Uncharted Territory

November 24, 2009

Lloyds Rights Issue: I think there’s a typo!

Filed under: Economics, Lloyds, Rights issues — Tim Joslin @ 11:28 am

In my earlier post, I expressed some bafflement that LLoyds say:

“Basis of Rights Issue 1.34 New Shares for every 1 Existing Ordinary Share”

since if you divide the number of new shares to be issued by the number of existing shares you get 1.34399. Suspicious those 9s, aren’t they?

I now suspect that what Lloyds meant to say was 1.344 new shares for each existing share. This would result in 36,505,301,100 new shares, 200,000 odd above the 36,505,088,579 stated. This is much closer to what would be expected since there will be some rounding down of the number of rights as 1.344 times the number of existing shares will not in general be a whole number. (Perhaps Lloyds had the data on shareholdings to calculate the number of new shares exactly).

If I’m right, the cash you need to find is 1.344 * 37p = per share or 49.728p, closer to what I was expecting than 1.34 * 37p which is only 49.58p.

Confidence-inspiring, eh?

[Note 16:40, 25/11: It turns out this isn’t a typo – there’s a different reason for the discrepancy].

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1 Comment »

  1. […] only have Lloyds apparently managed to put a typo in their rights issue announcement and seem to have based their TERP calculation on the closing price of the shares yesterday and not […]

    Pingback by Lloyds Rights Issue: TERP turpitude? « Uncharted Territory — November 24, 2009 @ 12:50 pm


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