# Bank of Ireland Rights Issue explained



## Brendan Burgess

I can’t find the official information anywhere online. Anyone got a link?  

You can call Computershare on 1800 930 490 from Ireland or +353 1 247 5414 from outside Ireland. 

*Timetable *
  Wednesday 19 May - Shares bought on or before this date will qualify for rights.
Thursday 20 May *Ex Date *
                   – Rights start dealing on the Stock Exchange 
                  -   Share price will fall to reflect ex-rights price

31 May 3 pm  deadline for selling all your rights 

2nd June 3 pm Deadline for opting to sell some rights and exercize others
 
Tuesday 8 June  11am  - Closing date for taking up all your rights 

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


*The basics *
  For every two shares you own, you have a right to buy three shares for €0.55 cents each. 

  So if you own 2,000 shares, you can buy 3,000 shares which will cost you €1,650

*Should I buy the shares? *
  We don’t speculate about individual share prices on Askaboutmoney. 

  You should make this decision as part of your overall financial strategy. If you invest in shares, you should have a diversified portfolio of shares. 

  If a high proportion of your wealth is already in Bank of Ireland or banking shares generally, you should not buy any further shares. 

  If Bank of Ireland represents an appropriate part of a balanced portfolio, you may wish to buy additional shares. 

*But aren’t they a great bargain? *
  Not really. You are not really getting cheap shares or a special bargain. 

  The rights have a value and you will be able to sell these while keeping your original shares. 

*The numbers – *



2000 old shares|€1.50|€3,000
  +3,000 rights|€0.55cents|€1,650
  =5,000 new shares| worth|€4,650  The theoretical ex-rights price should be €0.93 cents (€4650/5,000)

  So you should be able to sell your rights for €0.38 cents each (0.93 - 0.55)

  This is a theoretical price. As the underlying price of Bank of Ireland shares is so volatile, this will rise and fall in line with that.

*I want to subscribe for new shares but I have no money? 
*Then you can sell some of your rights in the market and use the proceeds to buy the remainder of the new shares. 
 

*How do I sell my rights? * 
 You will receive a Provisional Allotment Letter. You can mark this that you want to sell your rights and Computershare will sell your rights for you.


 You can assign the PAL to your stockbroker who will sell the rights immediately on the open market. 

*What do I do if I own my shares in a nominee account? *
 The stockbroker will send on the documentation to you and presumably your return it to them.

*What if I do nothing? 
*If you do nothing, your rights will be sold in the market by Computershare and you will get cash. 
Your 2,000 shares which were worth €3,000 will now be worth €1,860. The amount of cash will depend on how the market values the rights and the supply and demand on the day. 

*But won't my shareholding be diluted if I do nothing? 
*If you control 50% of a company  and a rights issue dilutes your control, then dilution is a meaningful concept. It is a meaningless concept for a tiny shareholder. What matters is cash and the value of your remaining shares. 
 
*Can I buy shares at the reduced price if I am not a shareholder? 
*You will need to buy rights first through a stockbroker. It may be simpler just to buy ordinary shares in the market from Thursday or Friday onwards.


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## MeathCommute

Hi Brendan. I have BOI shares. I was wondering if I decided not to participate e.g. sell my rights, would I get the number of shares that I WOULD have purchased, if taking them up, at the price of 0.38 cent per share e.g.
based on the example you gave above, would I get 3,000 x 38 cent before tax back ?


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## round1

I assume sale of rights will  be subject to CGT?. According to Davy website there will also be commission charges on sale of rights.


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## Brendan Burgess

MeathCommute said:


> Hi Brendan. I have BOI shares. I was wondering if I decided not to participate e.g. sell my rights, would I get the number of shares that I WOULD have purchased, if taking them up, at the price of 0.38 cent per share e.g.
> based on the example you gave above, would I get 3,000 x 38 cent before tax back ?



If you have 2,000 shares, you will still have 2,000 shares after the Rights Issue. 

You will be able to sell 3,000 rights at 38 cents each, so you will get €1,140 cash.

Your 2,000 shares will fall in value to €1,860 (2,000 @.93)

So your total value will be €3,000

Your current value is 2,000 shares @ €1.50 which is €3,000.


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## Brendan Burgess

*Capital Gains Tax*

Yes, there will be a deemed partial disposal of shares. The Revenue will issue a factor. It would be something like 34%. 

So you can set 34% of the initial cost of the shares against the proceeds of the sale of the rights. If you bought the shares before the big falls, you will have a CGT loss. If you bought them when they hit the lows, you will have a gain.


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## Brendan Burgess

So the price has fallen from €1.40 cum-rights yesterday to  88 cents ex-rights  this morning, which is about right. 



2000 cum-rights shares|1.40|€2,800
3,000 |0.55|€1,650
5,000 new shares| |€4,450
Value per share||0.89 Theoretical value of rights 0.34 (0.89 - 0.55)

I can't find the rights quoted anywhere


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## Brendan Burgess

It has dropped now to 0.83 which is a real drop of around 6 cents or 7%

AIB is up 3%.


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## dewdrop

Congrats Brendan on the clear and simple way you explained the impact of the rights unlike many others who waffle on about diluting your holding which only confuses the ordinary person


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## MeathCommute

Thanks very much Brendan for your excellent illustrations of how this works


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## Brendan Burgess

There is a good report from Joe Brennan in today's Irish Independent

Yesterday, you could sell your rights in the market for 22 cents each. 

You can follow the price of the nil-paid shares ( i.e. the rights) on the Irish Stock Exchange website 
http://www.ise.ie/app/equityDetails.asp?equity=74622  I don't know if they are quoted on a more up to date basis anywhere else.

Brendan



> Wednesday's share price close of €1.40 pointed to an inherent value  -- or what is known as its theoretical ex-rights price -- of 89c per  share, according to analysts, when the terms of BoI's deal is factored  in.
> 
> 
> 
> 
> 
> However, the stock  closed yesterday at 76.5c, marking an effective 14pc drop in its value,  amid huge volumes, as 43 million shares traded hands.
> 
> 
> 
> 
> 
> Dealers said that all else  being equal, the nil-paids would have been worth 35c (90c minus 55c),  based on Wednesday's share price close. However, they closed yesterday  at 22c as 14 million of the rights traded.


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## Brendan Burgess

*I want to buy Bank of Ireland shares. Should I buy them directly or buy the rights? 

*Let's say you want to invest €760 in Bank of Ireland shares at the latest price of 0.76 cents. The rights should be exactly 0.21 cents ( 76 - 55) . 

You can buy 1,000 shares in the market at 76 cents each.

or you can buy 1,000 rights for €210. 
Then you will pay €550 to buy the new shares, so the cost will be the same. 

*If the share price falls by 10%, you will lose €76 either way. 

*Of course, €76 is 36% of the €210 investment in buying the rights.

So buying the rights is a highly geared way of investing in Bank of Ireland shares.

*If the share price falls by 30%...
*You will lose €228 through buying the shares directly, but only €210 by buying the rights.


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## Brendan Burgess

*Disclosure 

*The above information does not constitute a recommendation for the shares or for the rights. It is simply an explanation of the mechanics. 

We do not allow discussion of individual share prices on askaboutmoney. See our 

I have purchased rights as part of my overall portfolio.


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## WaterSprite

Just for people's info - the rights issue is not available to ADR holders by the look of things.  Those holders are being cashed out for the value of the rights, rather than being offered the right to take up shares.  If anyone has any different information, I'd be delighted to hear it.  This is info that I got from Bank of NY Mellon - it appears (to me) that they are treating all ADR holders as US residents (thereby being excluded from the rights issue per se).


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## messyleo

Just a little confused about one thing. I got a letter from Goodbody saying the default option is 'do nothing' i.e. your holding will remain the same and you have to opt-in to take up the rights. This is very clear. I don't wish to take up the rights so I 'do nothing'. However then it said in the paragraph below if you wish to sell your rights contact us etc. Why would anyone want to 'do nothing' (i.e. if you don't want the take up the rights yourself, surely you would sell them as you have nothing to lose by doing so) and *not* sell their rights, or am I missing out on something obvious??


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## Brendan Burgess

Hi Girl

You have a choice of doing nothing or selling the rights in the market.

if you do nothing, the company will sell your rights on the 8th June and give you the proceeds. It's impossible to know whether this will be more or less than you would get by selling the rights in the market yourself.


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## messyleo

Ah thanks a million for the Brendan, I knew I had gotten things a bit cross-wired!


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## Slim

What are the implications of today's fall in the BoI share price to 65c, given the rights issue share price is 55c?

IMO - the rights issue is no longer as 'attractive' as it was and the sale of the rights will raise little, about 10c per share. Am I correct?

Slim


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## Petal

That appears to be the case!


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## Afterflood

*Online share trading with AIB - how to get BOI offer details*

Hello all,

I have an online share account with AIB.

I hold some BOI shares in this account.

I have recieved no letter or details relating to the rights offer.

Are AIB slow in sending them out or do i need to do something to get details?

Thank you for your help.


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## RLD

Afterflood - I received a letter from them dated 21st May. You should probably give them a call...


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## Petal

Yes, I got one dated 21st May also. If you check your online account you should see the rights listed there. For info, The deadline for take up the entitlement is 3rd of June in my letter.


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## JonM

Can anyone explain the CGT implications of the rights issue?
To avoid committing more cash, we are thinking of selling say 80% of the rights and using the proceeds to exercise the rights to buy more shares.
1. how will CGT be assessed on the rights we sell?
2. how will that affect CGT if we eventually sell the new shares we have bought?
Thanks.


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## Brendan Burgess

Answered in this post

http://www.askaboutmoney.com/showpost.php?p=1042017&postcount=5


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## 3_rd

hi ,
does anybody know why the adr s of bank of ireland does not sell at 4/1 ratio yet ? and when is this likely to happen (the latest)
Thanks


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## mtk

I have missed deadline to sell rights with compushare ( received by 3pm Monday and i haven't posted it yet)
1) Am i correct in saying doing nothing is the same as selling rights - the only difference being timing ( sold on market rathet than when rights lapse) ?
2) Dependin onet answer to 1) Could i use a broker directly to sell for me as deadline 31sy may appears to compushare one ?

also thank you for the clear explantions in this thread


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## mtk

I managed to hand deliver to compushare today so i avoided issue. The answer to my second question is yes if anyone is interested as i found on Sunday Buisness Post site.


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## Slim

National Irish Bank have not written to me about this at all. They hold 1000 BoI shares for me in a custody account. The 1,500 rights appear ok on the online account but I do not know what to do with them! I guess i'll ring NIB.

Slim


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## Redzer

Slim said:


> National Irish Bank have not written to me about this at all. They hold 1000 BoI shares for me in a custody account. The 1,500 rights appear ok on the online account but I do not know what to do with them! I guess i'll ring NIB.
> 
> Slim


 
Similar situation to you but NIB did write to me. Defo ring them.


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## Petal

Do people in general intend to sell their rights or let them lapse?


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## callybags

I have taken up mine.


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## Slim

Redzer said:


> Similar situation to you but NIB did write to me. Defo ring them.


 
Rang NIB. Letter was supposedly posted 20th May! I did not get it. Anyway I can do the business over the phone today. The shares were at 73c this am, so with the rights price at 55c, I should be able to sell them for 18c each, less commission of course. That should net me €250(270 - 20 comm). Am I correct in this?

Slim


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## Petal

Yeah, but my understanding is, if you don't do anything, they get sold on the 7th June and you get whatever profit then, so the share price could go up quite a bit if people take up their rights, or if everyone sells them I assume the share price will go down...


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## kev53

Apologies for silly question,if someone could clarify, I took up my right issue. I was entitled to 1000 shares which I purchased at total cost of 550 euro. Why on my  Sharewatch account do they have 1000 shares at 19 cent, total value = 190!! Have I lost already!! I expected the total to be current share price (0.76) * 1000 shares = 760! 
After rights issue trading is completed will the shares be at current market price (i.e. o.76)??


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## Jarakeda

Hi

I am not taking up the rights and want to sell them - I missed the deadlines to reply prtly 'cos the price was so low. I now don't know whether it is better to try and sell in the market or let them lapse.  I rang the help line and the guy was very vague about what happens if you let them lapse- saying they will be sold IF they can find a buyer and implying that not be possible, so I'd get nothing. Is that likely? 

Also, I don't have a broker so if i want to sell now, will it be possible by just going into my local bank (Natwest)?

thanks


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## Brendan Burgess

I would say that it's too late to do it via a broker although the market is still quoting a price for the nil rights. 

If you are in the UK, and you don't have a broker, I don't think you could do it in time.

As of this evening the rights were worth around 19 cents each. All other things being equal, this is what they will be worth next Tuesday.

If the BoI share price is 75 cents next Tuesday, people will want to buy the rights for 20 cents, so I would imagine that is what you will get. If there are huge volumes of rights for sale that day, it might artificially depress the market, so you might get less than you would get by selling them now.

But I don't think you can do anything about it now.

_Note: I am a rights holder and intend to subscribe for the shares_


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## Jarakeda

Thankyou


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## Petal

Kev53 - did you do this online by any chance, in that case you may have ended up buying more rights, rather than taking up the rights. for this you have to contact you broker to to this, it sounds like you doubled your amount of rights?


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## LDFerguson

Bank of Ireland rights ceased trading this morning at 11am.  Rump (amount of rights not taken up) to be announced tomorrow morning.


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## Brendan Burgess

95% of the rights were taken up

the remaining 5% were sold in the market today at 75 cents each. This means that people who did nothing should received around 20 cents for each right they had. 

Brendan


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## theprizelamb

*Payout*

Are those who did nothing more than likely to get a cash amount (lapsed rights*price)? The prospectus was vauge enough. 

When can payment be expected and how much would the fees be?


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## Brendan Burgess

If you had two shares, you were entiled to three rights.

These were sold in the market today for around 20 cents each.

So, you had 2,000 shares, you should get €600 

Brendan


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## TomOC

Brendan Burgess said:


> I can’t find the official information anywhere online. Anyone got a link?
> 
> You can call Computershare on 1800 930 490 from Ireland or +353 1 247 5414 from outside Ireland.
> 
> *Timetable *
> Wednesday 19 May - Shares bought on or before this date will qualify for rights.
> Thursday 20 May *Ex Date *
> – Rights start dealing on the Stock Exchange
> -   Share price will fall to reflect ex-rights price
> 
> 31 May 3 pm  deadline for selling all your rights
> 
> 2nd June 3 pm Deadline for opting to sell some rights and exercize others
> 
> Tuesday 8 June  11am  - Closing date for taking up all your rights
> 
> [/COLOR][/COLOR]



With the new rights issue coming up, I am wondering has the date of "Shares bought on or before this date will qualify for rights." been reached yet?  If shares are bought today, will they qualify for the rights issue?  I expect the date has not been reached but would like confirmation. Thanks


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## TomOC

I see shareholder have approved the terms of the share issue today.  How long after this happened last time, did the purchase cut off date for share rights issue come around? Thanks again


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## Brendan Burgess

When the details are published, we can do a new Key Post to avoid confusion with the old Rights Issue.

Brendan


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