Lloyds Grp 9.25 Discussion Threads

[aspex] 19/2/2016 06:49

Summarising. If Lloyds are prepared to pay a premium of say 34p for a LLPC share they can do so. They save paying 9.25p ( what about the 10% paid to the Exchequer) until the 34p has been recovered. That may be a bargain for them. Other than that, their market action could make LLPC more valuable along the way. So I will just hold my few thousand LLPC and LLPD and wait them out while interest rates stay so low elsewhere.

[redartbmud] 15/2/2016 13:43

At last gawd luv a duck.

red

[pvb] 15/2/2016 13:28

Ah! If they were originally B'ham Midshire PIBS then that's different.

The preference shares I was referring to were those issued to account holders of B'ham Midshires Building Society (who had no more than a certain amount invested) on it's takeover by Halifax Bank. All part of the demutualisation scramble. Remember that? :-)

[redartbmud] 15/2/2016 13:27

Lifted from a letter received from B'ham Mids.
April 12 1999

Important changes to your 9 3/8% PIBS .. following the transfer of business to
Halifax plc. ... replaced by Perpetual Subordinated Bonds of Halifax plc... will pay the same rate of interest.

23 April 1999 certificate received from IRG.


Original purchase 18.05.1994 at a price of 92.5p plus costs.

Trip to loft required, hope that it was worth it!

At some point they became 11.875% ECN2. I do not have the documentation filed in the same place.

[pvb] 15/2/2016 11:37

redartbmud 15 Feb'16 - 10:30 - 817 of 821

I also held a few ECN's that, from memory, were originally B'ham Mids, then Halifax PIBS.

If these were issued on takeover of Birmingham Midshires by Halifax, then they were issued as Halifax Bank prefs. When Halifax Bank merged with Bank of Scotland they were converted to a slightly higher yielding HBOS Pref. Following you know what, HBOS was taken over by Lloyds Bank and they became Lloyds Bank prefs.

I was forced to convert to an ECN. They have been bought back at par. Again I had purchased at par and enjoyed 11.875% interest.

"forced"? Surely it was voluntary. Admittedly, if you had kept them the dividend was suspended for a couple of years.

If they are the originally sourced Halifax prefs then they are now LLPE. They may be called, in whole or in part, in 2024.

Anytime you see 400 lots of LLPE being sold, you know where they came from!

[alphorn] 15/2/2016 11:30

A long time since I studied this topic but preferred stock are in range of capital reduction laws whereas (most, maybe all) bonds are not. (Company law, not capital ratio requirements).

[jonwig] 15/2/2016 11:23

The fact that about half of the prefs are USD-denominated means any attempt by LLOY to game the terms would meet court action in both the UK and USA. I doubt they'd have the stomach for that, as the directors might face extradition to the US and jail for racketeering. (Only half joking!)

[my retirement fund] 15/2/2016 10:56

Indeed and that part of the market is not looking very stable now is it. Coincidence? I should imagine if they can apply such treatment to ECNs you can pretty much be certain they will be looking at other forms of capital as well where it looks expensive in a near zero to negative rate environment.

[redartbmud] 15/2/2016 10:51

mrf

The disgraceful behaviour by the justice system might lead us to suspect that there is something behind a conspiracy to defraud with regard to the ECN's.
Honesty and integrity flew out of the window.
There are a lot of irredeemable prefs in the market that have been issued by a fair number of companies. If Lloyds got away with calling them in at par, surely that would totally destabilise that part of the market.

red

[my retirement fund] 15/2/2016 10:45

I agree regards the term Irredeemable. However all they need do is say they meant irredeemable under x,y & z terms, but because regulations have changed a, b & c are relevant meaning one can no longer call x, y & z relevant etc.

[redartbmud] 15/2/2016 10:30

I also held a few ECN's that, from memory, were originally B'ham Mids, then Halifax PIBS. I was forced to convert to an ECN. They have been bought back at par. Again I had purchased at par and enjoyed 11.875% interest.

FAMOUS LAST WORDS.
Irredeemable must mean something. I doubt they will be able to redeem them in a similar way to the ECN's.
Their only recourse is to pay the premium in the market and slowly buy them back to cancel.

Just MHO

[alphorn] 15/2/2016 10:26

IMO unlikely as Preference Share capital is a very old class of instrument unlike the newer variations that will be discussed in court again next month.

[my retirement fund] 15/2/2016 10:19

I converted mine into ECNs. I was tricked by the original offer Lloyds .made as they later reinterpreted the prospectus and when challenged they apparently turned round and said there were errors in the terms.Having read what others have said on other boards it seems Lloyds have done this because that considered ECNs an expensive form of capital for their buffers.All im suggesting is that there is no reason they cant do the same here either. Afterall why buy them back in the market when its perfectly legal to say the terms no longer meet the intention of the capital and/there are errors in the original terms?

[redartbmud] 15/2/2016 09:56

Folder

I bought below par, so despite falling prices, I am content to hold for the income on a long term basis. At some point interest rates will rise, but my personal opinion is that any significant rise is a long way down the road.
It may be that others are now rotating out of fixed interest.

red

[folderboy] 15/2/2016 09:43

Yes helpful re-cap - though the price continues to drift down.

[redartbmud] 15/2/2016 09:31

Recent posts have served to clarify the terms under which Lloyds Prefs are managed, with regards to dividends, buy backs and buyins.
I am sure that many of us were aware of the parameters, but it is always beneficial to revisit the scenario to refresh the memory.
As a holder, I for one am grateful to posters.

red

[tournesol] 15/2/2016 09:23

LBG preference shares do NOT have their dividends suspended. I have been receiving them for some years.

They were briefly suspended because of EU interference but that was all resolved years ago.

Since pref dividends are NOT suspended the co is perfectly at liberty to buy shares (ords or prefs) in the open market.

[p@] 15/2/2016 09:03

Restrictions on Dividends and Redemption
If the Company has not declared or paid in full a Preference Dividend stated to be payable as a
result only of the exercise of the discretion of the Board of Directors or the Committee, then the
Company shall not during the Stopper Period:
(a) redeem, purchase, cancel, reduce or otherwise acquire in any other way any Junior Share
Capital or the 2004 Preference Shares; or
(b) declare, or pay or set aside any sum for payment of any distribution or dividend or make any
other payment on, and will procure that no distribution or dividend or other payment is made
on, any Junior Share Capital or the 2004 Preference Shares.

[tournesol] 15/2/2016 08:56

Lloyds must pay an ordinary dividend before they can enter the market to buy back prefs. I am not sure how that stacks up.

First time I've heard that. What's your source? Does not sound right to me.

LBG cannot pay dividends on ord shares unless they have paid divis on prefs - so cannot suspend pref divis but carry on with divis to ords.

But that does not mean they are inhibited from buying prefs in the open market.

[aspex] 15/2/2016 08:23

OK. So that is irrelevant to LLPC discussions.Incidentally I am told that Lloyds must pay an ordinary dividend before they can enter the market to buy back prefs. I am not sure how that stacks up.

[my retirement fund] 14/2/2016 18:40

I was referring to lloyds blindsiding holders

[aspex] 14/2/2016 17:58

MRFYour 804?How has Lloyds buy back got anything to do with LLPC?These can only be bought by Lloyds in the market at full market value. They have no influence on what the EU decides. The circumstances that caused the original EU decision no longer exist.

[pvb] 14/2/2016 17:04

Interestingly, LLPE seemed to rise as the banking situation worsened. And then dipped down a bit when things returned to normal. (If they have!)

Alternatively, it's all meaningless noise. ;-)

[my retirement fund] 12/2/2016 13:43

Well in the case of lloyds its bad loans have been sorted out so no distress but its earnings could fall with negative rates.I think if you wanted LLPC it may be an idea to drop the FCA an email to ask the following:Dear FCAIf you decide Lloyds preference shares are to complicated for consumer retail investors and ban them from trading in them and then Lloyds senior management discuss their intention to force holders to redeem them all of which creates a depressed market price. Then Lloyds go on to make me a derisory offer or redeem then at par. Then later do so claiming obvious mistakes in a historic prospectus. Can you confirm if you will protect me or simply ignore me and dismiss all opportunities to help me?

[jonwig] 12/2/2016 13:33

Bank ordinary shares are signalling distress (BARC, anyone?) and there's no doubt bail-ins would be imposed. Sub-bonds and prefs first in firing line. What the EU imposed in 2009 could be repeated.

The prospect of negative interest rates is more damaging even than for higher rates. At least higher rates suggests a more "normal" economy.