Lloyds Grp 9.25 Discussion Threads

[investor73] 16/6/2020 14:42

LLPC and LLPD are perpetual instruments and not likely to be redeemed without the approval of the holders. These things can't be done through the legal loopholes.

Banks thought selling PPI was legal, which technically was but they ended up paying £60 billion in compensation.

[redartbmud] 16/6/2020 14:41

Go to Lloyds Banking PLC website.
Investors and Performance
Fixed Income Investors
Capital Issuance
ISIN
Tier1
16/11/2009 GBP 300m 9.250 Perpetual GB00B3KS9W93 Prospectus
Click on prospectus and you can read the section relevant to the 9.25% Non-Cum Irred Prefs

[redartbmud] 16/6/2020 14:26

From the Prospectus:

"Lloyds TSB 9.25% Preference SharesThe provisions of the Lloyds TSB 9.25% Preference Shares will provide, among other things:(i)that dividends will accrue at 9.25 per cent. per annum, and will be payable in arrear on31 May and 30 November in each year, save that the first dividend payment will be made on31 May 2009 and will be 4.625 pence per Preference Share; and(ii)that the Preference Shares will be irredeemable instruments."

[my retirement fund] 16/6/2020 09:33

Not as far as I'm aware. The time to do anything about it has been and gone and Bailey predictably moved on up. Issuers were put on notice about clarity though. However the instruction issued was so ambiguous that it was pointless. Thats why its just a matter of time before someone else cancels an issue having been made aware of the legal way of doing it. It's a smouldering issue.

[tbow112] 16/6/2020 07:04

"The FCA has since required issuers to up their disclosures, and holders are on notice that many issuers have the right to cancel at par."
Has the FCA said anything since Andrew Bailey said they were looking into the matter ?

[nicholasblake] 15/6/2020 16:18

A pretty key reason why Aviva abandoned ship was that institutions holding much of the prefs held something like 20% OF THE ORDS. Given it was a special resolution at the EGM they were unlikely to get it through.
The FCA has since required issuers to up their disclosures, and holders are on notice that many issuers have the right to cancel at par. So very hard to cry foul second time around.
Loglorry is right about NWBD. There is wording in articles there which overrides general companies act powers.
If prices similar I'd say risk of Lloyds much higher, but bear in mind I'm a NWBD holder.

[loglorry1] 15/6/2020 15:24

I'd agree PO it's off the table since Aviva backed off it. Lloyds and their solicitors were advising Aviva on it I believe so they were probably testing the waters.

It's a risk though but a second covid wave and impairments to bank capital and subsequent bail in is a much greater risk IMHO.

[pierre oreilly] 15/6/2020 15:21

Almost exactly 12 years ago these were 73p, mainly due to the cancelled divi and some other scare stories on bbs which currently escape me, but it wasn't cancellation at par obviously. It's given me 13%pa tax free on my original investment, and still does, together with a doubling of the share price, not quite the mega loss outcome some were predicting at the time. Knowing the ins and outs and what lloy can and can't do is the domain of specialist solicitors and ultimately the courts to settle any disputes, with some things you read in black and white not being applicable or superseded by the regulator and/or precedent.

I think compulsory buyback at par is just a non goer whatever is written saying it can or can't be done.

[loglorry1] 15/6/2020 15:17

For those of a geeky nature - check out the terms in the NWBD prospectus which prevents a par cancellation. Also note Lloyds far more likely to break convention and par cancel than RBS IMHO.

[investor73] 15/6/2020 14:14

Who forced them to U turn. The Financial Conduct Authority.

[nicholasblake] 15/6/2020 14:05

That wasn't because they couldn't it was because they U turned.
No read across.

[investor73] 15/6/2020 14:03

citywire.co.uk
Aviva invites claims over preference shares fiasco

Aviva (AV) is inviting claims from investors who lost out in the preference shares sell-off sparked by the insurer's threat to cancel them.

The insurer has announced its compensation scheme is now open to claims, while scheme administrator KPMG has detailed how payments will be calculated.

Investors who sold Aviva preference shares after they plunged in value following the insurer's 8 March announcement it was considering cancelling them, and before the 23 March U-turn that sparked a recovery, will be entitled to a payout.

The insurer is expected to pay out £14 million to as many as 2,000 investors.

[investor73] 15/6/2020 14:00

If the pref are trading at 140p the FCA wouldn't allow it. Aviva tried but look what happened.

Aviva invites claims over preference shares fiasco.

hxxps://citywire.co.uk/funds-insider/news/aviva-invites-claims-over-preference-shares-fiasco/a114296

[glavey] 15/6/2020 11:45

Thank you MRF, however I already have access to a dictionary. :-)

[alphorn] 15/6/2020 10:27

Little to add to the above other than I chose LLPE as closer to par.
(Noted the Aviva business).

[nicholasblake] 15/6/2020 10:25

Carcosa, am assuming you are labouring under the misconception that the offering memorandum contains the terms of a pref issue.
That is a common fallacy, but it is merely a marketing document and will generally contain a summary of terms where the prefs in question have elements at variance to the general requirements of the Companies Act.
But it is what is written in the articles which is the contract with the company.
General UK law is that prefs are cancellable at par UNLESS the articles state to the contrary.
For these prefs they do not.

[nicholasblake] 15/6/2020 08:46

Not sure I understand, Kirkie. To cancel the prefs the issuer must call an EGM and propose the cancellation. In practice, for the Lloyds prefs the ords determine whether or not the prefs are cancelled. If they no longer count as capital and can be refinanced much cheaper, why wouldn't ords vote to cancel prefs in line with their contractual terms?

[kirkie001] 15/6/2020 08:32

My Retirement Fund (and nicholasblake) - the point is that issuers here AREN'T able to simply cancel them at par, or choose not to pay - it's written into the articles and terms of the pref shares.

That's why they are such an attractive investment. It's a skewed risk/reward scenario which private investors can take advantage of because they are exchange traded in denominations of one share; protected by contract and company law.

[my retirement fund] 15/6/2020 07:37

Glavey, "May" and "Should" being the operative words. Other suitable words: Could, Would, Can, Permitted, Potentially, Possibly, Probable, Likely

[my retirement fund] 15/6/2020 07:16

Well I think as interest rates appeared likely to rise it wasn't an issue. But now Lloyd's are not only staring at even lower interest rates and possibly negative rates and having had to suspend ordinary dividends, it would be pretty stupid not to cancel them given they don't even bother use these in the capital buffer calculations.

[glavey] 15/6/2020 01:30

They may consider it not worthwhile given that the FCA raised the issue after the aborted Aviva attempt. Consider who fronted the FCA then and where he is now. Prior to that, it may not have caught their attention and even if it did, it might have been thought prudent to let someone else go first. The prefs had been in existance (one way and another) for a while, often with retail holders.

The ECNs were another matter as the FCA didn't want 'retail' in hybrid instruments. Hence the AT1 swap for sophisticated investors and the cash offer for the rest. (It should be an embarrasment to both LLOY and the FCA that 'retail' were induced to become involved as a swap for prefs!)

Alternatively, they may have chosen to act ethically, perhaps.

[investor73] 14/6/2020 22:13

My Retirement Fund....

Then why haven't Lloyds cancelled them yet? Rather than restarting the dividend in 2012 or whenever they could have cancelled them, why didn't they?