1) You do not own shares of Coca-Cola. You own an interest in shares of Coca-Cola HBC. Coca-Cola HBC is a Coca-Cola bottler that serves Eastern Europe. When Putin has a Coke, Coca-Cola HBC put it in the bottle. It's a fine company and all but it is not the same as the company that Warren Buffett ownbs lots of stock in.
2) This notice has nothing at all to do with warrants and I seriously doubt that warrants exist on this ADR (I can't think of any ADR"s ever that had warrants but the world is a big and rich place).
3) Coca-Cola HBC has decided to end their ADR program. An ADR is a bunch of shares put in a trust held by some bank in the US and then sold to you in USD. The ADR is sponsored by the company which means the company has reporting requirements to the SEC and can trade on major stock exchanges (here the NYSE). It's likely that Coca-Cola HBC decided that the volume of trading in the ADR didn't justify the reporting hassle so they are nuking it.
4) They are now giving you three choices:
a) Convert to an unsponsored ADR. This means that the stock you own will go from the NYSE to some OTC market and the company will have no reporting requirements to the SEC. Whoever is holding the trust now will likely continue the trust and say that if you are dumb enough to leave your shares in an unsponsored ADR, they will hold onto them for you. They can even do stuff like take away the voting rights of the shares held in the unsponsored ADR (I am not saying they would..). If your shares are illiquid now, just wait until that happens. There will be no market maker and these stocks will be part of your estate someday. Meanwhile you will be bottling Coke for guys to drink while firing Buk missiles at jetliners.
b) Convert to ordinary shares.
These shares would be shares on whatever stock exchange is the primary exchange for Coca-Cola HBC which I believe is London's LSE. These are vastly more liquid but they are denominated in GBP, not dollars. That gives you some currency issues in your portfolio (which are present but unobserved in the ADR). This is way better than a) unless you like illiquid investments that someone will convert into dollars for you.
c) Sell this now and let someone else worry about it.
Please forgive, but this investment is too advanced for you. You don't even know what it is. Sell the shares, use the money and buy KO at the market. You will be much happier in the long run and you won't be providing Putin with Coke and Fritos.
5) " Basically the value of the sponsored ADRs will be the same, roughly, as unsponsored ADRs" is completely silly.
Where does the word 'warrant' appear???
It says HBC AG sponsored ADRs will terminate and that you can convert into ordinary shares or continue to hold ADRs but unsponsored. Basically the value of the sponsored ADRs will be the same, roughly, as unsponsored ADRs or as the ordinary shares. Personally I would ask Fidelity for advice (that's not investment advice, which you won't get, but advice on where is the best place to hold this stock from a technical point of view). You need to know which shares (ADRs or ordinary) would be the easiest to trade, in the future, considering where you are domiciled.
Hello,
I own some of Coca Cola stocks via Fidelity and received a notice from Fidelity regarding whether or not I wish to exercise warrants.
I will copy and paste the content of this notice below:
-------------------------------------------------------------------------
Description: COCA-COLA HBC AG SPON ADR EA REPR 1
Offered By: COCA COLA ADR TERMINATION
THE TERMINATION ON COCA COLA HBC SPONSORED AMERICAN DEPOSITORY RECEIPTS
WILL TERMINATE EFFECTIVE AUGUST 1, 2014.
HOLDERS WILL HAVE THE OPTION TO CONVERT THEIR ADR'S INTO THE UNDERLYING
ORDINARY SHARES ON A 1 FOR 1 BASIS (ISIN: CH0198251305).
HOLDERS WHO CONVERT WILL BE REQUIRED TO PAY A CANCELLATION FEE OF $15.00.
THE ADR FEE IS $0.05 PER ADR ROUND UP TO THE NEAREST 100 PER TRANSACTION,
AND ANY TAXES OR GOVERNMENTAL CHARGES.
HOLDERS WHO DO NOT CONVERT INTO THE ORDINARY SHARES WILL HAVE THEIR
SPONSORED ADRS AUTOMATICALLY CONVERTED INTO THE UNSPONSORED ADRS WITH A
FEE OF $.05 PER ADS.
-------------------------------------------------------------------------------
If I wish to exercise my warrants, I need to call Fidelity and ask them to complete the transaction. Otherwise, I just let them expire.
As someone with little to no knowledge on this subject, I have no idea which would benefit me more in the long run: exercise warrants or not.
Any help from someone knowledgeable would be appreciated.
Thanks so much!
