help with consolidation letter please

[happyhero]

Hi apologies if this is in the wrong place but I am a bit of an amateur trader and did not know where this should go.

I have received a letter for some shares I own in Micro Focus International PLC and I don't really understand it so I was hoping someone could explain it to me please.

I own the shares within a Share ISA and that is with Barclays.

The letter is titled RETURN OF VALUE AND CONSOLIDATION.

It states every 11 existing ordinary shares will be consolidated into 10 new shares.

It then says:-

Shareholders will receive one C share or one B share entitlement for each pre-consolidated ordinary share by electing for either one or a combination of the following options:

Option 1 - C share Income Option (default)
Receive GBP0.50 in cash by way of a C share Dividend for each ordinary share held.

AND/OR

Option 2 - B share Capital option
Receive GBP0.50 in cash for each ordinary share held.

I understand the 10 shares for 11 shares bit but one part I am unsure about is will it still be worth the same i.e. if I had 11 shares that ere worth £100 for example would the 10 shares then be worth £100 after the consolidation or would they lose value in this?

Also why are they doing 10 for 11 isn't the difference normally bigger i.e. 5 for 10 etc?

What is the difference between the 2 options since they both mention cash?

I assume that any cash will be put in my ISA but wont that then count as a ISA contribution for this year?

I have tried asking Barclays about this sort of thing previously and they just tell you that they cannot give financial guidance and they can still be as technical as the letter in their answers, it can get a little embarrassing when I ask questions and still do not understand.

The shares trade for about £5.70 and have performed well for me so I would prefer to hang on to them for now unless anybody thinks there is a reason I shouldn't.

Any help would be appreciated but in Layman's terms if at all possible please.

 

[NVP]

ask barclays again ..your question is not about investment but about why the share distribution is being changed ........or ask the company itself as you are a shareholder

N

 

[A Dashing Blade]

"if I had 11 shares that are worth a total of £100 for example would the 10 shares then be worth worth a total of £100 after the consolidation " . . . they should do yes.

Offering circular with helpline number here . . .
http://investors.microfocus.com/~/m...reholder-info/micro-focus-proposed-return.pdf

Simple rational is . . .
"Consistent with the Board’s policy of delivering value to shareholders, Micro Focus proposes to return a further 50 pence per share to shareholders, equivalent to approximately $130m in cash and subject to their approval, by way of a B and C share scheme. The return of value will be accompanied by a proportional share consolidation to maintain broad comparability of the share price and return per share of the ordinary shares before and after the return of value."

 

[barjon]

isn't it just a tax option? option one gives you 50p per share as a dividend = income tax. option 2 gives it you as a capital gain = capital gain tax.

 

[TheBramble]

The shares trade for about £5.70 and have performed well for me so I would prefer to hang on to them for now unless anybody thinks there is a reason I shouldn't.

There's a potential change at senior level, in fiscal structuring and product placement in Q1 2013 which shouldn't negatively impact holdings.

Active traders' current worry level is 550 and they would be considering bailing out if this became resistance rather than support. As an ISA component though, I'd sit tight for now.