This morning I have received an email from COL Financial (my online stock broker) that I’m entitled to subscribe additional shares of MBT at a discounted price, meaning I can buy it at a lower price than its current price in the stock market.
MBT is the stock code of Metrobank in the stock market.
If you received that email also and have MBT in your portfolio, I know the first thing that came into your mind….
What is Stock Rights Offering or SRO?
And here’s the definition I have searched on the internet. (Google is my bestfriend.)
DEFINITION OF ‘RIGHTS OFFERING (ISSUE)’
An issue of rights to a company’s existing shareholders that entitles them to buy additional shares directly from the company in proportion to their existing holdings, within a fixed time period. In a rights offering, the subscription price at which each share may be purchased in generally at a discount to the current market price.
Companies typically issue rights to give their existing shareholders the opportunity to buy additional shares before other buyers, and also to enable current shareholders to maintain their proportionate stake in the company. (source: Investopedia.com)
I want to explain it as simple as possible.
Companies offer stock rights to their shareholders to raise capital for business expansion, debt payment, etc.
In order to give priority to their existing shareholders/stockholders, companies offer these additional shares to them first.
That’s why it’s called “rights” and of course, shareholders can buy it at a lower price than the current price in the market. (Mas mura mabibili kumpara sa price nya ngayon sa stock market.)
The number of additional shares that you are entitled to buy will be based on the number of shares you currently have.
The more shares you have, the more additional shares you are entitled to buy. (Pantay-pantay, proportion lang.)
For example, the Stock Rights offer of MBT:
How many Additional Shares can I buy?
For example, you currently have 100 shares of MBT. The offer ratio is 1:6.3045 ( 1 is to 6.3045).
Divide 100 shares by 6.3045. The answer is 15.86.
That means you can buy 15 additional MBT shares at P73.50 per share on or before March 23, 2015, 3:30 PM.
Current price of MBT is P93.60 as of today, March 19 6 PM.
Note that the Board lot of MBT is 10. If you buy all the 15 shares and decide to sell the shares on April 7 (Tentative trading date above), you can only sell 10 shares because the other 5 is less than the Board lot.
Board lot means you can buy or sell MBT shares by 10 only…10, 20, 30, 40…and so on.
Can I buy MBT today so I will be included in SRO?
No. If you have no MBT in your stock portfolio before the Ex-date, March 13, 2015, you are not entitled to the stock rights.
You can buy today, but you are not included in the SRO.
How to buy the additional shares?
If you are using COL Financial as the online stock broker and you are entitled to the stock rights, I’m sure you have received their email already including the number of additional shares you can buy.
Log-in to your COL Financial account, click Home Tab and you will see this (Texts with green background):
Click that and follow the next instructions.
What’s your decision, avail or ignore MBT SRO?
By this time, maybe you know already if you want to avail the stock rights or just ignore.
If you want to avoid the headache of deciding what’s your next move to maximize your earnings in the stock market and just want to leave it to the experts and just focus on your job or business, but at the same time you have the control by directly investing in the stock market, join Bo Sanchez’s Truly Rich Club.
The club is my guide from the start until now. I heard this news first from them and they already advised their members what to do with this SRO.
If you want to know more about TRC, watch their new video below.
To our success,
Janice Medes, CPA