F&C Global Smaller seeks to raise £40m but curiously discriminate against smaller shareholders


#1

F&C Global Smaller Companies has announced plans to raise up to a £40m debt facility that can be converted in to shares, but the offer has been de
[See the full post at: F&C Global Smaller seeks to raise £40m but curiously discriminate against smaller shareholders]


#2

How do they get away with things like this. honestly, its robbing from the majority of shareholders to pay the few.


#3

For the shareholders that are allowed to participate, does it look like a good or a bad deal, and on what do you base your opinion?


#4

It does look attractive for holders that qualify in my view @warrantstar, and I think it will be popular.

It gives you a much higher yield than the ordinary shares which are yielding around 0.8%, against the CULS 3.5%. Also you get capital protection and the option of participating in future growth in the NAV.

The price you pay is you convert at a 15% premium to today’s NAV. If the NAV increases sufficiently then you might be minded to convert. If it doesn’t then you can keep drawing your 3.5% until maturity in five years time.


#5

F&C can redeem the CULS early too, there are a couple of stipulations there but that is a common with CULS.

I agree it is a pretty attractive offer, I only qualify for an allocation by £1,234 (my holding is worth £12k odd), but whilst it might indeed not be too fair on smaller shareholders it is a good opportunity for me which I am taking.


#6

I have it as well and I’m entitled to subscribe for this CULS offer but I have never heard of one of these things and there is very little information available on it.

I found this article here via Google. It is interesting to get a view on it because I’d no idea if this was a good offer or not.


#7

Are you minded to subscribe to the offer @nicholasproy or are you still unsure?

And what about you @warrantstar?


#8

Thank you all. I will subscribe as much as the offer allows. This appears to be 100% of my basic entitlement plus an additional 125% of my basic entitlement, making a total of 225%.
The main attraction for me is the possibility to convert later on at a discount of 15% to today’s NAV.


#9

I’m trying to figure out if I’m loosing out as a small shareholder in FCS but I’m not sure if I’m completely understanding it properly.

When the holders of CULS start converting in to equity will that dilute my holding?

I’ve looked through the documents on this but by jeez, they don’t like to write in plain English do they, not where a confusing and elongated paragraph or 50 will do!


#10

You buy it at a premium to NAV @warrantstar unless I’ve read it wrong and I don’t think I have. So you would only elect to convert if the NAV has appreciated more by at least 15%.


#11

Thank you @Benedict. On closer reading of the article on here, I think you are correct that the subscription price would be 15% higher than the NAV at the time of the start of the loan. This is obviously a lot less than the 15% discount that I thought was on offer. So I’m not sure that I can be bothered with it. It all depends on how much the NAV goes up by 2019. But it is worth remembering that subscribing to the loan doesn’t actually commit anyone to converting to shares, it just gives the option to convert to shares.
Does anyone know what the institutional share holders are doing about the offer?


#12

I think the trouble with this process is it is overly complicated @warrantstar as @nicholasproy illustrated.

Couldn’t you chaps at WhichInvestmentTrust.com persuade someone from the Board or F&C to answer a few questions? You must have some contacts there surely.


#13

I’ll have a go and see if I can get someone from F&C to respond to your queries.

If anyone have any other questions or if there’s something they don’t understand post them here and I’ll pass them on too.


#14

I’m not sure if I will buy it or not. I like Benedict’s idea (or is it @Benedict like Twitter?) though I doubt that someone from F&C will come on a forum. We are shareholders though so I think they should.

What I want to know what are all the advantages and disadvantages of participating in the CULS? In plain English please would be great.


#15

I’d like to know in the event that the Board choose to cancel the CULS early do we still convert at a 15% discount to NAV even if that would result in us making an overall loss?


#16

F&C have very kindly agreed to respond to any queries or questions anyone has.

Please submit them here and we will forward them to them for a reply early next week.

@CityGirl @warrantstar @nicholasproy @Benedict @londondylan


#17

There is a discussion about this topic on Motley Fool forums. I’ve invited people on there to either come here themselves and ask questions or ask them through me.

The forums on Fool are pretty good too and free to join if anyone wants to have a look.

www.fool.co.uk


#18

It’s good to hear that F & C will answer questions about this. What I would like to know is:

What would be the total gain to a shareholder who owns 1000 shares, invests 100% of his basic entitlement in CULS, doesn’t convert into ordinary shares until the last minute if a) NAV rises at 5% per annum and b) NAV rises at 10% per annum? Can we see how the calculations are made?

Potential investors could then put their own assumptions into the calculation instead to enable them to figure out whether they want to invest or not.


#19

The prospectus tells us the trigger by which the company might invoke an early, compulsory redemption or conversion of the CULS. As this is at the company’s discretion rather than being an obligation, what are the circumstances - economic or otherwise - that would persuade the company to invoke its option?

Conversely, what are the circumstances under which the company would choose to not invoke when it is able to do so?


#20

Can I second @arkwelder’s question because I’d been wondering exactly the same thing. It is not clearly explained in the prospectus.