Leeds Building Society 13.375% PIBS (LBS) Tender Offer

[OldBoyReturns]

Leeds BS has just announced a tender offer with attached consent solicitation for its PIBS. Priced at 190 + 2 (voting fee) so about a 15% premium to market price. Certainly generous enough for me to accept.

https://www.londonstockexchange.com/new ... r/16351029

I am surprised it has taken so long for a society to tender. This may well encourage others.

[Rhinocol]

Seems like a generous offer, but another good earner disappearing. What will happen if you dont accept.

[OldBoyReturns]

Seems like a generous offer, but another good earner disappearing. What will happen if you dont accept.

The tender offer has a consent solicitation (to vary the terms to insert a sweep up clause) attached. So providing the resolution is passed (highly likely) those who do not accept will have their PIBS repurchased at the tender offer price.

[Borderline]

So we are being bribed with tuppence to vote for the sweep up clause.
Not much of a bribe in my view.

[OldBoyReturns]

So we are being bribed with tuppence to vote for the sweep up clause.
Not much of a bribe in my view.

But if you are accepting the offer (which in my opinion is fairly generous compared to market) why would you not also take the extra voting fee available?

[Seasider]

OK So I am going to make a loss at this price. A loss I cannot use for CGT because it is a PIBS. But what about the voting fee? Is that subject to CGT? Is it pure gain? Or can I say it is outside CGT because it relates to a QCB?

It may not be a lot but paying CGT on a transaction where I make an overall loss just goes against the grain.

[88V8]

OK So I am going to make a loss at this price. A loss I cannot use for CGT because it is a PIBS. But what about the voting fee? Is that subject to CGT? Is it pure gain? Or can I say it is outside CGT because it relates to a QCB?
It may not be a lot but paying CGT on a transaction where I make an overall loss just goes against the grain.

Then don't declare it.
Big Brother is not totally omniscient.

V8

[Dod101]

OK So I am going to make a loss at this price. A loss I cannot use for CGT because it is a PIBS. But what about the voting fee? Is that subject to CGT? Is it pure gain? Or can I say it is outside CGT because it relates to a QCB?

It may not be a lot but paying CGT on a transaction where I make an overall loss just goes against the grain.

Presumably you bought them at a price higher than today’s That could be described as brave.

This is costing LBS a huge amount but will of course save them paying the very high interest rate. I would have thought that most holders would be happy to accept these terms though.

Dod

[Seasider]

OK So I am going to make a loss at this price. A loss I cannot use for CGT because it is a PIBS. But what about the voting fee? Is that subject to CGT? Is it pure gain? Or can I say it is outside CGT because it relates to a QCB?

It may not be a lot but paying CGT on a transaction where I make an overall loss just goes against the grain.

Presumably you bought them at a price higher than today’s That could be described as brave.

This is costing LBS a huge amount but will of course save them paying the very high interest rate. I would have thought that most holders would be happy to accept these terms though.

Dod

I was a fair bit younger then. Of course if I had been braver and bought some more recently I'd have less of a loss.

[Seasider]

OK So I am going to make a loss at this price. A loss I cannot use for CGT because it is a PIBS. But what about the voting fee? Is that subject to CGT? Is it pure gain? Or can I say it is outside CGT because it relates to a QCB?
It may not be a lot but paying CGT on a transaction where I make an overall loss just goes against the grain.

Then don't declare it.
Big Brother is not totally omniscient.

V8

I am not THAT brave.

Looking at the timetable I think the disposal date will be 2 April 2024 (when the result of the tender is announced) rather than 9 April (the settlement date) so that any reporting I do would be for this tax year and not next. So I could not even claim that it slipped my mind.

[Holts]

Short term thinking .

[Seasider]

Short term thinking .

Is that along the lines of "I can't remember what I had for breakfast, officer. Why don't you ask me what I was doing 40 years ago?"

[hiriskpaul]

The offer represents a running yield of 6.97% at 190+2. Personally I would not have sold at that price as I think the yield will eventually go to 6.5%. The Leeds is an absolutely rock solid overly capitalised BS and it would be a shame to give up the PIBS at 6.97%, but I will probably take up the offer as I think I will probably lose them anyway.

[Holts]

Short term thinking .

Is that along the lines of "I can't remember what I had for breakfast, officer. Why don't you ask me what I was doing 40 years ago?"

More a case of , being an income seeker , lost BOI , now LBS , SKIP or COV maybe next , the Universe continues to shrink and am sulking .

[Borderline]

I agree with Hirskpaul and see the Leeds Pibs as a nice little earner that I don’t have to worry about and am reluctant to let go of them. In fact I would happily have bought more if it had been possible via HL.
I do, however, understand why The Leeds would want to get rid of them and it looks like they may have found a way to do it.
In summary I see it as an okay offer and not overly generous but then they are from Yorkshire.

My problem is I don’t want it to be known I can be bribed with tuppence.

[Jwdool]

Seems that PIBS are going to get bought as others follow Leeds and BoI. These notes are going to ultimately get tendered at ~15% above current market prices. For those interested the latest yields are around:

CVBP 7.05%
CEBB 6.35% (if called)
POBA 4.60% (if called)
NABB 4.1% (if called)
MBSP 7.1% (if called)
MBSR 7.16%
NBSP 7.47%
NBSR 7.25%
NOTP 7.5%
SKIP and SBSA 7.15%
WBS 11.25% (if called)

Although there are some nuances, the WBS is looking good value at current levels, given the Feb 2026 re-set which will boost coupon as is the MBSP, given the high coupon, sub par price and inevitable call. NOTP is also a good name around par-ish.

I suspect these prices won't be around these levels in a week or two. The market will gradually price in the inevitability of a call (along with GACA/B, RSAB given the reg changes in insurance).

[JohnEdwards]

I'm not a holder, but if it is modelled closely on the recent BOI tender, you may well find that (while declining) you can get the 2p (per unit) bribe just by voting in the solicitation - even AGAINST (optimistically) - as long as it succeeds! That's what I did with BOI and although they scraped enough votes to implement it, I did get the 2p (for what it was worth).

[88V8]

Is that along the lines of "I can't remember what I had for breakfast, officer. Why don't you ask me what I was doing 40 years ago?"

More a case of, being an income seeker , lost BOI , now LBS , SKIP or COV maybe next , the Universe continues to shrink and am sulking .

Yes, but meanwhile one can pile in with a reasonable expectation of a bonus, and a decent yield.

Disadvantage of PIBS vs Prefs, if in a tax-exposed a/c, is the higher tax rate.

V8

[Holts]

More a case of, being an income seeker , lost BOI , now LBS , SKIP or COV maybe next , the Universe continues to shrink and am sulking .

Yes, but meanwhile one can pile in with a reasonable expectation of a bonus, and a decent yield.

Disadvantage of PIBS vs Prefs, if in a tax-exposed a/c, is the higher tax rate.

V8

What surprised me yesterday was how slow the price was to adjust to the offer .

[Borderline]

Thanks JohnEdwards, I hadn’t realised that the tuppence was an incentive to vote and that even if you vote no and the resolution is passed you still get this plus the offer price.
The issue for me is if I vote no and the resolution is not passed I end up with an even less liquid investment than before [unless they get around to enabling Crest settlement].