# BOI rights issue



## car (27 Jul 2011)

[broken link removed]

BOI saying they had 60% take up of rights.    

I have some BOI shares.   Did I miss something, is this different to the rights issue last year?  Should I have got something in the post to say I had some rights to take up?  

Reading the locked sticky from brendan on last years topic further down this page the last entry is saying more info will come out when we hear more but I cant see anything else.   Mea culpa if there is.


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## Brendan Burgess (27 Jul 2011)

discussed in another thread


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## Brendan Burgess (27 Jul 2011)

car - apologies

The thread seems to have been deleted.

You will find it here.



or google askabboutmoney bank of ireland rights issue 2011 and click on cached

To answer your question - you had the right to buy 18 new shares for every 5 you held at 10cents. As the market price today is 10.3 cents, you have lost very little by not being informed about it.


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## Brendan Burgess (27 Jul 2011)

I have recreated what I can from the cache on Google. Yesterday and today's stuff was not cached. I have just copied the answers, not the questions. Many of the questions are no longer relevant.

*Statler*
  There was a question on another thread about the cut off dates for this rights issue, so I thought it might be useful to set out some of the details.

The rights issue:
BOI aim to raise a total of EUR1.91bn from the rights issue. The offer is 18 new shares for every 5 existing shares at a price of 10c per share. 
This rights issue is underwritten by the state meaning the government will subscribe for any allotments not taken up by shareholders. Assuming 0% take-up by private stockholders in the rights issue, the state's share would rise from 36% currently to 69.7%; 100% take-up by private holders would leave the state stake at 29.2%

Prospectus:
The prospectus is available from this link
http://www.bankofireland.com/about-b...l-raising-2011

Your options:
A: Take up all of your Rights
B: Take up some of your Rights through Cashless Take Up
C: Sell all of your Rights
D: Take up some of your Rights and let the remaining Rights lapse
E: Take up some of your Rights and/or sell some or all of the balance of your Rights
F: Do nothing

Deadlines:
There are a number of different deadlines, depending on which option you choose.
A: 11am on 26th July
B: 3pm on 19th July
C: 3pm on 19th July
D: 11am on 26th July
E: 3pm on 22nd July to split your allotment and 11am on 26th July to take up the split allotment

Nominee accounts:
If you have a nominee account, your stockbroker will set earlier closing dates so that they can respond to the dates above.

Contacts:
Computershare at (01) 2475414 or clientservices@computershare.ie unless you hold your shares in a nominee account, in which case contact your stockbroker.

Current share price:
Available at http://www.bankofireland.com/about-b...d-share-price/

*Brendan Burgess*

Thanks very much for this - saves me doing it.

I think the key question is whether people should subscribe or not. While we do not allow speculation about share prices on askaboutmoney, it's ok to discusss the mechanics of the rights issue.

In a normal rights issue, you buy shares at a discount to the market price. 

This is not a normal rights issue as the subscription price is 10 cents and the market price is 10 cents. 

If the share price falls between now and the final decision time, then obviously it would be cheaper to buy the shares in the market than through the rights issue. 

If the share price rises before the 19th July, then the rights will have some value. But no need to do those calculations unless the share price rises.

*Statler*
​  The absence of a discount to market does leave me wondering what rationale there is for taking up an allotment. At the moment the only difference I can see is that there are no broker charges to pay if you subscribe. That hardly counts as an incentive. 

  Selling your rights, as referred to above, is selling your right to buy the new shares at the issue price(10c). For your rights to have any value the issue price of the new shares needs to be below the market value of the existing shares.

An example:
Say BOI has 500 shares issued at a current market price of 15c. The bank is issuing 18 shares for every 5, so 1,800 shares at 10c.
          500 old shares at 15c
         EUR75 
             PLUS 1800 rights at 10c 
         EUR180
             EQUALS 2,300 new shares
         EUR255
             ex-rights price per share
         11.09 cents (255/2300)
             Less subscription price
         10 cents
             =value of 1 right
         1.09 cent each
             value of 1,800 rights
         €19.62
        However, the current market price is 10c (equal to the rights issue price) so the rights are currently not worth anything.


*Brendan*
  With a share price of €0.10 or less, the rights are worthless, so you will get nothing for them. 

I am not sure what happens if the share price rises above 10 cents in the meantime. You could certainly sell your rights in the market. If you don't sell them, I suspect that the only buyer will be the government and so they won't pay anything for them.
  You should only take up the offer if the share price is at least 10 cents on the final day. 

if you buy a share at any time in Bank of Ireland, you stand to lose all your money if the bank is nationalised. It's unlikely to be nationalised and if it is, the terms of the nationalisation will determine how much if anything you get. 

The rights issue changes nothing.
  Buying any share is risky. This is not a commentary on whether BoI is a good buy or not. 

If the share price is, say 20 cents, on the day of the decision. You can buy your rights for 10 cents and sell them immediately afterwards for a much higher price. And yes, in a month's time, the Bank could collapse completely and the shares may be worthless. 

Likewise if the share price is 9 cents you should not buy the rights as you can but them in the market for 9 cents. This does not mean that the rights are not worth 10 cents. In a year's time, the share price might be worth €1.


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## TomOC (28 Jul 2011)

What did "do nothing" actually mean in the end?  Will those who did nothing receive any money? Or is this search for buyers for the remaining 40% of rights still ongoing?  Thanks


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## Brendan Burgess (28 Jul 2011)

We will probably know later today. As the share price closed last night at 10.3, it is likely that the unsubcribed shares were sold at around this price.

So after costs, the shareholders who did nothing will get little or nothing. 

But they haven't lost out by not subscribing either. 

If they had bought their rights at 10 cents, they could have sold them in the market at 10.2 cents, so after costs of sale, they wouldn't have made any profit. 

Brendan


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## hawk (29 Jul 2011)

I was entitled to 122,000 shares 

I did nothing! 

My trading account says they are worth €122. 

I presume that is the final cost and that's what they sold for.


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## hawk (29 Jul 2011)

Yep just had another look... I got paid €0.001 for each entitled share I didn't take up. not sure when they took that number but I'm not too bothered. 

It was always a gamble aposed to an investment buying in to such a badly run outfit. 

Hawk


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## Brown (30 Jul 2011)

> I have some BOI shares.   Did I miss something, is this different to the rights issue last year?  Should I have got something in the post to say I had some rights to take up?
> 
> Reading the locked sticky from brendan on last years topic further down this page the last entry is saying more info will come out when we hear more but I cant see anything else.   Mea culpa if there is.


I am also a BOI shareholder .  I did not receive anything in the post, should I have?


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## Brendan Burgess (30 Jul 2011)

This exact question was answered in this earlier post

Brendan


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