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Rayner Fund - HSBC Rights Issue.

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A decision made (01/04/2009) regarding: Rayner Fund - HSBC Rights Issue.

Decision Reference:  MD-TR-2009-0046

Decision Summary Title:

Rayner Fund

Date of Decision Summary:

1st April 2009

Decision Summary Author:

Jason Turner

Deputy Treasurer

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title:

Rayner Fund – HSBC Rights Issue

Date of Written Report:

1st April 2009

Written Report Author:

Jason Turner

Deputy Treasurer

Written Report :

Public or Exempt?

Public

Subject: 

Rayner Fund – HSBC Rights Issue

Decision(s):

The Minister approved exercising an option to purchase 8491 HSBC shares under a rights issue.

Reason(s) for Decision:

The Ann Alice Rayner Fund administered in trust by the States has a holding in HSBC Bank Plc.  The bank has a rights issue in which existing shareholders are able to participate.

Resource Implications: 

Other than those detailed in the report there are no further financial or manpower Implications.

Action required:

Treasury Investment Officer to inform Northern Trust of the decision.

Signature: 
 

Position: Senator PFC Ozouf, Minister for Treasury and Resources

Date Signed: 1st April 2009

Date of Decision: 1st April 2009

Rayner Fund - HSBC Rights Issue.

Alice Ann Rayner Fund – HSBC Rights Issue  

Background  

The Alice Ann Rayner Fund holds shares and cash totalling approximately £1.7 million.  These funds are held in trust by the States in accordance with a bequest made in the 1940s.  The fund holds 20,379 shares in HSBC. 
 

HSBC Rights Issue  

As a HSBC shareholder the fund can participate in the HSBC rights issues.  This issue offers existing shareholders the right to purchase additional shares.  The fund’s holding of 20,379 shares entitles it to purchase an additional 8,491 share at £2.54 pence per share, a total cost of £21,567.  The fund holds sufficient cash to make this purchase. 
 

Recommendation  

The States Investment Advisor recommends that the fund exercises its option to purchase shares under the rights issue.  This advice is attached at appendix A. 

 

Appendix A  

Advice from the States Investment Adviser  

Given that you have sufficient available cash, the stock is trading above the rights price, I believe that you should take up these rights.   This does have the effect of increasing the total exposure to equities by just over £21k but this does not seem unreasonable given the current market conditions.  You could alternatively sell the nil paid rights in the market, but given the logistics/timing it is probably easier to take up the rights and separately consider the diversification issue which this holding brings. 

David Hager MA FIA FPMI FSAI  
Global Investment Practice 
Hewitt

C:\Documents and Settings\turnerj2\Desktop\Alice Ann Rayner Fund.doc

 

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