Tender offers Bristol & West prefs and BOI pibs

[JohnEdwards]

Well, we tried! But the abstentions (deliberate or careless) were just far too high.

I think it's inevitable that others will follow this example now and we'll soon see the end of the available universe of perpetual bank issues. which would be a great shame. What is it about 'perpetual' that isn't understood?

[GrahamPlatt]

I agree. Everyone on here has a great deal to be thankful for when it comes to Mark Taber. A proper unsung hero!

In thanks to our hero, that he does not go unsung

https://youtu.be/QcaNBBeZuW4

(June Tabor, Finisterre)

[GoSeigen]

What is it about 'perpetual' that isn't understood?

??

Perpetual does not mean the issuer may not purchase the stock. It means that the holder of the security has no right to repayment. They may only get their principal back when offered it back. [This is a big negative for the investor, by the way, which is why perpetual securities usually offer a higher yield than redeemable or dated ones.]



GS

[88V8]

In the OP,

Bristol & West is no longer an active banking entity and has no other material assets or liabilities apart from the Preference Shares.
The Bank of Ireland Group's ultimate intention, following the Tender Offer, is to wind up Bristol & West through a members' voluntary liquidation process (the Liquidation). This would mean that Bristol & West would cease to exist.
Any Liquidation is conditional upon receipt of the approval of 75% of Bristol & West's shareholders present and voting at a general meeting.
If the Liquidation is approved by the requisite majority of shareholders, holders of Preference Shares at the time (i.e. who have not accepted the Tender Offer) are expected to receive a cash distribution out of the Liquidation proceeds in accordance with the articles of association of Bristol & West.

In all the kerfuffle anent BOI, it may have been overlooked that BWSA were tendered only to the extent of 48.54%, so the issue will not be cancelled.
This means that a useful rump is still circulating, current yield c7%, and BOI have commented that they may make another takeout offer in future.

So I shall probably buy some.

Pay date for those who tendered is around 16th Aug.

V8

[GoSeigen]

In all the kerfuffle anent BOI, it may have been overlooked that BWSA were tendered only to the extent of 48.54%, so the issue will not be cancelled.
This means that a useful rump is still circulating, current yield c7%, and BOI have commented that they may make another takeout offer in future.

So I shall probably buy some.

Pay date for those who tendered is around 16th Aug.

V8

Wow, that looks to me one of the most egregious misrepresentations of a linked document that I have ever seen on these boards!

The message of the announcement, far from creating the expectation of another juicier tender offer, is that BOI intend to liquidate the issuer. They intend to do so by acquiring the 75% of shares necessary to pass a resolution to that effect. They require a further c52% of the outstanding bonds in the market to do that and have said they will use all means possible to do so, including a tender at a LOWER price than the previous. They may be able to do so by acquiring some of the shares they need in the market and from institutions, and the remainder via a coercive tender in which it will be clear that any holdouts will only receive the liquidation preference.

Unless the price is fairly close to par I can't see much incentive to buy these shares in the hope of an uplift in a tender offer.

YMMV


GS

[88V8]

In all the kerfuffle anent BOI, it may have been overlooked that BWSA were tendered only to the extent of 48.54%, so the issue will not be cancelled.
This means that a useful rump is still circulating, current yield c7%, and BOI have commented that they may make another takeout offer in future.

Wow, that looks to me one of the most egregious misrepresentations of a linked document that I have ever seen on these boards!

The message of the announcement, far from creating the expectation of another juicier tender offer, is that BOI intend to liquidate the issuer. They intend to do so by acquiring the 75% of shares necessary to pass a resolution to that effect. They require a further c52% of the outstanding bonds in the market to do that and have said they will use all means possible to do so, including a tender at a LOWER price than the previous. They may be able to do so by acquiring some of the shares they need in the market and from institutions, and the remainder via a coercive tender in which it will be clear that any holdouts will only receive the liquidation preference.
Unless the price is fairly close to par I can't see much incentive to buy these shares in the hope of an uplift in a tender offer.

75% was always the threshold for liquidating the issue.

They say....
Following the Retail Settlement Date, the Bank of Ireland Group may, at its discretion, seek to acquire some or all of the remaining Preference Shares, including by way of open market purchases or launching another offer, with the intention of acquiring sufficient representation to be able to pass the Articles Amendment and Liquidation Resolution with at least 75 per cent. of the votes cast at a future general meeting of Bristol & West on behalf of the Bank of Ireland Group.
Any subsequent acquisitions, including through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise will be subject to their own terms and conditions, and at such prices as the Offeror, Bristol & West and the Dealer Managers or the relevant affiliate may determine, which may be more or less than the prices to be paid pursuant to the Tender Offer and could be for cash or other consideration or otherwise on terms more or less favourable than those contemplated by the Tender Offer..
Please be aware that the Bank of Ireland Group is not obliged to make further tender offers to purchase the Preference Shares in the future.

I said they may make another offer, which is what the linked RNS says.
Your glass seems to be half empty, other glasses are available.

V8

[Jwdool]

For those thinking about re-investment next week, you'd do worse than looking at 20 year gilt yields.
These are now returning ~4.9%, see here for full list plus yields:

https://www.yieldgimp.com/gilt-yields

The improvement in security from subordinated paper in a small Irish bank to gilts, in my view justifies (more than adequately) the small loss in yield. In my view, long end gilt yields are unlikely to climb much higher from here - given the direction of travel on inflation. For those looking for income rather than capital gain (which is tax free) there are lots of >4.25% coupon options on the list which are also yielding >4.8%. For those buying outside SIPP/ ISA, there are quite a few <1% coupon gilts also offering >4.7% returns pretty much across the curve.

We should all be thankful BoI delayed the payout until the end of August - given the huge improvement in yields since the announcement. Surprisingly PIBS/ Prefs have not come off along with gilts - but I suspect this is partially a delayed reaction.

[OldBoyReturns]

OB"Wan"R is tendering! Catharsis!
Let's take a minute to remember that we wouldn't even be in this situation (at least not for the BoI 13 3/8) as bondholders in 2023 if it wasn't for him. The bonds would have been toast 10y+ ago.

Thankyou for the kind words. And thanks to the current gilts rout it looks as though BOI holders will have the last laugh due to the issue being largely retail held. The fixed tender price looked about right when it was announced but the rise in gilt yields since makes it look very tasty now. Of course the tender offer price would likely have been variable based on a spread above gilt yields at settlement if BOI had been an institutional issue.

[GrahamPlatt]

Has anyone actually received their cash yet?

[PeterGray]

Not due till 25th

[Mrbond]

BOI Due on 25/8/23

I have received the payment for BWSA (AJ Bell)

[cprof]

Proceeds for certificated BOI pibs arrived this morning direct to bank account, nothing yet for my nominee accounts.(Interactice investor)
Does anyone know how each of the three components of these payments are handled from a tax perspective?
The simple thing would be to consider all as capital repayments and do captial gains calculations versus original purchase price, but I fear things may not be that simple!

[88V8]

Does anyone know how each of the three components of these payments are handled from a tax perspective?
The simple thing would be to consider all as capital repayments and do capital gains calculations versus original purchase price, but I fear things may not be that simple!

The coupon is the coupon, the redemption and the bribe are capital, so fortunately it is quite simple.

V8

[BondSquared]

Does anyone know how each of the three components of these payments are handled from a tax perspective?
The simple thing would be to consider all as capital repayments and do capital gains calculations versus original purchase price, but I fear things may not be that simple!

The coupon is the coupon, the redemption and the bribe are capital, so fortunately it is quite simple.

V8

Disagree on the bribe - it's clearly stated as a "fee", so is likely to be taxed as fee income. After all, it was a fee for submitting a vote, and not some interest/dividend/other payment related to the lending/borrowing economics of the bond.

[Laughton]

Iweb confirmed thay have received payment this morning - but it will be "next week" before their team can credit customers' accounts.

I thought that's what computerised systems were for.

[2boi2]

ii paid today and exactly the right amount inc voting 'fee'. Nothing in X-O though.

[88V8]

The coupon is the coupon, the redemption and the bribe are capital, so fortunately it is quite simple.

Disagree on the bribe - it's clearly stated as a "fee", so is likely to be taxed as fee income. After all, it was a fee for submitting a vote, and not some interest/dividend/other payment related to the lending/borrowing economics of the bond.

Mmm, well I shall lump it into capital and hope Hector doesn't come after me

I wonder what will be in the CTS.

V8

[BobGe]

ii showing it separately, fwiw.

(Halifax / iWeb said they are planning to wind up the computer..., once they can find the key.)

[air04]

I received BOI amount in YouInvest(A J Bell)

[OldBoyReturns]

BOI tender offer proceeds turned up in HL account about 5 minutes before market close. But whole lot credited to capital (ie no segregation of accrued interest element) and the 2p voting fee completely missed! I hope they managed top get the corporate action returns right ....