HSBC Holdings plc (HSBC, Stock Code: 5) announced on 2 March 2009 a proposed rights issue of five New Ordinary Shares (Rights Shares) for every 12 Existing Ordinary Shares at $28.00 per Rights Share. HSBC also declared a fourth interim dividend for 2008 of US$0.10 per Ordinary Share. As the record date for this dividend is 20 March 2009, the New Ordinary Shares, when issued on 6 April 2009, will not rank for the dividend. These proposals are to be considered at a meeting of HSBC's shareholders on 19 March 2009.
Selected rights issue and dividend details
|
Rights Issue: |
5 for 12 at $28 per rights shares |
|
HK Record Date: |
4.30 pm on 13 March 2009 |
|
HK Ex-Rights Date: |
9.30 am on 12 March 2009 |
|
HK Record Date: |
4.30 pm on 20 March 2009 |
|
HK Book Close Date: |
20 March 2009 |
|
HK Ex-Dividend Date: |
9.30 am on 18 March 2009 |
For complete details of HSBC’s proposed rights issue, please refer to relevant HSBC announcement.
In connection with HSBC’s corporate action, The Stock Exchange of Hong Kong Limited and the Hong Kong Futures Exchange Limited, both subsidiaries of Hong Kong Exchanges and Clearing Limited (HKEx), announced the following adjustments for the trading of HSBC shares, HSBC stock options and futures, and structured products (eg derivative warrants and callable bull/bear contracts with HSBC as the underlying asset).
Adjusted previous closing price of HSBC shares on 12 March 2009
Adjustment will be made to the previous closing price of the Ordinary Shares of HSBC on the Ex-Rights Date, 12 March 2009, to account for the rights issue. The theoretical ex-rights price will be calculated in accordance with the following standard formula:
(S-D) x 12 old shares + ($28 x 5 new shares) + D
17
= 12S + 5($28+D)
17
Where:
For avoidance of doubt, the previous closing price will remain unadjusted and price adjustment for HSBC will not be made on the Ex-Rights Date if the closing price of the shares on 11 March 2009 (the business day prior to Ex-Rights Date), after deducting the fourth interim dividend, is at or below $28.
The adjusted previous closing price of HSBC which will be disseminated by the securities market trading terminals on 12 March 2009, the Ex-Rights Date, is for reference only.
Structured Products with shares of HSBC as underlying asset
The listing documents of all existing structured products with the shares of HSBC as underlying asset contain provisions that deal with a rights issue of underlying shares. Structured product issuers shall make announcements in the evening of 11 March 2009 regarding the relevant adjustments (including the Adjusted Entitlement, New Exercise Price and Adjusted Call Level as appropriate) and investors should study carefully the contents of such announcements.
Adjustment to HSBC Stock Options and Futures
On the Ex-Rights Date, 12 March 2009, the Adjustment Ratio (AR) to exercise price of outstanding option series and contracted price of outstanding stock futures contracts will be as follows:
12S + 5($28+D)
17S
Where:
| D = |
4th Interim Dividend of HSBC (ie $0.78, where the USD/HKD exchange rate of 7.80 is used for the HKD conversion of ordinary dividend US$0.10) |
For avoidance of doubt, the objective of this adjustment method is to adjust the options and futures contracts according to the theoretical value of the rights entitlement if there is a positive value before the Ex-Rights Date. If there is no exercise value with the rights, ie, the underlying price closes, after deducting the fourth interim dividend, at or below $28 immediately before the Ex-Rights Date (ie AR is equal to or larger than 1), no capital adjustment will be made.
There will be no change in the parallel trading arrangements for the options and futures contracts set forth in the news release on 5 March 2009.
HSBC Futures Formulas
Where:
|
D = |
4th Interim Dividend of HSBC (ie $0.78, where the USD/HKD exchange rate of 7.80 is used for the HKD conversion of ordinary dividend US$0.10) |
Exchange Participants and investors should note that capital adjustments, once made, are conclusive and binding on all transactions in the HSBC shares, structured products and futures and options contracts.
HSBC shareholders’ meeting to approve capital adjustments is dated after the capital adjustments date. Such capital adjustments will not be reversed even in the event that the rights issue proposal is rejected at the shareholders’ meeting.
For any questions or enquiries, investors should consult professionals such as Exchange Participants or qualified financial advisors.