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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » After XR date?

After XR date?

5 posters

Go down  Message [Page 1 of 1]

1After XR date? Empty After XR date? Mon Apr 25, 2011 5:28 pm

ssuni

ssuni
Manager - Equity Analytics
Manager - Equity Analytics

After rights issuing date what will happen to it's voting shares(normally)?

2After XR date? Empty Re: After XR date? Mon Apr 25, 2011 5:48 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

ssuni wrote:After rights issuing date what will happen to it's voting shares(normally)?

After right date the share price will get adjusted
EX : ABC compnay has share issue 1 share for 2 at Rs 40.
Before XR price RS 100
after XR price = (40+100*2)/3=80

If 1 to 1 after XR share price will be = Rs 70.

But rememebr that is the starting price, It can go up or down/.

3After XR date? Empty Re: After XR date? Mon Apr 25, 2011 7:27 pm

npc86

npc86
Manager - Equity Analytics
Manager - Equity Analytics

Check the starting price after XR date of CSF which recently issued rights. You may get some idea..
Smile

4After XR date? Empty after XR date Mon Apr 25, 2011 9:54 pm

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

I too have a question on this.

I have LDEV and today it started trading @Rs 30/-

My question is how come it went down to this figure as it was traded around 79/- (if I am not mistaken) on last Thursday.

How one can make up his mind to sell at 30/- when he would have purchased it at a higher price? Is there any benefit of doing that? as we are yet to allocate the rights for the ordinary shares we hold.

I am still trying to clear up my doubts on rights.

Appreciate expert opinion on this.

Regards

5After XR date? Empty Re: After XR date? Mon Apr 25, 2011 11:29 pm

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

pushpakumara wrote:I too have a question on this.

I have LDEV and today it started trading @Rs 30/-

My question is how come it went down to this figure as it was traded around 79/- (if I am not mistaken) on last Thursday.

How one can make up his mind to sell at 30/- when he would have purchased it at a higher price? Is there any benefit of doing that? as we are yet to allocate the rights for the ordinary shares we hold.

I am still trying to clear up my doubts on rights.

Appreciate expert opinion on this.

Regards

I will try to explain it as I understand it.

LDEV issued rights at SLR 25 in the following proportion and details.

Proportion: 15(Fifteen) for 1 (One) EGM/ Provisional Allotment : 21-04-2011 XR : 25-04-2011 Dispatch of Provisional Letter of Allotment : 29-04-2011 Rights Trading Commences on : 06-05-2011 Renunciation : 13-05-2011 Last Date of Acceptance & Payment : 16-05-2011

The closing price on 21.04.2011 was SLR 78.70

So now we can calculate the XR price as below.

LDEV XR price - SLR [78.70+(15X25)] / 16

This is approximately SLR 28.40 which was the starting price today.

In other words, if you choose to sell your outstanding shares at SLR 28.40 today, you will be in a neutral position (no gain, no loss) as you are entitled to receive 15 rights that can be converted to ordinary shares by paying additional SLR 25 per each right. (This is assuming that price stays at SLR 28.40)

But in reality, we can expect the share price to fall a bit once the additional shares hit the market thereby increasing the supply of that share.

Selling your current shares will not anyway affect your entitlement to rights. Also you trade your rights in the open market. According to announcement, rights trading commences on 06.05.2011.

Hope this will help you.



6After XR date? Empty AFTER XR Tue Apr 26, 2011 9:16 am

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

StocksWatch wrote:
pushpakumara wrote:I too have a question on this.

I have LDEV and today it started trading @Rs 30/-

My question is how come it went down to this figure as it was traded around 79/- (if I am not mistaken) on last Thursday.

How one can make up his mind to sell at 30/- when he would have purchased it at a higher price? Is there any benefit of doing that? as we are yet to allocate the rights for the ordinary shares we hold.

I am still trying to clear up my doubts on rights.

Appreciate expert opinion on this.

Regards

I will try to explain it as I understand it.

LDEV issued rights at SLR 25 in the following proportion and details.

Proportion: 15(Fifteen) for 1 (One) EGM/ Provisional Allotment : 21-04-2011 XR : 25-04-2011 Dispatch of Provisional Letter of Allotment : 29-04-2011 Rights Trading Commences on : 06-05-2011 Renunciation : 13-05-2011 Last Date of Acceptance & Payment : 16-05-2011

The closing price on 21.04.2011 was SLR 78.70

So now we can calculate the XR price as below.

LDEV XR price - SLR [78.70+(15X25)] / 16

This is approximately SLR 28.40 which was the starting price today.

In other words, if you choose to sell your outstanding shares at SLR 28.40 today, you will be in a neutral position (no gain, no loss) as you are entitled to receive 15 rights that can be converted to ordinary shares by paying additional SLR 25 per each right. (This is assuming that price stays at SLR 28.40)

But in reality, we can expect the share price to fall a bit once the additional shares hit the market thereby increasing the supply of that share.

Selling your current shares will not anyway affect your entitlement to rights. Also you trade your rights in the open market. According to announcement, rights trading commences on 06.05.2011.

Hope this will help you.



Dear Stock Watch

Firstly many thanks for your explantation. I can keep your reply for future reference. I understood the contents of your mail. Just two more clarifications.

1) In your calculation how did you get the figure 16 ? (Is it 15+1 )
2) Suppose I have 100 shares and if I sold it yesterday at Rs. 30/- , according the above formula I should get (30-28.40)x1500= Rs. 2,400/-

AM I CORRECT? If I am correct I got it very clear and I can make use of this for future use in rights transactions.

Thank you very much..





7After XR date? Empty Re: After XR date? Tue Apr 26, 2011 9:34 am

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Here goes my answers to your questions. Don't know if I understood the second question correctly though.

1. Yes 16 is 15+1, that is the number of shares after rights issue.

2. If you had 100 shares and if you sold it for SLR 30 per share, then you will get SLR 30 X 100 less transaction charges. SLR 28.40 is just the indicative opening price on XR date.

Hope this helps.

8After XR date? Empty Re: After XR date? Tue Apr 26, 2011 10:15 am

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

StocksWatch wrote:Here goes my answers to your questions. Don't know if I understood the second question correctly though.

1. Yes 16 is 15+1, that is the number of shares after rights issue.

2. If you had 100 shares and if you sold it for SLR 30 per share, then you will get SLR 30 X 100 less transaction charges. SLR 28.40 is just the indicative opening price on XR date.

Hope this helps.

Many thanks. Sorry for troubling you at a time you are busy. Suppose we reach the date 06.05.11. (The commencing date of rights). What will be my position?

9After XR date? Empty Re: After XR date? Tue Apr 26, 2011 11:29 am

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

pushpakumara wrote:
StocksWatch wrote:Here goes my answers to your questions. Don't know if I understood the second question correctly though.

1. Yes 16 is 15+1, that is the number of shares after rights issue.

2. If you had 100 shares and if you sold it for SLR 30 per share, then you will get SLR 30 X 100 less transaction charges. SLR 28.40 is just the indicative opening price on XR date.

Hope this helps.

Many thanks. Sorry for troubling you at a time you are busy. Suppose we reach the date 06.05.11. (The commencing date of rights). What will be my position?

Hi...I will try to be simple as much as possible...you can start trading your rights from 06.05.11. This means if you want, you can sell your rights in the market or alternatively you can buy more rights from the market. (Remember you need to contact your broker immediately and complete the formalities to get your rights listed for trading)

At the end of rights trading period, you will have to pay SLR 25 per each right and for the quantitiy of remaining rights to convert them to shares.

If you don't pay this amount or if you pay for only portion of the remaining quantity, then you loose your opportunity to convert those rights to shares.

10After XR date? Empty Re: After XR date? Tue Apr 26, 2011 11:33 am

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

By the way you can also refer to following thread that explain about rights in detail.

http://forum.srilankaequity.com/t1572-rights-issue-for-new-investors?highlight=rights

Smile

11After XR date? Empty After XR Tue Apr 26, 2011 1:24 pm

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

StocksWatch wrote:By the way you can also refer to following thread that explain about rights in detail.

http://forum.srilankaequity.com/t1572-rights-issue-for-new-investors?highlight=rights

Smile

Dear Stocks watch

Good article on Rights. Many thanks for it . When you are free If you could just say whether I am right or wrong on the following scenario it will be approciated as I can understand it very much by looking at a practical situation. (eg. only)

01 I have 100 shares of LDEV bought at Lkr 80/- previously
02. Yesterday was the XR Date. Assume I sold my 100 shares yesterdayt at Lkr 30/- at a loss.My loss is Lkr 5,000/- + trasaction charges
03. Trading date of rights 05/05/2011 . I now have 1500 additional shares by this date
suppose this share will be traded at 30/- on this particular day. If I sell it at Lkr 30/-
my profit from all transactions will be 1500x30- 1500x25 = Lkr 7,500/-less
-Lkr 5,000+...=Lkr 2,500 less Transaction charges?

If you could confirm whether the above statement is correct that would be fair enough.

Thanks and if you could post a reply when you are free... Very Happy

Regards
Very Happy Very Happy

12After XR date? Empty Re: After XR date? Tue Apr 26, 2011 11:16 pm

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

pushpakumara wrote:
StocksWatch wrote:By the way you can also refer to following thread that explain about rights in detail.

http://forum.srilankaequity.com/t1572-rights-issue-for-new-investors?highlight=rights

Smile

Dear Stocks watch

Good article on Rights. Many thanks for it . When you are free If you could just say whether I am right or wrong on the following scenario it will be approciated as I can understand it very much by looking at a practical situation. (eg. only)

01 I have 100 shares of LDEV bought at Lkr 80/- previously
02. Yesterday was the XR Date. Assume I sold my 100 shares yesterdayt at Lkr 30/- at a loss.My loss is Lkr 5,000/- + trasaction charges
03. Trading date of rights 05/05/2011 . I now have 1500 additional shares by this date
suppose this share will be traded at 30/- on this particular day. If I sell it at Lkr 30/-
my profit from all transactions will be 1500x30- 1500x25 = Lkr 7,500/-less
-Lkr 5,000+...=Lkr 2,500 less Transaction charges?

If you could confirm whether the above statement is correct that would be fair enough.

Thanks and if you could post a reply when you are free... Very Happy

Regards
Very Happy Very Happy

Hi sorry for the late reply mate. Here is my explanation to your queries.

Your calculation is somewhat correct on the assumptions you have made.

As I understand, your calculation is based on the assumption that you choose to covert all your rights to shares by paying additional SLR 25 per right. And then you have assumed that you will be able to sell these addtional shares at SLR 30 per share. Your calculation is correct on these assumptions.

The only correction is that on 05.05.2011, you will only be able to trade your rights in the market. That is as I said earlier, prior to exercising your rights, you have the option to sell your rights. The market price for rights will depend on many factors and largely related to the its share price in the market. If we assume, market price of share will be SLR 30 on 05.05.2011, then we can expect rights to be trading aound SLR 5 (30-25). So if you choose to sell your rights at this price, you will still earn SLR 5 X 1500 = SLR 7500 less transaction charges. In this event, you will not incur any costs in converting your rights to shares as you have already sold your rights in the market.

Cool

13After XR date? Empty AFTER XR Wed Apr 27, 2011 8:31 am

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Dear Stocks Watch

No worries , your answer to my query is very clear. Now I have got a good idea about whole process of rights transactions. Hats off for you for spending your time in clearing my doubts on this issue and for sharing your knowledge on this.

All the very best in what you do and like to be in touch with you whenever I need help with regard to equity related issues.

Have a good trading day Very Happy

Kindest Regards

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