A new Lufthansa share issue this Wednesday

As of Wednesday, 6 million new shares will be offered to current shareholders, doubling the number of outstanding shares.

The new shares cost 3.58 euros each

Will I be automatically notified of this??

Notified of what? That your shares are now worth less?:stuck_out_tongue_winking_eye:

Nothing will happen. They pay back debt from the money they raised by diluting shareholders.

Correct me if I’m wrong!

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They sell the new shares to the current shareholders, they don’t just put them on the market. So your broker needs to give you the option to buy them of lufthansa.
Mebye @DemiBUX knows ore knows who to ask.

Thanks for your answer
rgds
Vincent

Hi @Vincent1, thanks a lot for your question! @JimiBUX will elaborate more on this shortly.

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Hello @Vincent1, @Frisoke and @Mike1,

I am Jimi, the BUX Zero Back Office Lead. One of our daily responsibilities is to process all corporate actions. @DemiBUX asked me to step in here and give you an explanation of what is going on with Lufthansa exactly.

First of all, this type of corporate action is referred to as a Rights Issue or Capital Increase. A company launches this type of corporate action when they want to raise more money. This could be due to a variety of reasons. For example because they need more working capital to expand operations faster, if they want to pay off a loan or because they simply want to strengthen their financial position in tough times when revenues are lower.

How does a Rights Issue corporate action work?
In a rights issue, a company raises money by issuing more shares and selling them. This generally has a negative impact on the share price because the company’s market value and dividends now need to be divided over more shares. This is called dilution. To mitigate this impact for existing shareholders, the company offers them the exclusive right to buy the new shares at a discount. In this example, Lufthansa offers existing shareholders the right to buy 1 new Lufthansa share for €3,58 for each Lufthansa share they owned on record date of the corporate action. Existing shareholders have to sign up their rights through their broker to exercise them. Not all existing shareholders may want to exercise their rights though. In that case, they also have the option to sell their rights on the market. This leaves existing shareholders with two options in the event of a rights issue:

  1. Exercise their rights and buy new shares for a discounted price;
  2. Sell their rights on the market (these are tradable for a limited time on the primary markets).

How does BUX inform me of a Rights Issue?
We send out an email to all eligible users as soon as we are notified of the corporate action by our custodian (ABN AMRO Clearing). Please note that we may not yet be fully informed by our custodian at the time of the official company announcement. We always inform our users of all details at our earliest convenience, but these corporate actions are often announced rather ad-hoc.

Where can I find more information about this Rights Issue?
You can find more information on Lufthansa’s official investor relation website: News & Mandatory Announcements - Lufthansa Group Investor Relations

I hope this helps gents. Let me know if you have any questions!

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Thanks Jimi. Very clear to me.Vincent

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Thnx Vincent1 good question!