What is an Open Offer?
Those clients who hold on ex date of an open offer will be entitled to purchase more Ordinary shares in the company at a price normally discounted to the market share price, in proportion to their existing holding.
Entitlements from an Open offer are not tradable and therefore an open offer is only available to existing shareholders.
An Open Offer gives only 2 options: Take up your entitlement or Lapse your entitlement. If you allow your entitlement in an Open Offer to lapse you will not receive any lapsed proceeds.
Open Offer Example:
If the terms of an open offer are for example:
- 6 new shares for every 3 shares held on ex date at GBP1 per share
- If you held 100 shares on ex date you would be entitled to apply for a basic entitlement of:
- 199 new shares (100/3x6 = 199) at GBP1 per share - which would be a total cost of GBP199
- If the terms of the open offer allowed for excess applications in addition to your basic entitlement, taking the example above this would mean that you could apply for any number of new shares in excess of your 199 shares at the same price of GBP1
- This excess application can be subject to being scaled back which would mean you may not get as many shares as you originally applied for. However, as per the example above your 199 shares would be guaranteed.