Tender offers Bristol & West prefs and BOI pibs

[air04]

I have received 1.92031 per bond as a lumpsum

Suggest you ask them where your voting fee is (assuming you voted).

Thanks Laughton. I got the voting fee later as a separate transaction.

[OldBoyReturns]

Yes! I rang Barclays yesterday and they confirmed that the transaction had been completed but that they have up to 10 days to credit my account with the cash.

I think they're jerking you around, or the person on the phone doesn't know what they're talking about. Your account should be credited the day of the corporate action or maybe a working day later. Anything less is very poor service and I'd complain and demand interest be paid.

GS

I agree. There is no excuse for brokers not crediting routine interest or corporate action payments to client accounts the day they are received. Yet I often find I have to chase or complain before it is done. I do not have the precise wording to hand but, from memory, FCA Client Money Rules state it must be done 'promptly' and within 10 working days in any case. Routine interest and corporate actions are not extraordinary events to which the 10 day maximum should apply and brokers should have systems and procedures to ensure interest is credited within the day as far as I am concerned.

[Rhinocol]

I see BWSA are again pushing to liquidate and de list these subject to a share holders meeting on the 18 th December. What's peoples views on this. I still hold and declined the earlier offer in August.

[GoSeigen]

I see BWSA are again pushing to liquidate and de list these subject to a share holders meeting on the 18 th December. What's peoples views on this. I still hold and declined the earlier offer in August.

Link??

[Wozzitworthit]

https://www.londonstockexchange.com/new ... n/16224701


Woz (not a holder)

[GoSeigen]

That's pretty generous, an offer to purchase shares at essentially the same price as the June offer.

Holdouts will see the shares de-listed, so difficult to recover one's capital investment. The company will own a growing proportion of the shares and eventually have the 75% necessary to approve a liquidation at which time holdouts will get just the liquidation preference.

Meanwhile alternatives like NWBD are available at an even better price than in the Summer.

GS

[NealMorris]

NWBD is on offer at 124.2 through AJ bell and there's already over a penny in equivalent accrued time value. I calculate it to be offering about an equivalent of 7.32% in all. Seems better value than the risk of a delisted legacy preference share. What is not so clear cut is what would the distribution be if it was wound up? On the one hand, they pretend there are no monetary assets attributed to the company as it all comes from a free loan from the Bank Ireland, on the other hand they then miraculously have found plenty of spare money to make generous above par offers. I find it a little puzzling, either the company has assets or it doesn't, which is it?

[GoSeigen]

NWBD is on offer at 124.2 through AJ bell and there's already over a penny in equivalent accrued time value. I calculate it to be offering about an equivalent of 7.32% in all. Seems better value than the risk of a delisted legacy preference share. What is not so clear cut is what would the distribution be if it was wound up? On the one hand, they pretend there are no monetary assets attributed to the company as it all comes from a free loan from the Bank Ireland, on the other hand they then miraculously have found plenty of spare money to make generous above par offers. I find it a little puzzling, either the company has assets or it doesn't, which is it?

It's pretty simple really. Bristol and West is basically a shell company that collects dividends from the parent and distributes them to shareholders, and not much more.

In a winding up preference shareholders would be entitled to their liquidation preference and no more. The company has no option but to offer more than par value because it must have the consent of 75% of the preference shareholders to liquidate the business. To do that it needs to encourage holders to sell them their shares or otherwise vote in favour of the liquidation. So far from being generous they are acting entirely in the parent company's self-interest and offering the minimum required (per their advisors) to hopefully get them past that 75% line.

GS

[NealMorris]

I seem to recall the company upon incorporation in its original documents had a very large initial cash injection that was large enough to perpetually pay the preference share holders their 8.125% interest. I always understood that then was a capital sum belonging to the preference shareholders. I cannot find the original documents however, such a long time ago.

[Rhinocol]

Accept the offer or hold out ? I have been purchasing these prefs over the past2 to 3 years or so with an average of about 131pence on 10K worth. My calculations would show a small loss so I would have prefered to hang onto them a little longer. Descisions , descisions; I'm sorely tempted to hold on but wonder if there would be risk in doing this.
Thanks for all the comments to date

[GoSeigen]

I seem to recall the company upon incorporation in its original documents had a very large initial cash injection that was large enough to perpetually pay the preference share holders their 8.125% interest. I always understood that then was a capital sum belonging to the preference shareholders. I cannot find the original documents however, such a long time ago.

You don't have to find the original documents. The current ones are available to download from Companies House. Since when do any of a company's assets "belong" to the preference shareholders or even the shareholders for that matter? A very unusual circumstance I am sure and should be clearly disclosed in every annual report. So no.

The various creditors of the business have a claim upon its assets and those are settled according to the liquidation preference and unless evidence can be show to the contrary that is going to be par to the preference shareholders after senior creditors have been paid, and anything remaining goes to the ord shareholders. I could look it up (as I often do on behalf of those who can't be bothered) but I am not a holder and really not that interested.


GS

[GoSeigen]

The risks of holding on are:

1. The company immediately gets enough votes to push ahead with liquidation, which they will do immediately, and preference shareholders will then get 100p.
2. The company falls short of the 75% needed and has to allow more time to purchase the remaining shares needed. They then liquidate and pay the 100p.

Pretend the share is a bond with a call option at 100p which the company will exercise at the earliest opportunity. Then put in a few call dates and see how your yield looks. I'd bet you could find better yield in the market in all but the rosiest scenarios.

For those preference shareholders who love the idea of holding a perpetual security, why not simply buy the ordinary shares? Not only are they perpetual, but you get the potential upside of a successful banking business (which you assume anyway by purchasing the prefs) and inflation proofing (which will become more valuable, unlike the past two decades which have been stellar for FI).


GS
P.S. Carrying a loss is a poor reason to keep holding a stock. The sensible response to a losing position is to look back at the purchase decisions and try to understand how they turned out to be wrong. For example did you buy the hype on these boards just a few years ago that preference shares were a "riskless perpetual stream of income"? What risk actually happened and why did the optimists not see it?