Aviva and General Accident preference shares

[OwenSwansea]

GoSeigen, I have nothing to add to my previous post. The truth does not need to be "backed up".

Regardless of all your clever legal arguments, the meaning of the word irredeemable is clear to everyone, it is simple common sense, and all your bluster will not change this basic fact, which trumps all others.

[Rooky102]

For all the thousands of words now written, very little is by Aviva, but what there is is very specific.
See:
https://www.aviva.com/investors/credit-investors/

It says “We noted at our 2017 full year results that we have the ability to cancel the preference shares issued by Aviva plc and GA plc, at par ……”

Surely, they must have taken serious legal advice before making this statement, and it doesn’t say “we may have” it says “we have the ability”

The rest of it is a fob off to your advisor, IFA, broker or the share registrar, so they are already publicly washing their hands of the impact.
As for “balancing the ords vs prefs” I can’t see a circumstance in which the Ordinary holders should agree to take a hit to give the Preference holders more than their legal entitlement.

The surprise to me is that the prefs are still trading around 20% over par, so sell up now or wait? ( Holding AV & GA)

[JT1001]

RNS from ELLA on prefs
http://www.londonstockexchange.com/exch ... 62898.html

No plans to do anything on their prefs, interesting that they hold AV prefs as well and take a swipe at them.

[GoSeigen]

GoSeigen, I have nothing to add to my previous post. The truth does not need to be "backed up".

Regardless of all your clever legal arguments, the meaning of the word irredeemable is clear to everyone, it is simple common sense, and all your bluster will not change this basic fact, which trumps all others.

I guess that is no then. Kindly keep your abuse to yourself then in future.

GS

[GoSeigen]

RNS from ELLA on prefs
http://www.londonstockexchange.com/exch ... 62898.html

No plans to do anything on their prefs, interesting that they hold AV prefs as well and take a swipe at them.

I'd say the one is the cause of the other...

Does anyone have a link to their articles and/or the ELLA prospectus? Their statement about ELLA looks disingenuous on the face of it but one would need to check the pref rights.

Meanwhile someone on Mark Taber's board comments on Santander prefs thus:

Look at the winding up / return of capital section ( (a) 0n page 24) as it pertains to preference shareholders BUT also look at the capital section, pertaining to ordinary shareholders, on page 27.

It’s pretty clear that on a return of capital to preference shareholders that the next stage is to distribute assets to ordinary shareholders.

So the company will need to be wound up.

This is not correct, certainly as regards the sections referred to. The text is crystal clear that return of capital is contemplated at any time and holders are entitled only to their nominal capital and arrears of dividend in preference and have no further claim on the profits.

Santander pref holders should probably reassess their exposure following any market markdowns.



Incidentally certain Fools are posting near identical messages both here and in the other place. It would be clearer and helpful to readers to choose a single forum to make each post to.

GS

[swill453]

Incidentally certain Fools are posting near identical messages both here and in the other place. It would be clearer and helpful to readers to choose a single forum to make each post to.

It's even more confusing that you use this board to respond to points made on another one!

Scott.

[JT1001]

I'd say the one is the cause of the other...

Yes I realised that, the interesting part, to me anyway was they being a company with the same type of issue and clauses in the market they considered Aviva and GA prefs to be worthwhile investments despite the premium to par.
You’d have to think an issuer of prefs itself would know more than most of the risks.

[88V8]

RNS from ELLA on prefs
http://www.londonstockexchange.com/exch ... 62898.html
No plans to do anything on their prefs, interesting that they hold AV prefs as well and take a swipe at them.

Thanks for that.
I guess if anyone is going to behave properly it's Ecclesiastical. One that basis I just topped up.

Regardless of the legal position, the big picture is how everyone in the market - except GS who I thank for his patience - understood these instruments. There has been ample opportunity to 'correct' our 'misunderstandingl' but no one ever did.

If it was generally known that the rug could be pulled like this, then there has been decades of mis-selling over which the regulators have presided.
This is how the matter should be put to the FCA and I suggest that holders and anyone else who cares about fairness had better get writing right now.
We should not get bogged down in legalese. There are times when the law has to take a back seat.

V8

PS thankyou GS for the heads-up about Santander. I hold those also.
It's hard, selling out of a decent income stream that was supposed to be there forever.

[thebarns]

Well done to ELLA !

Noticeable bounce in the price of their preference shares !

Must have the backing of their oldest and perpetual trustee from above !!!!!!!!

[JT1001]

For disclosure I don’t hold any AV or GA prefs, I do however hold ELLA and thought it might interest some folks on here

[Darwin]

. . . . .

[Darwin]

aviva.com/content/dam/aviva-corporate/documents/investors/pdfs/credit-investors/GA_Pref_Shares_140.pdf

Description of the Rights attaching to the Preference Shares

1) The Preference Shares will be irredeemable

3) On a return of capital (other than on a winding up or a redemption or purchase by the Company of shares of any class), the holders of Preference Shares shall be entitled to receive an amount per Preference Share equal to the nominal amount per Preference Share together with any premium paid on issue and together with all arrears and accruals (if any) of the dividend payable thereon, whether or not such dividend has been earned or has become due and payable, to be calculated up to and including the day of return of capital.

[johnhemming]

The question, of course, is whether there needs to be a class vote for a return of capital other than compulsory liquidation.

[GoSeigen]

RNS from ELLA on prefs
http://www.londonstockexchange.com/exch ... 62898.html
No plans to do anything on their prefs, interesting that they hold AV prefs as well and take a swipe at them.

Thanks for that.
I guess if anyone is going to behave properly it's Ecclesiastical. One that basis I just topped up.

Regardless of the legal position, the big picture is how everyone in the market - except GS who I thank for his patience - understood these instruments. There has been ample opportunity to 'correct' our 'misunderstandingl' but no one ever did.

If it was generally known that the rug could be pulled like this, then there has been decades of mis-selling over which the regulators have presided.
This is how the matter should be put to the FCA and I suggest that holders and anyone else who cares about fairness had better get writing right now.
We should not get bogged down in legalese. There are times when the law has to take a back seat.

V8

PS thankyou GS for the heads-up about Santander. I hold those also.
It's hard, selling out of a decent income stream that was supposed to be there forever.

V8, thanks m8.

You don't necessarily have to sell. Any decision by other companies to emulate Aviva will involve a variety of calculations, e.g.:
-How useful is the pref capital?
-How expensive is it relative to other sources of capital?
-Does the issuer have excess capital and no use for it?
-Would shareholders be supportive?
-Are there contractual terms restricting powers in a return of capital?
-What is the cost of carrying out the exercise relative to the gain?
-When is the right time to do it?

All of these issues, along with the general health of the business and the investment environment will contribute to some justifiable level of premium for these instruments. So as some have pointed out this may be a buying opportunity, or at least it may be worth holding at current higher yields.

Ecclesiastical's statement is cheap. It is useful as a statement of intent I suppose, but it addresses none of the above points. It does not say: "We have studied the possibility of reducing capital, concluded that it is a realistic and profitable course of action and would be supported by the shareholders but have decided as an ethical company which cares for the interests of all its stakeholders not to do so." That would actually carry some significant information content!


GS
P.S. Does anyone second Scott's criticism of quoting from sites outside of The Lemon Fool as very confusing? Personally I like the idea that we can refer to content off this forum, and it's pretty essential for an investment site. Or does he just disapprove of referrences to Mark Taber's site? Or perhaps is trying to funnel users over there???

[swill453]

P.S. Does anyone second Scott's criticism of quoting from sites outside of The Lemon Fool as very confusing? Personally I like the idea that we can refer to content off this forum, and it's pretty essential for an investment site. Or does he just disapprove of referrences to Mark Taber's site? Or perhaps is trying to funnel users over there???

None of the above. I guess I'm curious why you didn't post the response "over there".

Scott.

[Alaric]

Ecclesiastical's statement is cheap. It is useful as a statement of intent I suppose, but it addresses none of the above points. It does not say: "We have studied the possibility of reducing capital, concluded that it is a realistic and profitable course of action and would be supported by the shareholders but have decided as an ethical company which cares for the interests of all its stakeholders not to do so." That would actually carry some significant information content!

What it does suggest that in the event of a capital reconstruction, it would base the return of capital to Preference Shareholders on the market value of the income they are being asked to give up, rather than the book cost of the original security at issue.

[TwmSionCati]

[quote="GoSeigen"][/quote]

GS -- Rushing out to bury an old friend, but would just like to say you're doing noble work; can't think where you find the energy. Keep buggering on!

TSC

[GoSeigen]

I guess I'm curious why you didn't post the response "over there".

Scott.

I'm not registered over there, Scott, but the site is free to read without registration. I like TLF and the people here. Nothing more sinister than that.

GS

[GoSeigen]

GS -- Rushing out to bury an old friend, but would just like to say you're doing noble work; can't think where you find the energy. Keep buggering on!

TSC

Thank you, I have narrow areas of interest LOL.

Just been listening to Adagio from Elgar's Cello Concerto Op 85 and it brought a tear to my eye. Some things are more important than money, eh... sorry for your loss.

GS

[CatcheeMonkee]

From Mark's site:

Have a look at:

http://www.aviva.com/investors/share-capital/

Under: “Preference Shares. How do they Differ from Ordinary Shares”, is the line:

“However, on a winding up, preference shares carry a preferential right of return of capital ahead of the ordinary shares.”

That’s on a winding up. From the donkey’s mouth.