Bristol&w.prf Discussion Threads

[old boy returns] 24/11/2010 21:42

zangdook - thanks - yes my link had been truncated and I have now corrected it. BWSA is a bit of an educated punt for me. I have spent so long researching the Irish bank situation over the past few weeks without investing that I had to do something ! You were clearly right to sell in the 80's and if it gets back that high in the short term I suspect I will do the same !

[zangdook] 24/11/2010 18:06

OBR

Your link above doesn't work, I think it's



I sold in the 80s, with difficulty, and am monitoring the situation. I don't like it enough to buy yet. Was the transfer of assets to the parent a first step on the road to winding up?

envirovision

if they do reply, please can you post it here?

thanks to all.

[montyhedge] 24/11/2010 17:57

Good luck, but I feel you will be very lucky to get a dividend again for years.
NR, B&B, West Brom BS, nothing safe.

[envirovision] 24/11/2010 16:21

I have joined you Old Boy. The under UK company law seems pretty water tight, you cant modify company law for just a single entity.

I sent an email to the bank of ireland asking them to clarify the statement in the last accounts regarding taking a 70 Mill dividend. In particular they state it is in shareholders interests, so I am seeking clarification how it is in shareholders interests and as yet have had no reply, i guess they have other things on their plate.

[old boy returns] 24/11/2010 16:03

Montyhedge - I do find BWSA the easiest Irish bank related security to analyse. This is because Bristol & West plc is now effectively a cash shell which exists purely to service the £2.6 million a year of interest on its own preference shares. It is a UK (not Irish) company and so falls under English law, is not a bank, no longer holds a banking license and is not FSA regulated. The sole holders of its ordinary shares is also a UK company. The funds behind the £32.6M of preference shares (BWSA) plus a £70M interest free loan from the parent are all loaned back to other group undertakings and it has a guarantee for the Bank of Ireland. The preference dividend is mandatory subject to sufficient distributable reserves. Prima facie I cannot see how EC bailout strings can interfere with this structure. In the hierarchy of creditors and order of application on winding up the preference shareholders sit above Bank of Ireland's shareholding. B&W plc is outside of Irish law so should not be within reach of any primary legislation in Ireland - even if BKIR is nationalised. On top of that if they do find a way to stop the dividend then the preference shares get the vote and there are 32 million of them compared to 100,000 ordinary shares so BKIR would lose control and, in substance, B&W would no longer be a BKIR subsidiary. In this case the preference shareholders could pass a vote to wind B&W up and call in the deposits / loans and guarantees from the Bank of Ireland group companies failing which they could seek winding up order against those creditors / guarantors.

The big unknown is the terms on which B&W have made the loans to the BKIR group undertakings. However, the short term element of the loans is classed as 'Cash and Cash Equivalents' within the accounts which does give some comfort. I am trying to find out more. You can follow progress at:



The price of BWSA has taken a pounding today so I have take advantage and started buying in the mid 60's.

[montyhedge] 24/11/2010 14:11

I can't see anyway they will pay this dividend. I reckon its going the way of NR and B&B.

[envirovision] 22/11/2010 08:30

oldboy has some great info on his web site regarding these.

[wenlynn] 22/11/2010 08:28

monty - have you got one of those rocket pictures ?

Wenlynn - 12 Nov'10 - 10:40 - 39 of 75
Yielding now over 10% as if that means anything in these uncertain times.

montyhedge - 12 Nov'10 - 10:41 - 40 of 75
Means nothing in April 2009 these were 38p, I can see this back to 50p.

[wenlynn] 21/11/2010 12:35

Irish Banks to be Nationalised !

[wenlynn] 18/11/2010 15:34

HOLTS,
Thanks for that.

100p coming.

[holts] 18/11/2010 13:34

Oldboy returns has started a thread on motley for BWSA

[simon gordon] 17/11/2010 13:01

You gotta be nuts to be buying these, share should be at 40p minimum, paper is in greater danger than at the all time low.

[zangdook] 17/11/2010 12:28

I see you're now saying it's an old article. Why are you reposting it? It doesn't reflect the current situation, as they no longer have the distributable reserves. To post that article now is potentially misleading.

[zangdook] 17/11/2010 11:13

If that's a recent comment from the Fool, the writer hasn't done his homework:

"Distributable reserves at 31 March 2009 stood at some £81m"

Yes, 20 months ago. Not today.

Edit: he's 17 years out of date talking about the EEC, too. :-)

[wenlynn] 17/11/2010 11:11

From Fool (old article).

These are an unusual proposition insofar as Bristol & West no longer trades, having been taken over by Bank of Ireland in 2007. Yet interest-bearing deposits are maintained in the company, sufficient to fund the preference shares.

Dividends are payable "if, in the opinion of the board, the distributable profits of the company are sufficient to cover payment in full of the preference dividend". The only circumstances where non payment is possible is where "in the opinion of the board, the payment of any preference dividend would breach or cause a breach of the Bank of England's capital adequacy requirements applicable to the company at that time".

Distributable reserves at 31 March 2009 stood at some £81m, against an annual payout on the prefs of only £2.6m.

I conclude from the above that the dividend is in effect mandatory. Given this legal requirement to pay, the dividend should be safe from EEC interference. There are also more than sufficient assets on the balance sheet to allow both dividend and capital repayment to be funded in full.

Whilst I have seen no comment on this, now the company is but a shell, I should have thought the most likely scenario going forward would be for the company to be wound up. What benefit is there to BOI in doing otherwise? In such circumstances, the preference shares would be entitled to receive the nominal value of £1 per share, a 33% premium to the current market price. I have no idea as to timescales here. But you earn a 12% yield whilst you wait.

The current market price is no doubt due to the uncertainties surrounding parent BOI. No small matter, but it seems to me that preference shareholders in Bristol & West are well insulated from the difficulties of the parent company. Even in the event of nationalisation of BOI, I do not see that the above scenario changes.

Of course it is conceivable that Ireland follows Iceland into bankruptcy and BOI is allowed to fail. In such dire circumstances, Bristol & West preference shareholders would require to rely on the Guarantee and Capital Maintenance Commitment entered into on 1 October 2007.

My reading of this is that one at least gets a bite at the cherry ahead of ordinary creditors. But this is the doomsday scenario. Ireland is part of the EEC. It won't be allowed to happen.

Note also that the numbers involved are tiny in the context of Bank of Ireland's balance sheet.

Most likely by far for preference shareholders is a 12% return, followed by a 33% uplift on repayment of the shares in due course.

[wenlynn] 17/11/2010 10:48

Some healthy purchases today.

[envirovision] 16/11/2010 23:25

I think the outcome will be when the EU imposes a blizzard of restrictions on BKIR and its debt holders, BKIR will not be allowed by amended law to loan BWSA funds and so BWSA will not then be able to sign off its accounts as a going concern. Shareholders will be left with nothing.

I doubt bwsa holders would be able to claim compensation from directors.

[envirovision] 16/11/2010 20:58

Yea interesting, they must have like a special share class holding whilst the imaginary shareholders (i.e. the stuff traded as bwsa) are some kind of numpty class of holding.

Would have to be set up like that, otherwise they would not have been able to steal the cash by way of an £80 Mill dividend in the first place.

[zangdook] 16/11/2010 19:25

In the reports they usually refer to the 'shareholder' ie BKIR, but when they were talking about paying the big dividend they said 'shareholders'. I don't know if that means the preference shareholders as well as BKIR. If I hadn't sold I'd enquire.

[envirovision] 16/11/2010 18:31

Good question, they claim taking the money out by dividend was on everyones interests, im not sure what possible reason could be given to say it was in shareholders interests. I also assume the company is 100% owned by the shareholders, or does BKIR have a controlling interest? Not something I have looked into. If they dont they should be fairly accountable.

[holts] 16/11/2010 17:52

to what extent are the directors accountable for allowing this ?