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Provident rights issue confusion

Investment discussion for beginners. Why you should invest your money, get help getting started
IanWorthington
Posts: 1
Joined: March 23rd, 2018, 2:59 am

Provident rights issue confusion

#127367

Postby IanWorthington » March 23rd, 2018, 3:55 am

Please forgive me for the basic questions, I know almost nothing about this.

Last August I bought 53 PFG at 1915.15. Today I see

1. I have 53 PFG at Sell: 667.20p | Buy: 669.40p
2. the price for my purchase date is showing as 1401.19, about 17/24 of what I paid
3. a credit of -277.23
4. and a new allocation of 37 PFGN at Sell: 355.50p | Buy: 374.00p bought with the 277.23

I also have an email advising me of a 17 for 24 rights issue and saying if I wish to keep the 37 PFGN I must pay 315p per Share, a total of £116.55.

So, do I understand correctly that

1. my original purchase has been reduced to 17/24 by the rights issue
2. if I wish to recover my original holding I need to pay an additional 116.55
3. that the market value of PFGN is substantially lower than my original holding in PFG
4. that I can buy PFGN for lower than the (current) market value

Could someone who understands this stuff maybe be so kind as to walk me through it and tell me how to work out if it's worth doing or not? And also what happens to that credit of 277.23 if I choose not to purchase?

tjh290633
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Re: Provident rights issue confusion

#127417

Postby tjh290633 » March 23rd, 2018, 9:22 am

The share price of PFG has fallen considerably since you bought them. They now have a rights issue and the nil-paid rights, PFGN have a quoted price of 355/374 from your figures. The value of each of your original shares has fallen, because they have gone ex-rights, and you now have 4 options.

You can do nothing, in which case the underwriters will make up your rights and then sell the fully-paid shares. You will then get the difference between the sale price and the 315p subscription price, less a small fee.

You can pay the subscription yourself and receive the 37 new PFG shares.

You can sell your PFGN in the market now, if you wish.

Finally you can sell enough of your rights to buy the rest, known as tail swallowing.

Hope that helps.

TJH


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