AMP's Share Purchase Plan - Opportunity or a Trap?

I happen to own some AMP shares. They are offering a share purchase plan (SPP):

Eligible shareholders who take up the offer will receive shares at the lower of $1.60 per share or a 2.5 per cent discount on the volume-weighted average price at which AMP trades between 30 August and 5 September.

Eligible shareholders can elect to buy shares worth of $1000 / $2500 / $5000 / $7500 / $10000 / $15000

The current share price is $1.80, which makes the SPP rather attractive (~11% discount). However AMP been crap and the current economic environment is not helping. On the other hand it looks like AMP been beaten into the ground already.

I would appreciate your opinion.

Poll Options

  • 19
    Avoid SPP
  • 4
    Go for it (moderately)
  • 0
    Take full use of it

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Comments

  •  

    Um. Do read up on the most recent news regarding AMP:

    AMP plunges to $2.3b first-half loss and asks shareholders for another $650m

    AMP advisers shocked and furious

    ASIC examples AMP/Clayton Utz in enforcement outcome

    Why AMP and these ASX shares just sank to 52-week lows

    AMP to raise capital after $2.3 billion loss

    Though the stock market has likely already priced these events into the current price of AMP shares, so the discount might still be valid.

    On the other hand it looks like AMP been beaten into the ground already.

    This is true, but personally I wouldn't. If AMP had any better options, they'd be capital-raising elsewhere. Share plans tend to be (not always, but quite often) offered when the company can't raise money elsewhere and for some reason feel they need to offer steep discounts to raise money.

    Considering I trust a company to be in the best position to know about its financial circumstances, I'd be very worried about why AMP feels like they need to offer their shares at a 11% discount.

    • +1 vote

      They done this before (2003) and it was a success for both the buyers (very few had the courage) and the company. However I am asking myself a simple question: would I buy more if the market went down(very realistic scenario) to $1.6? The answer is NO, I am not throwing good money after bad.

    •  

      Considering I trust a company to be in the best position to know about its financial circumstances, I'd be very worried about why AMP feels like they need to offer their shares at a 11% discount.

      They priced it at a 2.5% discount. Anything else is just market forces … yeah, stock markets have been down around the world for the past week.

      •  

        I was going off of OP's

        at the lower of $1.60 per share or a 2.5 per cent discount

        The current share price is $1.80, which makes the SPP rather attractive (~11% discount)

        And yeah - everyone's feeling rather bearish these days. Brexit, US-China trade war, HK protests, etc.

  • +5 votes

    If I had >15k worth of AMP shares, I could take full offer, but sell at least $15K of AMP shares today at 1.80. This means I will still end up with some AMP shares, so I'd only do this if I want to remain exposed to AMP.

    •  

      Sounds very reasonable, thank you. That should also create a CGT loss which may be not a bad thing.

  •  

    Also look at the key dates in the offer letter. If you can make 11% by holding for 1-2 days, its definitely worth considering.

  •  

    I'm not an accountant, but I'm fairly sure you can sell your AMP shares now and still be eligible for the SPP. So the option is there to sell now, lock in the $1.80 price, and buy back the shares you sold at $1.60 (up to $15k worth). But if the offer is oversubscribed, you will probably get scaled back (ie won't get as many shares as you applied for).

  •  

    There is a current class action lawsuit being run by slater+gordon against AMP representing former clients. I think the bleeding is far from done

  •  

    The real question is why are you still an AMP shareholder?

    •  

      The rest of my bets during the Royal Commission worked out fine. AMP seem to bear the punishment alone on behalf of the whole industry.

  •  

    looks like AMP been beaten into the ground already.

    they said this when price dropped to $2.5, then $2, and what now?

    i dont follow this stock but my gut feeling is telling me to stay away from it. unless your investment horizon is long like 5-10 years…

  •  

    I've had AMP shares since they gave them to us for free about 20 years ago. Kicking myself for not selling them when they were about $10. And with the way the share price has gone ever since If I hold them for a bit longer I'll be able to buy as many as I like …. For free

  •  

    Is Insolvency a risk? They seem to be making early survival moves with banking, share plans, NZ sale etc. I guess they rely on customer trust, and they have perhaps lost that for a while.

    I trade conservatively, so I would look for much better options.

  •  

    I've kept a distant and occasional eye on AMP since it listed and IMO it's been a dog the whole time. The current price doesn't make it any more attractive except as a gamble rather than an investment.

    Sink $5k in if you can afford to have the money floundering about waving it's hand at the shoreline. Maybe setup a stoploss for $1.25

  • +1 vote

    Well, that was a tidy 15% profit.

    •  

      Yes - but I'll wait a year to sell them and take the tax loss by selling off the original shares. Happy with that outcome. I see there was no scaling back of requests

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