Bristol&w.prf Discussion Threads

[wenlynn] 07/6/2011 15:32

Worrying Times indeed !
I don't think a severe "haircut" is on the cards.
Hopefully these Bonds will be converted into something exotic and profitable.

[jeff h] 04/6/2011 12:18

Interesting situation here, will BWSA be included in the liability management exercise and holders be forced to accept 10 or 20% of nominal?

I sold my stake on Apr 6 for 83.25p and pocketed the div as well reasoning the risk of holding and suffering a haircut was too great.

I'd love to hold again and rang Investor Relations yesterday to ask if BWSA had been included in the exercise.

"It's not been decided yet" was the response...so holders will have a nervous wait before all is revealed.

[wenlynn] 21/2/2011 10:28

Confidence returning.

[holts] 16/2/2011 08:22

Old Boy returns on the tmf thread is attempting to get more detail from the BWSA board , particularly the terms of the loan and the duty of the board members to the pref holders as this is their only function.

[sicall] 04/2/2011 18:34

Just to clarify a couple of things on this thread. Bristol and West is no longer trading and is a wholly owned subsidiary of Bank of Ireland. ( not allied Irish).

It does however still exist and the Prefs are paid via a £70m interest free loan from Bank of Ireland. Without the loan the prefs would only be paid for a further 12 months.

The risk therefore lies in whether the £70m loan remains or is called in at anytime in the near future.

Probably not worth the risk at less than a 10% yield. But currently i am tempted to add a few.

[montyhedge] 23/12/2010 15:20

Amazed these are not 20p, surely they won't be paid. Allied Irish virtualy nationlised later next year 93% owned by the gov.

[holts] 08/12/2010 21:45

8 December 2010

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND ANNOUNCES EXCHANGE OFFERS FOR ITS EXISTING EURO, U.S. DOLLAR AND STERLING LOWER TIER 2 NOTES TO BE EXCHANGED INTO NEW EURO AND STERLING GOVERNMENT_GUARANTEED NOTES

[envirovision] 01/12/2010 16:06

The 12 month term is a worry, I wonder if Oldboy will get a reply from them, i have emailed them and not had any reply myself. It seems BKIR has turned into an right cowboy outfit and it is starting to feel a bit dodgy again.

[montyhedge] 01/12/2010 09:29

I cannot see anyway this will be paid, another B&B, NR and West Brom BS here.

[catcheemonkee] 01/12/2010 09:23

A little more insight from OldBoyReturns on The Motley Fool:



"Bristol & West Interim Report for 6 months to 30 September 2010 has been released ( On one hand, bearing in mind the crisis in Ireland, it is encouraging that they state:

The Company continues to hold interest-bearing cash deposits in order to meet its liabilities as they fall due, including the payment of future preference share dividends. No material changes to this position are expected in the second half of the year.

On the other hand these are the first accounts which include the £70 million interest free loan from the parent. In respect of this loan the report states:

Amounts due to parent company are interest free and have a remaining period to contractual maturity of less than 12 months.

Against this the figure for loans and advances to banks maturing in less than 12 months in £51.8 million. With a £70 million creditor capable of becoming due within 12 months I hope that there is a right of offset otherwise it is hard to see how the directors and managing liquidity risk. I am waiting for an answer from B&W on this and other issues. I will update progress on this on the B&W section of my website at:

"




I must admit to selling my small position this morning - I'll look again when all this becomes clearer.

[wenlynn] 30/11/2010 18:53

Interims Released.

"The Company continues to hold interest-bearing cash deposits in order to meet its liabilities as they fall due, including the payment of future preference share dividends. No material changes to this position are expected in the second half of the year."

[envirovision] 26/11/2010 15:32

Whilst the BKIR is still solvent, thats about all they can do from what I understand. Dont really understand all this talk of forcing haircuts on anyone who is solvent.

[holts] 26/11/2010 14:04

Allied Irish, Bank of Ireland May Buy Back Subordinated Bonds
2010-11-26 13:10:14.756 GMT


By Joe Brennan and John Glover
Nov. 26 (Bloomberg) -- Bank of Ireland Plc and Allied Irish Banks
Plc, the country's two biggest lenders, plan to ask subordinated
bondholders to share more of the cost of their bailout as officials race
to conclude an international rescue, three people familiar with the
situation said.
Talks with the central bank have focused on how the two may buy
back or exchange subordinated debt at close to market prices rather than
the punitive 80 percent discount to par offered by Anglo Irish Bank
Corp., said the people, who declined to be identified because the
discussions are private.
In the talks with the central bank, there have been no discussions
about senior bondholders sharing the burden, the people said. European
Union and International Monetary Fund officials are taking legal advice
on how senior bondholders can share the cost of Ireland's 85
billion-euro ($113 billion) bailout without triggering lawsuits, the
Irish Times reported today, without saying where it got the information.
If the authorities tried to force losses on owners of senior debt
"before shareholders and subordinated bondholders had been fully written
down, it would be a hard sell," said Simon Adamson, an analyst with
CreditSights Inc. in London, in a note to clients today. It "would
presumably contradict previous indications by the European Commission
that it would want to preserve the ranking of creditors in a bail-in."

Bond Prices

Allied Irish has about 4.8 billion euros of senior and junior
subordinated debt as well as preferred stock. The lender's 1.1 billion
pounds ($1.7 billion) of 11.5 percent senior subordinated notes due 2022
fell 3.15 pence on the pound to 27.8 pence, according to composite
prices on Bloomberg today.
The notes traded as high as 103.5 pence as recently as Aug. 3.
Bank of Ireland has about 4 billion euros of senior and junior
subordinated debt, as well as preferred shares, Bloomberg data show. The
lender's 1 billion euros of 10 percent senior subordinated notes due
2020 fell 6.9 cents to 44.8 cents today, according to composite prices
on Bloomberg. The notes closed at
100.25 on Sept. 21, Bloomberg data show.
By buying back and exchanging debt at a lower price than its face
value, the lenders can book a gain. Allied Irish and Bank of Ireland
have generated a combined 3.37 billion euros of gains over the past 21
months from such transactions.
Anglo Irish, which the government nationalized in January 2009, may
raise about 1.7 billion euros from buying back subordinated debt,
Dublin-based Glas Securities wrote in a note to clients on Oct. 22. That
would cut the cost to the state of rescuing the bank, which Finance
Minister Brian Lenihan has said may total as much as 34.3 billion euros.

Central Bank Involvement

The central bank has been the intermediary with Ireland's banks as
officials continue talks with the EU and IMF on aid.
Both Allied Irish and Bank of Ireland will strongly resist any
attempt to force losses on bondholders, as it would make lenders rely
more on the European Central Bank for emergency funding because they
remain frozen out of wholesale debt markets, the people said. Still, the
decision on restructuring linked to the bailout is out of the banks'
hands, they said.
Officials at the finance ministry, central bank, Bank of Ireland
and Allied Irish all declined to comment.

[envirovision] 26/11/2010 12:15

Its really like depositary debt, so in theory its going to be as safe as any other joe with a cash savings account with the Bank Ireland and given the bailout on offer thats pretty much cast iron. IMO.

[catcheemonkee] 26/11/2010 11:38

100p coming

As far as I can see, BWSA is neither sub-debt nor senior debt of Bank of Ireland. Unless we've been stitched up with the arrangements mentioned earlier in the thread, how can this not be worth that 100p? I now have a few of these.

[wenlynn] 26/11/2010 10:07

100p coming

[wenlynn] 25/11/2010 14:40

The Interims ending September 2010 are due shortly.

[simon gordon] 25/11/2010 08:24

Avidya - 24/11/10:

OBR,

I've had another look at BWSA tonight because as you say the continued drop in its price makes it look interesting.

But having read through the accounts I've got one major question which is giving me pause for thought. The accounts show that "fair value" of its £128m of deposits with the parent as at March 2010 was only £106m (i.e. a £22m negative fair value adjustment), whereas the previous year £126m of deposits had a fair value of £147m (i.e. a £21m positive fair value adjustment). The accounts also show that of the £128m deposits, £61m matured in less than 12 months. This seems to imply that the other £67m of long term deposits have generated a negative fair value adjustment of £22m in the 2010 accounts. Which in turn suggests to me that these are very long term deposits on unfavourable interest terms compared with current market rates. But I'm not a qualified accountant, so have I misunderstood?

My worry is this: if the £70m interest free loan from the parent is legally capable of being recalled at any time, then B&W doesn't seem to have sufficient funds available on call to repay this amount. If the loan were in fact called and that then resulted in the winding up of B&W, then presumably a payment to the parent to "break" the term deposits would be required, and if that break fee were the full amount of the £22m negative fair value adjustment then that would wipe out the larger part of remaining shareholders' funds and severely reduce the funds available for the preference shareholders in liquidation.

The Directors say in the accounts that the £70m loan from the parent "is interest free and does not have a fixed term". The Directors also say that "the Directors do not anticipate that this loan will be called in the future". However this is not the same as saying that it cannot legally be called, and I note that the going concern statement in the accounts says that "the Company is dependent on the Bank of Ireland Group funding its balance sheet". The latter statement presumably refers to the £70m loan.

As I say, I'm not a qualified accountant so may have got this wrong, but this question has given me pause for thought, no matter how arcane it seems. What do you think?

A

[holts] 25/11/2010 08:22

Have added more this morning , I see BWSA as a safer bet than BOI , bar full nationalisation , but even then it may have advantages.

[envirovision] 24/11/2010 22:21

I'm astonished BOI is higher than BWSA. I suspect its simply a case of people not really understanding the situation and simply assuming the one with the higher yield should be priced higher. In reality this is chalk and cheese as OBR points out.

I think given the dividend being paid depends on the loan not being called, whilst change of the control of the company is also dependant on the loan being provided, its fairly black and white.

I would go as far as to put percentage odds to it (educated odds).

98% dividend continues perpetually, loan remains safe and secure no matter what.

2% Loan withdrawn and independent control proposed and company is wound up and preference share holders repaid at £1 par.