|London Scottish Bank
||EPS - Basic
||Market Cap (m)
|Nonequity Investment Instruments
Real-Time news about Lon.Scottish Bk (London Stock Exchange): 0 recent articles
|davius: Well Apollo 1 was destroyed by fire during a platform test, Apollo 11 really did "fly me to the moon" and Apollo 13 made it half way before disaster struck. But perhaps, given the tragedy of 1 and the ultimate success of 13 (in that the crew made it home), somewhere in between may be more appropriate an analogy.
Anyway, share price up, some buyers about.
|davius: The share price seems to be telling us it's all over bar the shouting.
Auction at 2.79p.
I only hold 20000 now, average 8.88p. The cash would probably be better in premium bonds...|
|davius: Quite possibly, but they'll not be much left for the small fry, and I think that's being reflected in the 28% fall in the share price so far this morning...
Wonder if they'll be a bounce?|
|davius: The collapse in the share price here seems to be rather worse than in the rest of the banking sector. LSB is now capitalised at a lowly £6m and down over 18% today.
Probably not worth bailing now as my holding is relatively small and has been more than halved from an 8.88p average. Also, barely a month to go until they have to get things sorted either way.
With the demise of BB and the likely buyout of HBOS I have to say I'm starting to feel a little pessimistic as to whether they'll be any return at all on this share...|
|davius: Harsh glue, he's been in this one a while, as have I.
Trust me nutty one, you're not alone in suffering in this market. I'm far from being a fat cat, just bouncing along (close to) the bottom wondering why the winners I pick I go into lightly and the duffers I seem to risk lots on.
I see that the shorting brigade took another huge slice out of HBOS this afternoon. I watched the share price rise to 220p+ and could pretty much call the point when it reversed. Fortunes being made and lost there, I sold out yesterday on a limit order, blind luck it got hit when I was out. Have avoided today though, too volatile and hard to trade (they keep halting on line trades).
Still hoping to see my 8.88p back here, it may take a while though.|
|davius: My oh my, there seems to be a complete failure to grasp the fact that the rights issue price has little relevance IF they have to raise a significant multiple of the current market cap.
What IS relevant is how much the company is worth once recapitalised.
So lets chuck my example in with another at a much lower level...
I suggested buying 100K shares at 7p, outlay £7K.
Then a 7 for 1 rights issue at 4p would mean another £28K invested (700K extra shares), total shares 1142m and if the recapitalised company were worth £70m the shares would be 6.1p and your £35K outlay worth £48.8K. We all clear so far?
So the board decide no way will they get it away for 4p, so 1p it is.
This means issuing 4000m new shares to raise the £40m, which would be a 28 for 1 rights offer. So I'd now need to buy 2800K new shares at 1p each, totalling, um, £28K. Er, isn't that the same as before? Are we making sense yet?
So the company now has 4142m shares, if it were worth £70m then the share price equates to 1.69p per share, and my 2900K shares are therefore worth £49K.
Where I completely agree with grlz, they will consolidate, as to issue new shares at 1p each would be ridiculous.
But the point of my post is that if they raised £40m (or something similar) via a rights issue, then if the company that emerged was worth more than that sum there is money to be made even at the current share price level, because the cash call on shareholders would be far higher than the current market cap. Holding the shares now will offer the rights to buy new shares at a discount, hence why the share price has not bombed to 1p.
Of course, this is all complete speculation as we don't even know if they need to raise anything like £40m which is a figure pulled from the ether by the FT as far as I can fathom.|
|davius: I have no plans to sell but have to admit to feeling uncomfortable with this sliding share price. Now down to 8-8.5p and showing as the 13th worst performing share today.
It reminds me a little of the share price movement of Jarvis. I wish I'd piled in and held those from under 10p.
Anyone expecting to make a quick buck in LSB is likely to be disappointed I think, it could takes months for value to return (as it did in JRVS) and will probably be post rights. What we do know is that they have to get the company in order by October to avoid a forced sale (under the terms of the loans) so things should become clearer over the next two or three months.|
|davius: > every share consolidation i have seen has been followed by a drop of between
> 25 - 50% even in decent companies where they have no funding issues.
I have to disagree with you in this case, PRTY consolidated recently and the share price is now significantly higher.
In my view consolidation isn't much of a problem either, the market cap is so small that whether the shares were priced at 10p or £10 each makes little difference. However, what IS most definitely a problem is that new shares cannot be issued at below their nominal value. The LSB shares are '10p ordinary' so under the current structure the minimum rights issue price would be 10p. Unless the share price moves ahead they WILL need to consolidate or restructure the shares in order to decrease the nominal value to below the current share price.
I think that the board would be happier with a little more in the way of disposals and closures first with perhaps a modest rise in the market cap to perhaps £20m before attempting a rights issue. This remains a share to hold on to for a month or two in my view.|
|davius: Well 1.2m is still only £130K worth or so, could be small holders but more likely one of the institutions I would have thought. The other option is it's just MMs selling stock, the share price has been sitting in a fairly tight range for a while now so the MMs might expect to be able to buy back without too much trouble.
I'd rate this as a solid hold for now. The funding provided by the banks demonstrates confidence that the business remains highly viable, though we could be looking at post rights for a decent recovery in the share price.|
|davius: Well if they make a placing it would be for perhaps a little lower than the share price and would dilute. But a rights issue wouldn't provided you take up your full entitlement, regardless of what they price it at. The share price tends to go for a mid equivalent price after a rights issue.
A simple example.
Current share price 10p, holding 10000 shares, market cap 10m
If they want to raise another 10m at 5p a share you would have the right to buy 20000 more shares at 5p each.
you would then hold 30000 shares at an average cost of 6.67p. Market price would typically settle above that level if the issue was considered a positive move, and below it if negative.
Where we small timers lose out is when they raise via a placing rather than a rights issue, but placings are usually at a smaller discount.
The point I'm getting at, it's the amount of money to be raised, not the rights issue price, that's important.|
London Scottish Bank share price data is direct from the London Stock Exchange