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Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

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GeoffF100
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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#130028

Postby GeoffF100 » April 4th, 2018, 7:01 pm

Gengulphus wrote:
GeoffF100 wrote:I update my spreadsheet with the exact values of my trades as I go. For the last trade, I set the amount to be realised to the exact amount of allowance that I have left. iWeb rounds the trade size down, even for sales, so I am under my allowance by at most the price of one share. ...

I don't really see that, because the CGT allowance is a limit on the gains that you realise by your sales, not on the proceeds of those sales, and they're not the same unless you have some shares with zero base cost to sell (which is possible, but it's pretty rare in practice). E.g. if you're selling shares that have doubled in price, the value of the sale that you want is twice the amount of CGT allowance you have left plus the selling commission - but variations in share price will make the exact multiple of the remaining CGT allowance that you want vary as well...

But basically, what you say about being under the allowance by at most the price of one share does answer my actual question, which was essentially "How much accuracy is 'accurate' meant to require?". And yes, I think that in normal circumstances, something pretty close to that accuracy is achievable by the sort of technique you describe. But does the CVR value uncertainty's effect on the base cost apportionment detract appreciably from that level of accuracy?

The number of shares sold and the proceeds of each sale are the only variables that I do not know in advance. The spreadsheet already contains the numbers of shares and the base costs for each holding. When I enter the number of shares sold and the proceeds, it calculates the gain from that sale, and adds it to the gains from previous sales. (It also works out the number of shares remaining and the base cost of those shares.)

Actually, my spreadsheet has three sections:

(1). The first section calculates the amount of each stock I have to sell to fill my allowance, based on prices that are fifteen minutes or so out of date. (I fill my allowance by trimming my largest holdings to a common level.)

(2). The second section is as already described.

(3). The third section uses data from the second section to calculate revised amounts of stock to sell.

As far as the GVC takeover is concerned, the capital gain/loss is insensitive to the value of the CVRs, because the CVR value is only about 7% of the offer, and the difference between the the two GVC share prices is only about 1%.

I believe that most logical calculation uses the closing LCL and GVC prices on the last day of trading to estimate the value of the CVRs, and the opening GVC price on the effective date to apportion the base costs. We will have wait to see what HMRC decides, but it is not going to make much difference, unless you have a huge number of shares.

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#131402

Postby Paultry » April 11th, 2018, 11:14 am

Cash in the account today.

7646 LCL became 1078 GVC and £2500, plus contingency rights cash.

I'd paid 149p for LAD in Jan 14'.

Glad I did not sell out at a loss, but was occasionally tempted.

Paul

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#131559

Postby GeoffF100 » April 11th, 2018, 9:22 pm

I got my cash yesterday. It is good to see someone else hanging on in there.

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#134437

Postby Paultry » April 24th, 2018, 1:49 pm

Appears the fixed odds limit will be £2.

Hence the GVC price fall.

And what will the contingent rights pan out at?

Paul

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#139656

Postby PinkDalek » May 17th, 2018, 6:05 pm

As most will already know, there's an RNS from GVC Holdings plc today, as The Government has today published its final decision on the Triennial Review:

http://www.londonstockexchange.com/exch ... 44452.html

It includes (partially my bold):

Contingent Value Right

As part of the consideration paid for the acquisition of Ladbrokes Coral, GVC issued to each Ladbrokes Coral shareholder a Contingent Value Right ("CVR") for each Ladbrokes Coral share that they held. The CVRs were constituted under a deed poll made by the Company ("CVR Instrument"), a copy of which can be found at http://www.gvc-plc.com. The value of each CVR, and therefore the value of any payment ultimately due from GVC to CVR holders, is directly linked to the outcome of the Triennial Review and certain laws enacted pursuant to it. Whilst there is a formal process and methodology for determining the value of the CVRs, which GVC will adhere to, the CVR Instrument envisages that if legislation is enacted prior to 28 March 2019 reducing maximum stakes to £2, as announced by the Government today, this will result in each CVR having zero value. In such circumstances no payment would be required to be made by GVC to CVR holders and the CVRs would be automatically cancelled.


Not that we know what HMRC will agree as the CVR valuation as at the date of the deal, rather than now, unless anyone has found an update on this issue.

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#139853

Postby GeoffF100 » May 18th, 2018, 3:54 pm

PinkDalek wrote:Not that we know what HMRC will agree as the CVR valuation as at the date of the deal, rather than now, unless anyone has found an update on this issue.

There does not appear to be anything here:

https://gvc-plc.com/news/

I am assuming that GVCs calculation is the accepted one, even though I do not believe that it is entirely logical. My preferred calculation does not give a significantly different result though. I am assuming that the cancellation of the CVRs results in a tax loss in this financial year.

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188143

Postby PinkDalek » December 19th, 2018, 7:50 pm

Continuing from May 2018.

GeoffF100 wrote:
PinkDalek wrote:Not that we know what HMRC will agree as the CVR valuation as at the date of the deal, rather than now, unless anyone has found an update on this issue.

There does not appear to be anything here:

https://gvc-plc.com/news/

...


Months later, in case of interest, I've only now taken another look and when one gets here (via https://gvc-plc.com/investor-relations/ ... documents/ and the disclaimer etc) Capital Gains Tax Note for Shareholders https://gvc-plc.com/wp-content/uploads/ ... olders.pdf you'll see this:

GVC Holdings PLC 10 September 2018

This note is intended to provide UK resident shareholders of Ladbrokes Coral with certain further information in relation to the capital gains tax treatment of the disposal of their Ladbrokes Coral Shares under the Scheme.

Since the RNS communication released on 29 March 2018 (RNS no. 3288J),1 HM Revenue and Customs have agreed the valuation of the CVR for the purposes of apportioning the base cost in the Ladbrokes Coral Shares across the three components of the Offer Consideration. … the value of a CVR being 11.221p (as agreed with HMRC).

In percentage terms the split (for those who didn't indulge in the Mix and Match Elections) is shown as:

Cash 18.847%

New GVC Shares 74.685%

CVRs 6.467 %

Total 100% (adds to 99.999%)

We provisionally used 12.47% of the s104 pool to set against the cash element, so will probably revise 2017-18 (once I've looked in detail) as this provides us with a gain, as against a carried forward loss, in that year. Conversely the s104 pool carried forward increases.

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188153

Postby PinkDalek » December 19th, 2018, 8:14 pm

PinkDalek wrote:We provisionally used 12.47% of the s104 pool to set against the cash element, so will probably revise 2017-18 (once I've looked in detail) as this provides us with a gain, as against a carried forward loss, in that year. Conversely the s104 pool carried forward increases.


Ignore the above. Having looked the capital loss in 2017-18 is greater than originally claimed, so we may amend via 2018-19 as it makes no difference to any CGT payable in either year (in so far as we are concerned).

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188646

Postby GeoffF100 » December 21st, 2018, 1:05 pm

I have reworked my numbers using the HMRC approved prices. The capital loss in FY 2017-2018 is unchanged (to the nearest £). The capital gains bases carried forward have only changed a little.

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188651

Postby PinkDalek » December 21st, 2018, 1:25 pm

GeoffF100 wrote:I have reworked my numbers using the HMRC approved prices. The capital loss in FY 2017-2018 is unchanged (to the nearest £). The capital gains bases carried forward have only changed a little.


Yes, I’ve since looked again and the differences are minimal. I’d forgotten the shareholder concerned had indulged in the mix and match, so my earlier reported changes in the %s in so far as “we” are concerned were incorrect!

At least we now have the confirmed valuation on the CVRs. Without wading through the thread/paperwork, do you happen to know the month in which these expire(d)?

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188683

Postby GeoffF100 » December 21st, 2018, 2:53 pm

PinkDalek wrote:At least we now have the confirmed valuation on the CVRs. Without wading through the thread/paperwork, do you happen to know the month in which these expire(d)?

My financial diary says:

17/05/18 LCL CVRs declared to have zero value.

An essential document to keep!

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188706

Postby PinkDalek » December 21st, 2018, 4:51 pm

GeoffF100 wrote:
PinkDalek wrote:At least we now have the confirmed valuation on the CVRs. Without wading through the thread/paperwork, do you happen to know the month in which these expire(d)?

My financial diary says:

17/05/18 LCL CVRs declared to have zero value.

An essential document to keep!


Thanks and I've now glanced back at this thread and see the relevance of your 17 May 2018 viewtopic.php?p=139656#p139656

That's when it was reported that The Government has today published its final decision on the Triennial Review but the RNS then includes the CVR Instrument envisages that if legislation is enacted prior to 28 March 2019 reducing maximum stakes to £2, as announced by the Government today, this will result in each CVR having zero value.

This https://hansard.parliament.uk/Commons/2 ... gTerminals includes The Government have therefore concluded that October 2019 is the best date to make both changes but I'm none the wiser on when the capital loss is crystallised as I've yet to establish when the legislation was/is to be enacted.

It is relatively small beer this end but it would be good to know!

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188714

Postby Bouleversee » December 21st, 2018, 5:38 pm

Rather glad I sold my son's Ladbroke's shares on 14.3.18 and invested the proceeds profitably and he is about 62% better off than if he had stayed in and waited for the t/o to complete, all within an ISA so no complex calculations. Got it right for once.

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Re: Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

#188973

Postby PinkDalek » December 23rd, 2018, 4:40 pm

PinkDalek wrote:This https://hansard.parliament.uk/Commons/2 ... gTerminals includes The Government have therefore concluded that October 2019 is the best date to make both changes but I'm none the wiser on when the capital loss is crystallised as I've yet to establish when the legislation was/is to be enacted.

It is relatively small beer this end but it would be good to know!


Answering myself but there was something in the press the other day, which I've only now read, which suggests the legislation was formally enacted on 18 December 2018.

I should have looked at GVC's RNS's. Here's the relevant one dated 19 December https://www.londonstockexchange.com/exc ... 08814.html

It includes:

CVR Valuation and Cancellation Process:

The CVR Instrument requires a period of 10 business days to elapse post enactment of the law before the formal valuation process can be completed by the representatives of GVC and the CVR holders. Upon GVC receiving confirmation from them that the CVR is valued at 0 pence, the CVRs are automatically cancelled. The Group therefore expects to be in a position to announce the cancellation of the CVRs on or around 7 January 2019.


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