N Brown open offer

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3rd Dec '20 by john2

8 comments 764 reads

I am currently intending to take up my guaranteed allocation of the N Brown (LON:BWNG) open offer. This entitles me to buy shares at 57p. The current market cap is £182m, they are looking to raise about £100m. The price has been gyrating wildly this week - up 12% or so yesterday, down 7% or so today. Obviously I will wait until the last moment before taking up the offer, but I have to make a decision by noon on the 10th and I will not receive the shares until the 23rd. Presumably the share price will fall immediately after the new shares are created.

Should I really be looking for a price further above 57p than the current 63p before committing to buy?

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John2

Premium Member

8 comments

Gromley

3rd Dec '20

Hi John,

I don't think there is any reason for the price to fall when the shares are actually issued. The market is effectively already pricing this in as a done deal (it is I believe).

The key date when you would normally expect a price change would be on the entitlement date ie the date on which would have to own the shares to qualify for the offer. Prior to that date you are buying or selling shares with the option to buy more at the offer price attached; after that date you're just buying or selling standalone shares.

In this case through, the entitlement date was the same as the date of announcement and as the offer price was essentially at par (neither a discount nor a premium) it was a pretty neutral event anyway.

It certainly makes sense to wait to the last minute to commit as some black swan announcement could come out before hand (probably unlikely).

I don't really think how far ahead of the offer price the share-price may get is really that relevant to your decision.

The only real thing to look out for would be if the share price dips below 57p before you need to commit. In this event it would make sense to buy in the market rather than in the open offer (so long as there was enough margin to cover dealing costs & spread etc.) It looks as though there was a chance to do that for about a week after the announcement (not sure why) but I doubt whether that will happen again in the next week.

It is a while since I looked at N Brown (LON:BWNG) ; at that time I was concerned about how they were managing their customer credit - however just looking at the fundraise in isolation then I would deem it to be positive. Also the potential demise of Arcadia, Debenhams & Bon Marche are potential positives for Brown's

john2

3rd Dec '20

Thank you Gromley, I was worried that the presence of more shares would automatically reduce the share price. Obviously I will wait until the last possible moment, but you have set my mind at rest about the share dilution.

mercury61

4th Dec '20

what was the entitlement date ? I can't seem to find that info.

john2

4th Dec '20

The offer is an extra 11 shares for every 18 held at close of business on November 4th.

mercury61

4th Dec '20

Thanks! I missed it then. GL

obayesshelton

4th Dec '20

Hi John, do you have a link to this? I cannot find the article/RNS?

john2

4th Dec '20

This information came from a secure message sent to me by Hargreaves Lansdown.

Gromley

4th Dec '20

You can find the full prospectus here : https://data.fca.org.uk/artefacts/NSM/Portal/NI-000014427.pdf

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N Brown open offer

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John2

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