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if new shares were released how does that affect current shareholders?

j1mgg

By j1mgg
in Jimmy Bell's Kitroom

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Carson's cat

Carson's cat 744

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New investment by way of a share issue would result in existing shareholders owning a smaller percentage of the company but, in theory at least, the value of each share ought to remain roughly the same because the new investment will inevitably add to the balance sheet value of the company.

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mitre_mouldmaster

mitre_mouldmaster 21,511

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We keep on reading that new investment is needed and will more than likely be done by way of a share release.

Can some one explain how that affects current shareholders and the value or percentage of them?

Thanks

Think there are 2 ways to do it.

1. A Rights Issue, in which existing shareholders are offered the option to buy new shares and increase their existing shareholding. Not open to new investors. Similar to what Barclays recently ddi.

2. Not sure about this one, but I think I read in a document recently (might have been the accounts) that the board have the option to issue up to £100m worht of shares until 2018. Im guessing that if they recieved the backing of the current shareholders, they could issue new shares to the market through a similar mechanism to the IPO, but this would dilute the existing shareholders.

As Carson states, the shareprice should be helped due to the balance of the company increasing.

Not an expert in this at all though, so all the above may very well be rubbish.

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TMB

TMB 14,167

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I was desperate to get a share last Christmas but it was a really bad time of the year to be parting with £500 so I couldn't do it. Now, after seeing the way the Club has been run over the last year, I don't think I would invest. The Club isn't being run properly on and off the pitch and I'm sick of it. We can't just keep bailing it out. Moral Hazzard (Gordon Gekko; Wall Street; 1987)

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mitre_mouldmaster

mitre_mouldmaster 21,511

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So if DK wanted to, and the board agreed to....

Effectively they could just Issue new shares to the value of whatever DK wants to invest, therefor giving him a big shareholding.

Am I reading you right there MM?

Yes, but I basically just guessed at what they could do.

If I make enough crap up though, Boss ususally appears to show me up. Its a plot to get to the truth. ;)

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gogzy

gogzy 31,195

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Yes, but I basically just guessed at what they could do.

If I make enough crap up though, Boss ususally appears to show me up. Its a plot to get to the truth. ;)

Yes, but I basically just guessed at what they could do.

If I make enough crap up though, Boss ususally appears to show me up. Its a plot to get to the truth. ;)

lmao, good tactic.

Boss is like my canary in the mines, if he starts to panic, I will shit myself :lol:

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KingBillyLives

KingBillyLives 27

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If they get diluted I would find this unfair and would rather sell then buy again at the new share price offer

So all you'll actually be doing is selling for less than you bought them and then buying new shares at the same price while paying brokers charges. Just hand me your spare cash and keep the shares you already have. :thumbup:

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Beaujolais

Beaujolais 1,371

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A share issue should not necessarily decrease the value of an existing shareholders current shareholding. However if the new shares have voting rights attached they will certainly dilute the voting power of each share previously issued. With regards value, given the recent accounts demonstrating a cash injection is required- a new share issue could lead to existing share prices increasing.

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The Mongoose

The Mongoose 1,007

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If they get diluted I would find this unfair and would rather sell then buy again at the new share price offer

To Be honest it makes no difference to me and I imagine the Majority of shareholders (Not Shareholders with the majority of shares, There is a BIG difference) I bought shares because my Club needed help and I like many others rallied round and did what I could to help the cause. My £500 got me a certificate to which I added cost of £7 to get it framed, and THAT is why I bought mine......

I do not think it is a matter of 'fairness' it was a matter of what you could afford at the time. Just because someone never bought shares does not make them any less of a Supporter,in the same way as someone who does not have a season ticket is any less a supporter than someone who goes when they can due to personal circumstances.

If there is another share issue and I can afford it I will buy again, but one thing I would NEVER contemplate is selling my shares.

What would be the point The Club would get Nothing from that sale!

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