when the rights issue was announced is basically the market's reaction to the fact that it wanted to do this rights issue: whether rightly or wrongly, on the whole investors pretty strongly dislike it. Such reactions are generally views on the reasons why the company wants the funds raised by the rights issue, or on its implications. For instance, an announcement of a rights issue to fill an unexpected and not previously-announced 'hole' in its balance sheet is near-certain to provoke a sharp share price drop, one of a rights issue to fill a previously-announced 'hole' in its balance sheet might well provoke a share price rise (after the bad news of the previous announcement of the 'hole' has provoked a price drop, the news of a rights issue to fill it improves the company's prospects), one of a rights issue to fund an acquisition might provoke a price fall, a price rise or neither (depending on whether the general opinion is that the acquisition is a poor one, a good one, or pretty neutral). General opinion about how economical the directors are being with the truth about the reasons for the rights issue can also influence the reaction, and if there are takeover rumours in the air, a rights issue might affect people's view on how likely they are - for instance, by making the company bigger than the rumoured bidder can be expected to swallow.
Anyway, I neither know Kier well enough nor have studied the reasons it gives for the rights issue well enough to have any opinion I consider valid on any of those possible factors in the price fall that has already occurred, so I won't try to give one! All I'm doing in the last paragraph is listing the sorts of thing I would look out for if I wanted to understand the price fall that has already happened.
More generally, dilution is a reduction in the
percentage of a company that one owns, which can be important to a large activist shareholder - owning 15% of a company gives one significantly less say in how it is run than owning 20% of it. But it is generally just about
completely irrelevant as such to small shareholders. That's firstly because whether one owns 0.002% of a company or 0.0015% of it basically makes no difference to how much say one has in how it is run - zero for practically all intents and purposes in either case, even if one gets past the difficulties that often exist in exercising one's votes at shareholder meetings at all (*). And secondly, it's because what actually matters to the small shareholder is not the percentage of the company that they own, but the
value of that percentage. Owning 0.0015% of a £2b company is just as good as owning 0.002% of a £1.5b company - it's a £30k holding either way (so one needn't be all that small a shareholder to still count as small as far as HYP companies are concerned!).
Basically, whenever a company raises funds by issuing more shares, whether in a rights offer, an open offer, a placing, in a scrip dividend scheme, as a result of employees or management exercising share options or any of the other ways that doubtless exist, there is an increase in the shares in issue
and an increase in the funds held by the company. The first causes dilution, the second an increase in the size of the company - so basically you end up with a smaller slice of a bigger pie. So the question is whether the pie is sufficiently bigger to compensate for the slice being smaller...
When the shares are issued in a way that doesn't involve a corporate action that you yourself are involved in, there's a simple way to determine that: look at how the price for which they're issued compares with the current share price. If it's about the same, as for instance in a typical scrip dividend scheme, the pie is sufficiently bigger to compensate for the slice being smaller; if it's less than the current share price, it's insufficiently bigger and your holding drops in value - how much by depends on both how much less and the dilution, but only becomes as much as the dilution if the price for which the shares are issued is negligible compared with the current share price (which can happen - an example would be employee share options with an exercise price set to the share price when a start-up floats, or to an HMRC valuation of the shares before it floats, and the start-up's share price rising massively from that level before the employee exercises them). If the shares are issued at e.g. a 10% discount to the current share price, as they might be in a typical placing, your value of your holding will be affected adversely, but by much less than the dilution figure.
But if you are yourself involved in a corporate action, as in a rights issue, it's more complicated. Basically, for a small shareholder, the only importance of being told that you might be diluted is that it's an alert that the company is raising funds (though not necessarily significant funds - employees paying the exercise price of their options does raise funds for the company, but is often essentially only petty cash) and that the value of your shareholding
might be adversely affected by what the company is doing to raise funds, and not only by market reaction to the news that the company is raising funds and why it is doing so. The amount of the dilution is an
upper limit on how much what the company is doing will adversely affect it, so might be helpful in deciding whether it's worth taking a look at that aspect of things at all, but is otherwise unhelpful about what the answer is.
And the answer for rights issues is basically that they're carefully designed not to themselves affect the value of your holdings, beyond the fact that the company incurs significant costs (**) just by having the rights issue at all. What you decide to do about the rights issue won't change that effect at all, so it can be ignored when deciding what to do about it. Otherwise, the rights issue doesn't itself affect the value of your holdings, just shifts that value around: first some of the shareholding's value from the shareholding into the rights holding when the shares go ex-rights, then the value of the rights shifts into your new shares if you take them up, or into your cash holding if you sell them or let them lapse (the difference basically being when the cash arrives and price fluctuations during / shortly after the rights issue).
(*) The recent abortive move to unify Unilever's dual-listed-company structure demonstrated quite a few of the problems, including one I hadn't properly been aware of before: I knew that small shareholders
can have a noticeable influence on
some corporate actions, namely ones that require Court approval and for which a Court meeting is held in addition to a general meeting of the company. That's because the vote at the Court meeting can only pass if it gets
both 75% of the shares voted in favour
and a majority of the shareholders voting in favour. If 4 large shareholders holding a million shares each vote in favour and 100 small shareholders holding ten thousand shares each vote against, it passes the 75%-of-shares part comfortably (4 million shares voted for and 1 million voted against) but badly fails the majority-of-shareholders part (4 for and 100 against), and so doesn't pass overall. So a small shareholder
can have fairly noticeable influence on the (fairly rare) occasions that such a corporate action is required to do whatever is being proposed. What I
wasn't properly aware of previously was how small shareholders voting holdings held in 'pooled' nominee accounts end up being treated, assuming they manage to vote them at all (which can only be done via the broker, who might not be cooperative): the broker's nominee company votes the shares belonging to each client who asks to vote as they ask, so ends up voting some of the shares in the single registered shareholding for, some against and some not at all. And when the voting is tallied up for the Court meeting, I'm not sure whether the broker's nominee company is counted as a shareholder who is neither clearly for nor clearly against (not changing the number-of-shareholders vote at all) or as one who is both (adding one to the count on both sides), but either way, it makes no difference. So if a small shareholder wants to use their influence in such votes, such as it is (it's still pretty small, just not microscopic), they need to arrange to have a registered shareholding (certificated or in a CREST account) or possibly (but almost certainly harder to arrange) one held in an 'individually designated' nominee account.
(**) The biggest cost is generally the underwriters' fees, which are basically the cost of guaranteeing that the company
will raise the funds they want, from the underwriters if no-one else. The fees paid to corporate advisers, lawyers, etc, can be enormous as well, and a large amount of those costs are required for regulatory reasons to do with offering shares to ordinary 'retail investors'. Those regulatory costs are broadly unaffected by the amount being raised and so become disproportionate for smaller fundraisings - which is why placings at a discount are often used for those smaller fundraisings: the adverse effect of the regulatory costs for a rights issue or open offer may be more than that of the discount on the placing.
Caterham wrote:I,m glad this happened on a weekend and I have time to take it all and whilst I still believe in the long term future of the company I am very nervous of throwing good money after bad.
I think I should spell out what I think is the most important point to realise about rights issues - it is a consequence of what I've written above, but not explicitly drawn out there, and so important that I'll preface it with:
LAST BUT NOT LEASTBecause the rights are a traded security while they last, and have a market value that shareholders will realise in cash (either by selling them or by letting them lapse) if they don't take them up, a rights offer does
not offer shareholders a significant discount. That's because someone who takes up rights doesn't pay 409p each for the shares they acquire: they pay 409p
plus a right each, and the market price of a right will be pretty much the market price of a share minus 409p (*) once they both exist. (So one might ask why it's a 'discount' at all? The answer is that it is basically one for the underwriters: they're guaranteeing that they'll supply the funds wanted by buying shares at the subscription price if no-one else will. The cheaper that price, the smaller the underwriting fee needs to be to induce them to give that guarantee. So shareholders should regard a bigger discount as an indication that the underwriters are more dubious about the value of the shares - and so
only an indication that the rights are more worth taking up if you think the underwriters are positively
bad at their job!)
There will be some effects on trading costs - in particular, shares acquired by taking up rights don't attract stamp duty, so there's a 0.5% saving there, and commissions (including those deducted by the company in arriving at the amount of any lapsed-rights payment) will depend on the details of what you do in a complex way, that often (but not always) results in a small saving on them. But the trading cost savings will be small (if they exist at all), so all they might do is allow you the opportunity for a reduced-cost trimming of the value of your holding (letting your rights lapse effectively shifts part of the value of your shareholding into cash overall, just like a sale apart from the fact that your share of the company's trading costs may be less than your trading costs would have been, especially if your holding is small) or a reduced-cost topping up (taking up your rights avoids stamp duty and quite possibly broker commission as well). It actually
adds costs if you just want to roughly preserve the value of your holding, which can be done by the standard technique of 'tail-swallowing' (often offered by brokers), which is to sell enough rights to pay the cost of taking up the rest, or by either selling your rights or letting them lapse and in either case using the proceeds to buy extra shares.
And by the way, that trimming / topping-up / preservation of the value of your holding doesn't apply just to its capital value, but also to the dividend income it can be expected to produce. That's because companies that do rights issues also adjust the figure they use as their baseline for future dividends down in rough accordance with the part of the capital value shifted out of the shares and into the rights (this is often known rather unfortunately as adjusting for the 'bonus element of the rights issue', when rights issues are seldom a bonus in the common sense of the word!). The net result is that if you own e.g. 900 shares in a company that has been paying a 10p dividend and you 'tail-swallow' a rights issue with the result that your holding rises to 1000 shares, you'll probably find that the company's 'bonus element' adjustment results in it adjusting its baseline dividend down to about 9p, so that it describes e.g. a 9p dividend the following year as a held dividend, a 9.9p dividend the following year as a 10% rise, etc. Which is a fairly accurate description of what happens to your dividend income from the holding when you've 'tail-swallowed': it's gone from 900*10p = £90 to 1000*9p = £90 or 1000*9.9p = £99, i.e. unchanged or 10% up, but it does mean that if you let all your rights lapse, you effectively trim
both the capital value
and the dividend income of your holding, just as though you'd sold some of it normally.
One practical consequence of that: consensus forecast dividends often take several weeks to adjust fully to news like this and are too high in the meantime, due to some of the analysts' forecasts that they're based on being out of date and so not yet taking the 'bonus element' adjustment into account. Historical dividends are fine at present, but will need you to apply at least a rough 'bonus element' adjustment to them once the shares go ex-rights to avoid them giving a misleadingly high estimate of future income. So whichever you use, dividend figures needs to be treated with some care from Wednesday onwards if you're to avoid getting misleadingly high yields.
The fact that rights offers do
not offer shareholders a significant discount may well get rid of your motivation for asking about buying on Monday: as I say above, if you do you should get extra rights that you can take up - but that cannot be expected to give you a bargain: specifically, shares that you buy on Monday can be expected to drop in value on Wednesday as they go ex-rights, and that drop in value can be expected to be to be about as much as the amount by which the 409p/right price of taking them up is below the market price of the shares you get as a result. So the two can be expected to roughly cancel out, apart from small trading-cost effects.
The final conclusion: decide whether you want to increase the size of your holding, reduce it, or leave it more-or-less unchanged, taking anything Kier has said that you think affects the HYP-worthiness of the company into account. If you want to increase it, the rights issue gives you the chance to do so to a limited extent with a fairly small cost saving compared by buying. If you want to reduce it, the rights issue may well give you a chance to do so to a limited extent with a smaller cost saving compared with selling. If you want to leave it more-or-less unchanged, the rights issue will impose some small costs on you (your choice which costs) and so is a minor nuisance!
And one last cautionary note: in the future, you will probably encounter open offers. They're superficially very similar to rights issues and so easily mistaken for being just another name for them, but they do have a crucial difference: their apparent equivalent of a "right" is not tradable and does not have any financial value other than the ability to take it up oneself. That alters many of the considerations above: in particular, open offers are usually 'use it or lose it' opportunities in a way that rights issues aren't.
(*) Unless the market price of a share drops close to or below 409p, in which case the market price of a right will be
more than the market price of a share minus 409p (and in particular won't go negative!).
Gengulphus
