National Grid Rights Issue

[IanTHughes]

You are correct in that those are the three options open to you and, if you do nothing, option 2) is the default, with the rights being hoovered up for the underwriters to exercise. But what I was trying to suggest was that this is an investment decision, just like any other.

In other words, assuming you have the money to invest in your portfolio, should you invest it in NG? The price - 645p per share - looks attractive, but don't forget that you would be giving up the value of those rights, as well as paying the Exercise price. The overall cost would be (645p x no. of rights) + value of those rights. This is an investment decision like any other, Is this share worth buying at the cost?

Select option 1) only if you want to add new money to your NG holding. Select option 3) if you want to add to your NG holding, but do not have extra funds available. If there are better possibilities for your money, select option 2). I guess what I am saying is, do not get drawn into believing that NG is the only home possible for your available funds. If NG fails your screening criteria, don't buy any more of it

Thanks Ian

This suddenly became more confusing. At first, when I was looking at iWeb's corporate action page, it seemed clearly, in so far as I needed to select one of the options there and the iWeb would deal with everything. However then I looked at my portfolio valuation breakdown I'm now seeing:

NATIONAL GRID NEW ORD 12 204/473PNP 10/06  (NGPN) 	
98 	242.551p 	£237.70 	*204.30p 	£200.21 	£-37.49 	-15.77%
NATIONAL GRID ORD GBP0.12431289  (NG.) 	
446 	955.5897p 	£4,261.93 	*889.40p 	£3,966.72 	£-295.21 	-6.93%

I assume that the top entry (NGPN x 98) is the nil paid rights, and each right is currently valued at 204.3p . So now:

1. if I choose the option to "exercise my rights" then will the NGPN line vanish when I choose to buy on the corporate action options page?
2. or does that holding remain in my account until I either manually sell it before the lapsing of the offer, or when (if I allow it to lapse) NG. settles the value of the rights and exchanges the rights for cash?

Most brokers will allow you to change your mind up to whenever is the date and time set by the organisers that all details must be submitted. In this case, some time before 10 Jun 2024. If you choose to Exercise, the transaction will take place on 10 Jun 2024. If on the other hand, you allow the offer to lapse, the Rights will be taken from you on the 10 Jun 2024, and the funds should be credited a couple of days later.

A couple of other points to consider:

1) The Exercise of rights does not attract Stamp Duty and, my broker at least, does not charge a commission.
2) Lapsing Rights is also commission-free.
3) You will not know the actual value of the lapsed rights until they are sold on your behalf. Until then the price of such Rights can swing wildly.

Enjoy!


Ian

[88V8]

3) You will not know the actual value of the lapsed rights until they are sold on your behalf. Until then the price of such Rights can swing wildly.

When I have sold rights in the past, I have noticed that the price has tended to fall rather than rise. But that was then of course.

Anyone have a view on how NG fits in with Labour's plans for GB Energy?

No, but in general I fear Labour will interfere with utilities even more than the Tories, so I am minded to sell and invest elsewhere.

V8

[BullDog]

3) You will not know the actual value of the lapsed rights until they are sold on your behalf. Until then the price of such Rights can swing wildly.

When I have sold rights in the past, I have noticed that the price has tended to fall rather than rise. But that was then of course.

Anyone have a view on how NG fits in with Labour's plans for GB Energy?

No, but in general I fear Labour will interfere with utilities even more than the Tories, so I am minded to sell and invest elsewhere.

V8

I could imagine NG splitting itself in two since at least half it’s business is now in North America. But I might have too vivid an imagination? (Happily not holding any privatised utility stocks).

[Gerry557]

Please help a brother out, I'm so confused.

I own 4522 shares of NG. Stock, currently worth aprox 40K after this week's 12% crash.

What is my Right Bill going to be? I wish to take up my full rights but don't know how much of another stock I need to sell to raise the funds.

4522/24 =188
188 × 7 = 1316
1316 x 645 = £8488.20

Check you broker account for a corporate action that should detail this and what options you have. Most brokers are asking for a decision by 4th of June so be quick.

[tjh290633]

I've been really angry about this Rights Issue ever since I heard about it, since it's announcement my holding is down £12K. Made me a bit sick, feeling like I was being stitched up and forced to plow money in to a Green Woke sinkhole.

I've done some digging and found National Grid have form for this. The last Rights Issue they did was in June 2010. Back then the SP was around £5 and I think the Rights people were asked to buy were £3.

The Only thing that has made me positive about this whole mess is that following the Rights Issue in 2010 National Grids Share price went on a massive Bull Run and peaked +90%

Obviously this isn't to say History will repeat itself, but it's given me some hope I'm not throwing good money after bad.

Either way I'll be sure to sell out of my NG Position before the next rights issue, presumably in 2030.

I have had a few rights issues in my time. My actions has varied each time. I see that I took up the last one with NG. and will do the same this time. As it happens, I shall have enough accumulated dividends by 4th June to do so. Usually, if taking up the rights would make a holding overweight, I would sell the nil paid rights in the market. There are times when I have sold enough to take up the rights (tail swallowing). Doing nothing is never a sensible option. One thing to remember is that taking up your rights involves neither stamp duty nor broker fees.

TJH

[simoan]

I've been really angry about this Rights Issue ever since I heard about it, since it's announcement my holding is down £12K. Made me a bit sick, feeling like I was being stitched up and forced to plow money in to a Green Woke sinkhole.

I've done some digging and found National Grid have form for this. The last Rights Issue they did was in June 2010. Back then the SP was around £5 and I think the Rights people were asked to buy were £3.

The Only thing that has made me positive about this whole mess is that following the Rights Issue in 2010 National Grids Share price went on a massive Bull Run and peaked +90%

Obviously this isn't to say History will repeat itself, but it's given me some hope I'm not throwing good money after bad.

Either way I'll be sure to sell out of my NG Position before the next rights issue, presumably in 2030.

Like it, or not, this is what capital markets are for. I share your pain FWIW. Many people have forgotten about Rights Issues because interest rates have been so low for so long. They were more common when interest rates were higher. I think we can agree that a world of near zero interest rates is over, and so we’re likely to see more use of the capital markets, rather than debt markets, going forward where large amounts of cap ex are needed, including company takeovers.

Moderator Message:
Edited to correct quote attribution (chas49)

[EthicsGradient]

Please help a brother out, I'm so confused.

I own 4522 shares of NG. Stock, currently worth aprox 40K after this week's 12% crash.

What is my Right Bill going to be? I wish to take up my full rights but don't know how much of another stock I need to sell to raise the funds.

4522/24 =188
188 × 7 = 1316
1316 x 645 = £8488.20

Check you broker account for a corporate action that should detail this and what options you have. Most brokers are asking for a decision by 4th of June so be quick.

Small correction - the rounding down doesn't happen until the end of the calculation for number of new shares, so:

45223 / 24=188.42
188.42 x 7 = 1318.92
1318 new shares allocated
1318 x £6.45 = £8,501.10

Usually, if taking up the rights would make a holding overweight, I would sell the nil paid rights in the market. There are times when I have sold enough to take up the rights (tail swallowing). Doing nothing is never a sensible option. One thing to remember is that taking up your rights involves neither stamp duty nor broker fees.

"Never"? Doing nothing means your rights are sold to the underwriters, also without broker fees, whereas selling the nil paid rights in the market does mean fees. Is there evidence that people always do worse with the "do nothing" option?

[simoan]

Like it, or not, this is what capital markets are for. I share your pain FWIW. Many people have forgotten about Rights Issues because interest rates have been so low for so long. They were more common when interest rates were higher. I think we can agree that a world of near zero interest rates is over, and so we’re likely to see more use of the capital markets, rather than debt markets, going forward where large amounts of cap ex are needed, including company takeovers.

If this was NG taking over a company (that added value) I'd be down. As a scaled down analogy, this feels like my wife has had my perfectly good Gas-Boiler ripped out and I'm getting the bill for an inefficient £10,000 heat-pump system that I never agreed to.

This isn’t a very good analogy. You should’ve known all along the existing boiler was high maintenance and required you to borrow money to meet the bills.

National Grid has always had to tap the debt and capital markets for money to fund investment. That’s the business model. You shouldn’t invest in a company and then just ignore its funding requirements - the balance sheet is there for all to see.

[Arborbridge]

I've been really angry about this Rights Issue ever since I heard about it, since it's announcement my holding is down £12K. Made me a bit sick, feeling like I was being stitched up and forced to plow money in to a Green Woke sinkhole.

I've done some digging and found National Grid have form for this. The last Rights Issue they did was in June 2010. Back then the SP was around £5 and I think the Rights people were asked to buy were £3.

The Only thing that has made me positive about this whole mess is that following the Rights Issue in 2010 National Grids Share price went on a massive Bull Run and peaked +90%

Obviously this isn't to say History will repeat itself, but it's given me some hope I'm not throwing good money after bad.

Either way I'll be sure to sell out of my NG Position before the next rights issue, presumably in 2030.

Moderator Message:
Edited to correct quote attribution (chas49)

I find your complaint a trifle odd, because you are investing in a market system designed to raise money for businesses: this is how it functions. If you don't like it, warts and all, invest in fixed interest. No point getting angry at the system when it is only doing its job.

Arb.

[IanTHughes]

Small correction - the rounding down doesn't happen until the end of the calculation for number of new shares, so:

4522 / 24=188.42
188.42 x 7 = 1318.92
1318 new shares allocated
1318 x £6.45 = £8,501.10

Usually, if taking up the rights would make a holding overweight, I would sell the nil paid rights in the market. There are times when I have sold enough to take up the rights (tail swallowing). Doing nothing is never a sensible option. One thing to remember is that taking up your rights involves neither stamp duty nor broker fees.

"Never"? Doing nothing means your rights are sold to the underwriters, also without broker fees, whereas selling the nil paid rights in the market does mean fees. Is there evidence that people always do worse with the "do nothing" option?

I would suggest that the answer rather depends upon the value of Rights/Nil Paid under consideration. My broker - A J Bell - would charge £9.95 to sell in the market before lapsing. In the holding example quoted above, the Rights/Nil Paid - 1,318 - currently have a market value of around £2,650.00. With such a value, a charge of £9.95, representing only 0.38% of the sale proceeds, may not be considered too onerous.

However, with a smaller holding, say 100 Rights/Nil Paid, that £9.95 would represent close to 5.00% of the sale proceeds. Somewhat different, and possibly indicating that allowing the Rights Nil Paid to lapse, free of any charge, would be more profitable.

Enjoy!


Ian

[IanTHughes]

I was getting confused with people posting about NGPN with a value of 200p.

NGPN does have a market price of around 200p, which means that the current value of you National Grid PLC (NG) can be represented as follows:

EPIC   |         Name           |      #      | Price    | Value     
NG.L   | National Grid ORD      |       4,522 | 889.4000 | £40,218.67
NGPN.L | National Grid Nil Paid |       1,318 | 204.3000 |  £2,692.67
       | Fraction left over     | 0.916666667 | 204.3000 |      £1.87
       |                        |             | Total    | £42,913.21

A drop in value over the past couple of days I grant you, but do not forget the value of the Nil Paid.

I've sold £10K of other stock to cover the purchase, I'll decide what to do when HSBC finally get in contact. Might have been a bit quick to react

So, despite your reported anger with the behaviour of NG, you have still decided to transfer funds from another holding to your NG holding. Can one ask why?

I didn't know tail-swallowing was an option till finding this thread.

"Tail Swallowing" - selling sufficient of the Nil Paid to raise the cash needed to exercise the remaining - would require you to sell somewhere over 1,000, allowing you to exercise the 300 odd remaining. The exact numbers are of course dependant on the price achieved for the sale.

Good luck with whatever you decide to do.

Enjoy!


Ian

[TheMotorcycleBoy]

3) You will not know the actual value of the lapsed rights until they are sold on your behalf. Until then the price of such Rights can swing wildly.

When I have sold rights in the past, I have noticed that the price has tended to fall rather than rise. But that was then of course.

Anyone have a view on how NG fits in with Labour's plans for GB Energy?

No, but in general I fear Labour will interfere with utilities even more than the Tories, so I am minded to sell and invest elsewhere.

V8

Hi V8,

I'm not sure whether this is false optimism, but won't it be almost impossible for Labour to break NG. that much? More than half its business in the States, so presumably they would need to split it into first.

BU      | UK_Trans | UK_Distrib | UK_Sys_Op | New_England | New_York | NG_Ventures | Other
Revenue |     1946 |       2033 |      4659 |        4427 |     6994 |        1283 |   317

Perhaps I'm being a bit naive, but I'm not sure how given its current that they can do too much harm to it.

Matt

[IanTHughes]

I've been really angry about this Rights Issue ever since I heard about it, since it's announcement my holding is down £12K. Made me a bit sick, feeling like I was being stitched up and forced to plow money in to a Green Woke sinkhole.

You are not being "forced" to do anything. You are being "offered" the chance to add to you holding of National Grid PLC (NG) by taking up the extra shares at what some might suggest is an attractive price. If, for whatever reason, you do not wish to take up the offer, ignore it! Sell/Lapse the Nil Paid and invest the funds elsewhere.

I say again, you are not being "forced" to do anything, why do you suggest otherwise?

Enjoy!


Ian

[monabri]

I find your complaint a trifle odd, because you are investing in a market system designed to raise money for businesses: this is how it functions. If you don't like it, warts and all, invest in fixed interest. No point getting angry at the system when it is only doing its job.

Arb.

My 'complaint' as you strangely put it isn't with the system it's with the way in which it came about.

- The increase in short selling before the crash, were Hedge funds tipped off?
- The short space in time I've had to digest the facts
- No contact or information (as yet) from my broker (HSBC)
- Deciding best actions to take with regards to Rights Issues, option 1, 2 or 3 which I had to learn about from this thread.
- I was already unhappy with the direction NG is going and was thinking of selling, now I feel trapped for the foreseeable future and kicking myself for not taking action sooner. Hindsight is beautiful, I know.

I even said in my post I've cooled since digesting the facts and looking back at history.

No need for the condescending reply.

Out of curiosity, where are you seeing the short selling for NG?


I can't see any evidence (>0.5% level) here
https://shorttracker.co.uk/companies/?sort=2&d=desc

nor here
https://www.lse.co.uk/ShareTrades.html? ... ional-Grid

I'm not saying there is none , maybe you are looking at another source?

[ReformedCharacter]

You are not being "forced" to do anything. You are being "offered" the chance to add to you holding of National Grid PLC (NG) by taking up the extra shares at what some might suggest is an attractive price. If, for whatever reason, you do not wish to take up the offer, ignore it! Sell/Lapse the Nil Paid and invest the funds elsewhere.

I say again, you are not being "forced" to do anything, why do you think otherwise?
Ian

Shareholders clearly are being forced to make a decision which may not suit their individual circumstances. Only if the rights issue had not been devised would it be true to suggest that shareholders are not being 'forced' to do anything.

RC

[dealtn]

So, despite your reported anger with the behaviour of NG, you have still decided to transfer funds from another holding to your NG holding. Can one ask why?

Ian

- Checked account yesterday, 12K down in two days, OMG WTF
- Went down Rights Issue rabbit hole, what do I do etc..
- I'm Fully invested, No cash.
- Figured to claw back a portion of the loss in value from XR stock price, the forced option would be to purchase the discounted Rights. (didn't see another option at the time)
- In fear of my Rights disappearing and getting absorbed by the Underwriters, I figured I needed to sell stock to raise the funds. Not happy about that BTW as NG is one of my worst performing stocks.
- HSBC is pretty slow, when I sell a stock the funds don't appear for days after the sale. As I was under false confused urgency I sold the stock in preparation so funds would be available. Not a big issue either way. The stock I sold can be transfered in to my ISA should I decide not to use it.

My only other experience of Rights Issues was during the 2008 financial crisis. I seem to remember a few of the Banks doing them, LLOY in particular. Now that really was throwing good money after bad, but I didn't care so much back then as I was working away at sea and only learnt about them months after they'd been resolved. God knows what happend to my Rights back then?

I appreciate you are new here but this thread is about Company News. It isn't about individuals and what you are doing etc. There are other places for that. I haven't reported the post but "off-topics" in this place will be removed.

[tjh290633]

Usually, if taking up the rights would make a holding overweight, I would sell the nil paid rights in the market. There are times when I have sold enough to take up the rights (tail swallowing). Doing nothing is never a sensible option. One thing to remember is that taking up your rights involves neither stamp duty nor broker fees.

"Never"? Doing nothing means your rights are sold to the underwriters, also without broker fees, whereas selling the nil paid rights in the market does mean fees. Is there evidence that people always do worse with the "do nothing" option?

The problem with doing nothing is that it can be several weeks before you get your money, compared with selling your rights in the market. It's a case of lost opportunities for reinvesting in something, which may not be possible later. This time the timescale is relatively short, but the value of the nil paid can vary considerably.

TJH

[IanTHughes]

"Never"? Doing nothing means your rights are sold to the underwriters, also without broker fees, whereas selling the nil paid rights in the market does mean fees. Is there evidence that people always do worse with the "do nothing" option?

The problem with doing nothing is that it can be several weeks before you get your money, compared with selling your rights in the market. It's a case of lost opportunities for reinvesting in something, which may not be possible later. This time the timescale is relatively short, but the value of the nil paid can vary considerably.

All of which may be true, although most Rights Issues are done and dusted fairly quickly. Weeks not months. However, it does not alter the fact that selling a small holding of Rights may involve losing a significant percentage of the sales proceeds to charges.

Enjoy!


Ian

[TheMotorcycleBoy]

Hi folks,

I've spent a bit more time thinking about the final option ("tail-swallow") for the NG. rights issue. Well at least as is presented by my broker. That being

I elect to sell sufficient of my NATIONAL GRID Nil Paid Rights to exercise the remaining Rights. I believe that in addition to tail-swallowing this is also know "cashless takeup of the rights".

Using the following as an example, that is supposing I have 5 Nil paid rights.

NATIONAL GRID NEW ORD 12 204/473PNP 10/06  (NGPN) 	
5 	xxx 	xxx 	*204.30p

Should I opt for the above (tail-swallow, cashless takeup), would I be correct in saying that then my broker will:

1. sell 4 of the rights yielding 817.2p
2. buy the 1 remaining right.
3. the result of this complete transaction, being 1 extra NG. share and 817.2 - 645 = 172p in change

Is this correct?

thanks Matt

[Arborbridge]

I find your complaint a trifle odd, because you are investing in a market system designed to raise money for businesses: this is how it functions. If you don't like it, warts and all, invest in fixed interest. No point getting angry at the system when it is only doing its job.

Arb.

My 'complaint' as you strangely put it isn't with the system it's with the way in which it came about.

- The increase in short selling before the crash, were Hedge funds tipped off?
- The short space in time I've had to digest the facts
- No contact or information (as yet) from my broker (HSBC)
- Deciding best actions to take with regards to Rights Issues, option 1, 2 or 3 which I had to learn about from this thread.
- I was already unhappy with the direction NG is going and was thinking of selling, now I feel trapped for the foreseeable future and kicking myself for not taking action sooner. Hindsight is beautiful, I know.

I even said in my post I've cooled since digesting the facts and looking back at history.

No need for the condescending reply.

Not meant to be condescending, but just an observation: that one lives by the sword and dies by it. You invest in a system and you have to put up with its limitations. The stock market exists to raise money, so don't go bitching because it asks you for a contribution to future development - is a sense, that is your job.

And as for the your name "MurkSlayer" - it's a shame you didn't clear the murk yourself when it comes to NG being shorted - it isn't being, at least not in any noticeable volume. That's the trouble with the internet: people pick up on something, someone repeats it, and before you know where we are it becomes the truth.
And you add a touch of paranoia by asking if people are being tipped off.

Nothing wrong with NG, in my view - just hang in there and it'll come right for you in the end. Why rush to judgement over this? Can you see NG being anything other than a necessary and valuable infrastructure asset in this age of greater electrification?
Yes, - I do agree it all seems a bit rushed, especially as some of us might be involved in holiday trips! But doing nothing wouldn't be such a bad outcome, if necessary.

Arb.