I picked up CPU earlier in March and now there is an entitlement offer. Current price is around $15.20 and the CPUR is $1.60 (11.00am 30/3/21). I haven’t seen how to handle an entitlement offer. Do I treat it like a dividend and let it lapse with its value being sent to me after the closing date, or purchase extra shares at $13.55?
I’ve got the same dilemma as you. Yesterday I was given CPUR shares (because of my CPU holdings) and I’m not sure what I should do with them and when I should do it.
The CPU Retail Entitlement Offer is part of a Capital Raising scheme in which CPU is looking to raise $835 million to purchase the assets of Wells Fargo Corporate Trust Services (CTS).
As such, current CPU share holders have been offered rights to purchase more CPU shares at a discounted rate in proportion to their current holdings. (More information regarding Rights Offerings can be found here)
Please follow this link to view the Letter to Shareholders regarding the Retail Entitlement Offer and the options available to you in.
In terms of the SPA3 Investor ASX Equal Weighted Public Portfolio, this is how we will handle the Retail Entitlement Offer.
The Share Rights (CPUR) have been sold at market for $1.30. This action is consistent with previous reactions to these matters - typically we do not buy extra shares when an offer is extended!
The sale of these rights (CPUR) has also been recorded as a Return on Capital Dividend in Portfolio Manager and will be reflected in your version of BC upon re-importing the portfolio.
Your situation may be different, please ensure it is consistent with your investment plan or if there is no rule in your investment plan, write in your action to stay consistent going forward. We recognise that customers situations may be different and due diligence should be practiced.
As always, if you have any further questions, please continue the discussion below.
Thanks Vincent for how Sharewealth will handle the rights issue. I haven’t a rule in my investment account, as yet, but will add one. I am thinking that as the issue is below the action price it would be acceptable to buy them without breaking the rules. I would need to add a $ amount to the portfolio to cover the cost. Again I would need to edit my plan to cover this change. I can see that there is a risk between the prices being that the difference of the share prices are close to the issue price. That being said my original purchase share price is above the current price.
I bought 3650 CPU on 9/3/21 - but I don’t see any issue of CPUR in my portfolio (in SelfWealth) - - should I have already received these? Thanks Annabella
To cover ALL Rights issues that your portfolio may receive, you have to think about the scenario where you pay for the additional shares and the stock concerned gives an Exit signal before your account is allocated the new shares.
Thanks Gary, I didn’t think that far ahead. I only have a small cash value that would be mostly lost if sold through my broker. So it would be more prudent to use the 4th possibility and add the cash to the portfolio as Vincent suggested. Stick to the plan.
My rights appeared today on ANZ.
Mine haven’t shown up in my broking account as yet either but they should soon.
Re the queries about allocation and sale of CPUR shares as per recently announced entitlement … the CPU announcement on 24 March should provide an answer to most questions … particularly those relating to when entitlement shares will be allocated, how many and when they can be traded.