CRH Rights Issue explained

[BM146]

I had 250 CRH shares. I took up my rights to 71 new shares. When will I be able to sell all of these shares (250 + 71)? In other words, when will the rights issue shares start coming on the market as fully paid ordinary shares?

 

[Brendan Burgess]

Hang on a minute. I don't understand this €4.53. I received a Provisional Allotment Letter with application form at the back and there is no mention anywhere of the €4.53 anywhere. I understood from this letter that I just send back a cheque for the amount as specified in Box 3 in my case and that was it - extra share popping my way then.



-M

The €4.53 was the market price of the option on the day of that post. That is what the stockmarket valued a right to buy one share at.

Also does anyone know the indebitness of this company? Why are they raising money? Is it just to pay off a debt or are they hoping to cash in the proposed US roadbuilding scheme which may or may not take off.

We don't allow discussion of the valuation of shares on Askaboutmoney.

 

[Brendan Burgess]

I had 250 CRH shares. I took up my rights to 71 new shares. When will I be able to sell all of these shares (250 + 71)? In other words, when will the rights issue shares start coming on the market as fully paid ordinary shares?

According to the Shareholder Guide, dealings began in the New Ordinary Shares on 4th March, so in theory, you can sell them now.

But ask your broker. They will not sell certificated shares until you lodge the share certs with them, and you won't get the share certs until 22 April.

 

[Brendan Burgess]

Thanks for info Brendan. Just a quick question about any possible payment if i decide to do nothing -

My Rights Issue letter from DAVY states that:
"Option 2 - Take no action
The nil paid shares will lapse. If you let the shares lapse, the company may sell the shares in the market and you may be entitled to a cash payment in relation to 'lapsed rights proceeds'. This will be at the discretion of the Company and may be zero."

Are they simply covering themselves here ? i.e. I and other shareholders will most likely receive a payment at some level in respect of the forgone rights issue shares should we decide to do nothing?

Any info appreciated.
Cheers.

No, they are not simply covering themselves.

If the share price on the day is €16.40, then the rights will be worth €8 on the day. (€16.40 - €8.40)

In theory, you should get €8 for each of your rights.

I am not sure what happens in practice. If they sell all the rights which were not taken up in one go on 18th March, will the share price reflect that?

 

[Brendan Burgess]

The fully paid new ordinary shares ( which don't qualify for a dividend) were €14.70 on 17th March and were dealt at 10.30 am at €15.48 on the 18th March.

Take away the €8.40 subscription price, and so those who held rights should get around €7 per right.

Has there been any announcement about this?

Of course, they might not have been sold yet as they probably have been busy since Wednesday trying to see who has not subscribed for the rights.

Brendan

 

[Brendan Burgess]

According to today's Irish Times, the issue was 95% subscribed.

The remaining units were placed in the market at €15.95, so those who did not subscribe will get €7.55 per share.

This seems fair enough. I thought that there might have been a technical drop in the share price due to the "oversupply" of shares.

Brendan

 

[eggerb]

The remaining units were placed in the market at €15.95, so those who did not subscribe will get €7.55 per share.

(Maybe I should post in Taxation?)

Does anybody know how this €7.55 per share will be taxed?

 

[mattmacg]

I have CRH shares. I didnt take up the rights. My rights were sold and I have now recieved a check for this.
How is this taxed? Is it taxed as capital gains, income or dividend?

 

[Brendan Burgess]

It will be taxed as a part disposal of shares.

You will have to work out the cost of the shares disposed of.

I think that Revenue will issue a guideline to say that you have disposed of, for example, 17% of your shares.

I got this on the Revenue website. It's not the same question, but if you follow the examples, you might find something closer. You might follow it up and let us know how it works out

Occasionally the shares received in a bonus or rights issue will be shares of a different class to the shares held, e.g., one new Preference share for every two Ordinary shares held and so on. Where this happens the position is essentially the same as above except that it is necessary to apportion the allowable cost - including enhancement expenditure in the case of rights issues - between the different classes of shares. See Example 7, Chapter 11. 25 Guide to Capital Gains Tax Chapter 9 Returns, Appeals and Payment - Self-Assessment 1.

 

[mattmacg]

Thanks. I bought the shares at €25 so it will probably be a capitals loss.
I will ask my accountant. I will post if I find out more.

 

[Flann O'B]

Mattmacg,

Like yourself I did not take up my options in this rights issue.

With the "initial period" CGT payment required by 15/12/2009, I was wondering if your accountant could shed any light on how exactly this "deemed part disposal" would figure in the CGT calculations...?

I haven't seen any examples of "deemed disposals" that exactly fit the bill for this sort of scenario.

Many thanks,
Flann

 

[polar]

Did anyone come up with an example for working out how to calculate a gain/loss to be declared for tax when the rights were sold and a premium payment awarded instead? It's nearly Form 11 time...