Aviva 8 3/8% Pf Discussion Threads

[spectoacc] 12/3/2018 18:06

@Ptolemy - prefs have 4x the vote of the ords, but of more interest is how many pref holders also have ords (thinking more institutional investors, and mainly investment trusts at that). Makes any vote not so straightforward..

I don't doubt that AV. have taken advice; I also don't doubt that if that advice was a dead cert, they'd have announced the cancellation last week, not announced "We're thinking about it". Enough debate everywhere, and previous court cases, to imagine that cancelling "Irredeemable" shares isn't easy.

Ecclesiastical's comment re Aviva today is well worth a read.

Personally, it feels like a softening up exercise gone badly wrong, and I'm moderately confident that Aviva will reverse-ferret, quietly, within a matter of weeks. But anything's possible, and even if I'm right, prefs seem tarnished as an asset class now (though see ELLA's recovery today - pretty much back to where they were).

[ptolemy] 12/3/2018 18:01

I do not hold Aviva preference shares but would like to if the risk / reward appears favourable.

I think its important to accept that this is unlikely to be 'softening-up exercise' by Aviva management. Before suggesting such a bold move they undoubtedly have taken expert advice and believe the goal is achievable.

A number of potential concerns hold me back from purchasing at these attractive levels and I've not seen these mentioned on any of the threads I've read.

Firstly, it appear both preference share holders and ordinary share holders get to vote on the issue, since the 'share class' of prefs is 'equity'. Ordinary shareholders must out-number pref holders by many times (any idea by how many?), and given it's in the former's interest to see cash staying in the company, won't ordinary holders vote overwhelmingly for the proposal?

Secondly, and here my recall is very rusty, but isn't it the case that preference shares held in nominee accounts - which I'm guessing is the majority where ownership is by a PI - are entitled to the single vote of the broker holding the shares. If true - and I stress I can't properly recall - this ought to compound the issue raised above and increase the probability of redemption.

[hpcg] 12/3/2018 17:25

Still not much attention being paid to page 41 3b which is explicit about rights under a reduction of capital, which is the mechanism Aviva propose.

[spectoacc] 12/3/2018 16:37

That is a good summary, and much as I think, though I'd go further and suggest that if AV went ahead, they may not even get sufficient votes from the ords for it to go through.

Of course, I say that as a holder now of AV.B.

[spittingbarrel] 12/3/2018 16:22

Excellent summary by Avidya on Lemonfool here:

[spectoacc] 12/3/2018 13:38

Agree on the GA ones. Nicked this from YieldSearch, posted just now on other threads:



Not sure how the "75% of pref holders to vote for it" has come about - could potentially save even GACA/B, but not a gamble I'm taking.

[hpcg] 12/3/2018 13:34

I bought some today having cogitated over the weekend. The Additional Information section does it for me, it is explicit about the process for a reduction in capital with respect to the for CU preference shares. I do have a feeling this might be contradicted by the law subsequent to those terms but I think it will be a long enough legal process. The former GA are much different and I don't see why they should trade together. I just need 4 dividends to more or less get to par and this is such a minuscule proportion of my portfolio, about my daily beta or even less, that the outcome is immaterial for good or ill. I'm just being opportunistic with surplus cash looking for a home.

If I were to guess an outcome I would imagine they'll tender at 1.4-1.50 or something like that. They could do that off the bat with cheaper debt no doubt, if they needed to, which they have said they don't.

[speedsgh] 09/3/2018 07:27

#AV.A #AV.B #GACA #GACB

Small investors hit by Aviva bond buyback -

[kenny] 09/3/2018 01:30

To all holders of Av and GA preference shares - although I am not a holder I have done some research and please see my comments on the AV.a board at posts 326 and 327.

[actuary78] 08/3/2018 21:48

I don't know how they can do this.

Page 41 of the original listing terms says:

On a reduction of capital the price will be a max of £1m and the average of the previous 6 months share price

If they have made this announcement to reduce the share price that is market manipulation.

Any variation of rights requires a 3/4 Yes vote from the class of share in question ie. preference share holders who wouldn't agree at current low interest rates.

Not Ordinary shareholders and preference shareholders combined - as per their statement - suggesting ordinary shareholders can bully preference shareholders

[holts] 08/3/2018 16:31

para 4.iii in terms of gaca is the problem 'on a return of capital otherwise than on a winding up ' you are entitled to a par payment , accrued , and ant premium you paid if you bought at issue , at least that's how I understand the terms .

get reading the terms again for all your prefs

[yf23_1] 08/3/2018 16:21

It says on the Aviva site :

"We noted at our 2017 full year results that we have the ability to cancel the preference shares issued by Aviva plc and GA plc, at par value (plus accrued interest, arrears and in the case of GA plc, issue premium), through a court approved reduction of capital, subject to the approval of the relevant issuer's ordinary and preference shareholders voting together."

Advice to phone Computershare...they state that the Aviva Client Manager (whatever that is) says its only pref holders would vote.

WTF, this is disgusting. They may just be spooking the market to acquire them on the cheap.

[nerja] 08/3/2018 16:09

No for me as well, it looks like the real bid/sells are the one goin much lower and the buys are around the bid level, bought in the past below the bid so don't trust whats going on, the lower values trades give the better guide for me

[jonwig] 08/3/2018 16:05

nerja - lol ... probably not. Need some confirmatio opinion.

[nerja] 08/3/2018 16:02

Jonwig have you got gonads to buy any?

[jonwig] 08/3/2018 15:19

On a quick look at the terms, AV.A and AV.B can only be redeemed with the consent of the prefs holders. That particular clause doesn't seem to be in GACA which might therefore be most vulnerable. (See part II, Section 4 Capital in each prospectus.)

[jonwig] 08/3/2018 14:31

The terms can be downloaded here:

[jonwig] 08/3/2018 14:16

rik - luckily I sold mine around 12:30 and wondered whether I'd made a mistake - after all, if only pref holders can vote they're unlikely to act like turkeys at Christmas! Incidentally, GACA are down even more!

Need to check the terms of the prefs over the weekend! Then maybe a speculative buy back.

It's xd - was that the fall first thing or early Feb??

[rik shaw] 08/3/2018 13:42

jonwig- thanks for posting this. Its starting to have a big impact on price. Not sure how irredeemable shares can be redeemed but sounds as if they know a way...

[jonwig] 08/3/2018 11:41

From AV.'s FY results:

In 2018, we have signalled our intention to reduce hybrid debt by £900 million. We are targeting more than £500 million in additional capital returns, incorporating liability management and returns to shareholders.

In this regard, we have the ability to cancel preference shares at par value through a reduction of capital, subject to shareholder vote and court approval. The preference shares carry high coupons that are not tax deductible and they will not count as regulatory capital from 2026. As we evaluate the alternatives, one of the things we are considering is how to balance the interests of ordinary and preferred shareholders. We
have committed €130 million to acquire Friends First in Ireland and have further appetite for bolt-on acquisitions in our major markets. Any unused M&A budget will be diverted to further reduce debt balances or fund additional returns.

I doubt pref. shareholders will vote for this, but I'm not well-versed in their Articles - maybe ord holders have a vote too?

[yf23_1] 29/11/2017 20:18

Has anyone noticed AV.A storming ahead.
With its divi payment before AV.B by 3 months worth 2.2p difference, it still leaves AV.B looking cheap by comparison.

[yf23_1] 04/7/2017 20:41

very tight spread on these now.

[uppompeii] 04/7/2017 16:28

On reflection it was a good decision. Surprised the thread is so quiet.

[uppompeii] 08/12/2016 10:41

Just bought some av.b for my sipp, seems as good a time (or not) as any.