Lonmin Share Discussion Threads

[elvisrocks] 24/11/2015 13:20

Careful re your Post 6615, thanks for this. I look at this on what the old equity is worth.

10p pre rights = $80m
1.19p (lunchtime 1.25p) ex rights = $80m
120p post consolidation (if that is what it is) = $80m

Or in other words, after the re-IPO and $400m cash being banked as new share capital, it's made no difference. Lonmin is a cash shell effectively. I don't buy this argument even in a low Pt environment.

Barclays/Investec/Macquarie are double this
Comparable Sibanye/Implats valuations 6 times higher
Deutsche, 8.5 times higher

[bouka1] 24/11/2015 13:13

30 % over priced currently

[elvisrocks] 24/11/2015 13:11

Just a friendly word to all you out there on the current trading price of these rights, 0.05p around lunchtime today.

As you will be aware, the share price pre rights actually held up rather well, 10p roughly day before ex-rights and 12p roughly on Record Date, so 10:1 ratio or 12:1 ratio.

Today's rights price you see now of 0.05p is equivalent to the 10p we saw at the end of last week, now collapsing to about 3.5p equivalent, a price never remotely seen even in the madness of the 46:1 being announced and the sell off that began then on the 9th/10th/11th.

So, it's either the bargain of the century if you can get them or the biggest p.ss take ever if you are sucked into selling them! DYOR etc.

EDIT
Careful, I think I disagree with you re your Post 6616, the LMI "matters more" in the medium term

[careful] 24/11/2015 13:07

LMIN now 0.0496p.
heading towards zero.
they may get there.

It is logical, who wants to pay 1p towards a company that may be valued at below 1p in a few weeks time.
(...below £1.00 after the 100;1 split on the 18th Dec.)

This is now looking more probable than possible.

[careful] 24/11/2015 12:36

I hope all will be tidy by 18th dec.

We started with 587m shares at about 10p.
We added 27,000m shares at 1p.
We then reduce, 18th dec, by a factor of 100.
That will mean 276m shares remaining when it is all over.

To match the above numbers they should be trading at 120p.
any less will be awful.

[elvisrocks] 24/11/2015 12:17

No problem at all lazy.

Careful and Kojak are the ones here I think who have seen this before.

[lazyhisnibs] 24/11/2015 12:15

Elvis,

Well, let's see if others see it differently and I don't say that with a barb for anyone. Rather I've noted on BBs on previous occasions the same phrases or rules in a prospectus are interpreted differently by different people. It is those who have been through the mill before (as holder or traders during the process) whom are likely to have the battle scares and clarity.

[elvisrocks] 24/11/2015 12:13

Lazy if only 10% trade through platforms we see how else will shareholders not take up their rights? Either side deals like old mutual did last week when they quietly offloaded 5% and announced that after the RI vote or they let them lapse.

If they let them lapse, will be mostly PIs who are not aware of what's going on. What will the underwriters pay, next to nothing if p.ss taking continues or above TERP if it surges. IIs won't make this misstake as they know they will be diluted into oblivion.

[lazyhisnibs] 24/11/2015 12:10

Thanks Chris.

Careful, with POG different posters had different experiences depending on what brokerage they were using and what instruction (if any) they had given said broker. Quite quickly it was academic with that one though as there was virtually no value. grbaker might remember more if he's still around.

[careful] 24/11/2015 12:07

That last bit states they will have nil value if not taken up.
is that true?
usually they are sold on your behalf and the cash credited to your account.

[chrisbr777] 24/11/2015 12:05

Lazy - that sounds about right.

[lazyhisnibs] 24/11/2015 12:02

Thanks Chris and in respect of the following for someone in the position described in the last couple of posts is the following correct:

Each right is bought for a fraction of a penny. (Typo56 mentioned 0.07p yesterday which value is dynamic.)

On the 10th one has the right but not the obligation to exercise the rights purchased in the secondary market in part or in full. Each right taken up involves paying 1p without spread but with broker's commission and stamp duty.

If by the 10th the rights have not been exercised in part or in full then then they will lapse with nil value.

What have I got wrong this time please?

PS: I've just seen your post above this one Chris and thank you for it. In the mean time I'm still struggling with the clunky bits. So far I've always got out of the way of RIs. I'll probably continue to stay out of the way with this one too but just want the basics under my belt rather than a 100 page prospectus.

[chrisbr777] 24/11/2015 12:00

Hi Lazy, I apply a simple approach to this. If the rights prices are low, its most likely due to demand being low. If there were huge opportunities this would be reflected in current pricing which it is not (at this stage). If what Elvis has posted that only 10% of the rights would have been traded by due date then this further confirms to me that the demand for acquiring new rights is not very high at the moment. That and the fact that shareholders have on the whole probably decided to take up their rights I guess contributes to the low volumes traded. We will probably see a flurry of activity with 1-2 days to go before the 10th. Larger shareholders might be doing private deals (who knows). My advice would be to let this consolidate and then decide whether Lonmin is a share for you or not. The real gains will come from market fundamentals and management excellence. There is enough time to ride out a nice upswing after 10 Dec.

[chrisbr777] 24/11/2015 11:50

Lazy, your Quote "So, one share confers 46 rights. If the shares are bought in time before XX or XD (whatever it is called) then one sleeps snuggly in the knowledge that one owns the rights to up to another 46 shares at 1p each.

But if one doesn't hold shares in to XD / XX then the rights inherent in those shares can be bought from someone else who was holding on XD/XX but has more than they can afford or want to follow.

Is the above correct please?"

YES This is correct understanding

[lazyhisnibs] 24/11/2015 11:48

So, one share confers 46 rights. If the shares are bought in time before XX or XD (whatever it is called) then one sleeps snuggly in the knowledge that one owns the rights to up to another 46 shares at 1p each.

But if one doesn't hold shares in to XD / XX then the rights inherent in those shares can be bought from someone else who was holding on XD/XX but has more than they can afford or want to follow.

Is the above correct please?

PS: Just seen your post above this one Elvis. For I'm just trying to get my head around the basics so that I know what the hell the rest of you are talking about as in terms of the process as there's been a fair bit of inconsistency.

[elvisrocks] 24/11/2015 11:43

Lazy, you are right, traders are trying to buy but at take the p... prices. About 1% per day volumes seems to be trading on the rights, say 10% or so during the next 2 weeks but how many of these are traders washing over and over again and thus how much will be left with PIC to grab?

[lazyhisnibs] 24/11/2015 10:55

Hi Chris,

I've not held Lonmin shares for ages. I am interested in holding again under certain circumstances.

Is not the PIC buying rights the same as a PI buying rights unless they do a private deal and surely most of what they buy at this stage and from now on will not be through private deals? (I'm not saying they do private deals as I know nothing about that side of things but dark pools and all the rest have been mentioned here.)

Traders surely are buying rights now. Obviously their prime aim would be to trade them for a profit before the 10th and preferably multiple times but if the rights didn't confer a real right of some kind why would they have any value at all?

[chrisbr777] 24/11/2015 10:44

Hi Lazy - if you held this share at the close last week, you would have been allocated 46 rights for each of these shares you held. The next day you were able to trade these rights independently of the share you held. Theoretically 27bn of these could be up for sale. We could also have PIC for example buy rights from other shareholders in order to increase their shareholding in Lonmin come subscription date.

[diku] 24/11/2015 10:37

1p and then 0.8p and then a rally to 1.5p....Strictly No Advice Intended...

[lazyhisnibs] 24/11/2015 10:36

Thanks for your reply Chris but I thought the time for buying shares with rights passed last week on XX date or whatever it is called. If that is correct why are some buying or trying to buy rights.

[lazyhisnibs] 24/11/2015 10:31

Thanks Elvis but at the moment I'm seeking clarity on the very basics as per my questions.

The rest of it is noise unless trading them currently which I'm not. As for future value I may as well be as open minded as possible as no one knows when platinum will turn next and no PI knows what impact the PIC might have on the prices of LMI and LMIN in the next couple of weeks. They may not know themselves.

[chrisbr777] 24/11/2015 10:31

Lazy, the below explanation is not correct. Each share held going into the RI will entitle you to 46 rights. (As opposed to one right entitling you to buy up to 46 shares). Therefore each right will need to be separately purchased if you want "IN". There are currently 27Bn rights floating about, which if fully subscribed become 27Bn shares.

[elvisrocks] 24/11/2015 10:21

Lazy, Typo 56 got it spot on when he gave this formula. At the moment, the value of LMI/LMIN are barely above RI cash that will be raised, and there is p...s taking on people trying to buy the rights cheap. Put some sums against this formula:

LMI [cum rights] = 47*LMI [ex-rights]-46

On a TERP of 1.19, or right of 0.19, (day it went ex-rights), old money = 10p
On a trading Ex Rights Price (ERP) of 1.30, right of 0.30 etc today, old money = 15p
On a trading ERP of 1.40, Macquarie, old money = 20p
On a trading ERP of 1.50, old money = 25p

On a trading ERP of 2.30, where Kojak thinks Lonmin is compared to Implats / Sibanye, old money = 62p. This is roughly the same as Lonmin being valued at 50% of its "kitchen sink-ed" balance sheet after the RI.

Consequently, Magara is right, the big value uplift comes when we reach fully paid rights, and between now and then, it's p.... taking by experienced traders trying to get you to sell your rights cheap so they can make a fast buck over the next week or so or hold until fully paids.

Thus, demand for these rights is actually high, but people are taking the p...s at the moment.

[lazyhisnibs] 24/11/2015 10:07

Would someone or someones in to the basics and subtleties of the process let me know if I'm wrong with anything that follows:

Buying a LMI share at this stage costs in the region of one and a quarter pennies plus costs including broker fees, stamp duty and will be subject to a spread as per normal. (I understand the price is dynamic and can go up or down.)

Buying a right to take up to 46 shares at 1p each on December 10th costs a fraction of a penny. (Typo56 mentioned 0.07p yesterday which value is also dynamic.)

On the 10th one has the right but not the obligation to take up to 46 shares at 1p each for every right held. There is nil spread but presumably there are broker fees.

One could buy any number of shares from 1 to 46 at 1p for each right held provided the broker has the necessary go ahead.

If by the 10th the rights have not been exercised in part or in full then then they will lapse with nil value.

What have I got wrong?

PS: I'm not planning on buying shares before the RI dust has settled.