Your queries answered by DOMINIC COYLE

Is Greencore’s rights issue value for money?

Q: I am a shareholder in Greencore. I have received mail stating that Greencore is undertaking a rights issue to raise additional capital of €80 million. The new shares are 46 cent each. This would cost me €1,770. Is this good value? – Mr EW, e-mail

A:  Greencore is looking to fund its proposed acquisition of British food group Uniq and is offering existing shareholders the right to acquire five new shares in Greencore for every six shares they currently hold.

At the offer price, 46 cent, the rights issue marked a 52 per cent discount on the price the shares were trading at prior to the announcement. However, the shares dipped as low as 55 cent after the EGM to approve the Uniq deal last week – in part due to global stock market volatility – and are now trading around the 60 cent level.

Investing in the issue must be on the basis that you believe that the Uniq deal – and the company’s decision to relocate its main listing to London – will add value. Only you can answer that question. Projecting longer-term stock market value of any company in the current climate is, in large part, guesswork.

There is, of course, nothing to stop you exercising your rights over some of your shares if you are inclined to invest but are worried about the outlay of such an amount at this time.

In negative equity, should I sell or rent?

Q : I'm looking for advice regarding whether I should rent out a property our sell it. I owe €190,000 and am in negative equity of about €50,000. Would it work out better financially for me to clear the debt or to rent out the house and hope to sell as the market starts to improve? I'm obviously concerned that holding onto the property could cost me more than the negative equity in the long term. – Ms MB, e-mail

A: I am assuming from your question that, while you are in negative equity on this property, you are not in arrears. In terms of assessing your options, this is the most critical issue.

It is clearly not a seller’s market and in such circumstances, the only reasons to sell now are: one, you are struggling or will in future struggle to meet your debt repayments, and/or two, you believe that, given the property’s location, any general market pick-up will not be sufficient to raise the value of your particular property and reduce the current level of negative equity.

In any case, if you were looking to sell in a position of negative equity, you would need to reach agreement with your mortgage provider on how that negative equity would be repaid. You owe the bank €190,000 and, even in the current market, it is unlikely to be happy to write off over a quarter of this sum unless there are no other options. In a situation where you are meeting your repayments, it is unlikely to be amenable to a write-off.

So why not rent? Why not indeed. The main issue here is what you can expect to get. Will it match your net outgoings, most particularly the mortgage?

There is no way of guaranteeing that your negative equity will not increase, at least in the short term. The real question is how long you can afford to wait for an upturn?

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.

Please send your queries to Dominic Coyle, Q&A,The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@ irishtimes.com