Segro Right Issue.

[BarrenFluffit]

Ok I hadn't really been paying attention until this popped up.

They want to buy out their JV partner around Heathrow.

The announcement: http://www.londonstockexchange.com/exch ... 53992.html

News: http://www.telegraph.co.uk/business/201 ... ches-556m/

Which ever way you look at it the CGT calculations are going to be more complicated. I'm minded to take up the offer as a cheap way of increasing my property exposure but would be interested to hear what others think.

[SKYSHIP]

RE: SGRO

The whole idea of a deeply discounted rights issue is that you avoid having to pay an underwriting fee!!! Incidentally, that is a statement of fact - not an opinion.

"The Rights Issue is fully underwritten pursuant to the Underwriting Agreement. The price at which Qualifying Shareholders will be invited to subscribe for New Ordinary Shares will be 345 pence which represents a 25.3 per cent. discount to the theoretical ex-rights price based on the Dividend Adjusted Closing Price for an Ordinary Share of 485 pence on 9 March 2017"

What are SGRO shareholders having to cough up for this underwriting? I don't hold; but if I did I would be mightily pi**ed off if shareholder cash was used to pay a totally unnecessary underwriting fee to brokers/bankers. Someone needs to create a stink over this one.

[Dod1010]

RE: SGRO

The whole idea of a deeply discounted rights issue is that you avoid having to pay an underwriting fee!!! Incidentally, that is a statement of fact - not an opinion.

"The Rights Issue is fully underwritten pursuant to the Underwriting Agreement. The price at which Qualifying Shareholders will be invited to subscribe for New Ordinary Shares will be 345 pence which represents a 25.3 per cent. discount to the theoretical ex-rights price based on the Dividend Adjusted Closing Price for an Ordinary Share of 485 pence on 9 March 2017"

What are SGRO shareholders having to cough up for this underwriting? I don't hold; but if I did I would be mightily pi**ed off if shareholder cash was used to pay a totally unnecessary underwriting fee to brokers/bankers. Someone needs to create a stink over this one.

The whole idea of any rights issue is to raise cash for the company. The argument about the company paying an underwriting fee is an old one, not confined to Segro. We all know that mostly it is apparently a waste of money, but then so are most insurance premiums.

Dod

[SKYSHIP]

Dod - I believe you may have misunderstood the point I was making.

Everyone accepts the purpose of a rights issue; and indeed the need for underwriting to ensure the success of the issue. It is a fee justifiably paid due to the possibility of underwriters having to step up to the mark.

The point I was making is that a heavily discounted rights issue is done to ensure a high degree of acceptance from shareholders. Accordingly there is no need to pay underwriting fees.

I assume the fees here are much reduced; however if not, then the Board should get a flea in the ear.

Fair comment surely...

[greygymsock]

the prospectus says 2.25% fees to the underwriters (i thought 2% was standard? - i might be wrong), + various expenses.

my impression was that underwriting fees had stayed the same, but discounts widened, since perhaps around the GFC. which could reflect greater volatility in markets, hence greater risk to underwriters; or price gouging. take your pick

even if that's the best that underwriters will offer, not sure why companies don't go for an even deeper discount and no underwriting. or an even deeper discount, and either demand lower underwriting fees, or try to insure via some other route (a lloyds syndicate?).

taking up my rights, anyway.

[Dod1010]

Dod - I believe you may have misunderstood the point I was making.

Everyone accepts the purpose of a rights issue; and indeed the need for underwriting to ensure the success of the issue. It is a fee justifiably paid due to the possibility of underwriters having to step up to the mark.

The point I was making is that a heavily discounted rights issue is done to ensure a high degree of acceptance from shareholders. Accordingly there is no need to pay underwriting fees.

I assume the fees here are much reduced; however if not, then the Board should get a flea in the ear.

Fair comment surely...

Sorry for not responding sooner. Yes, it is a fair point you are making. I simply do not know the answer and cannot contribute much to the discussion. I was surprised that the issue was 'heavily discounted' because surely the deal is a fairly attractive proposition since the proceeds are to be used for the expansion of the business in an area they know well, as they are already 50% partners. Anyway, my shares are held in an ISA and I do not have spare funds so have sold my rights and bought what shares I can with them.

Dod