winningstreak
15 Mar 2018
Re: FCA Paul - Did you write or did the FCA write to Aviva about IRREDEEMABLE?ws
paul1945
15 Mar 2018
FCA Written to Aviva asking them to comment re IRREDEEMABLE!! PREF
winningstreak
15 Mar 2018
Re: Preference Shares Aviva should try to buy up the Directors' Ordinary shares at nominal issue value, see how they would like that!ws
The Dutchman
14 Mar 2018
Re: Preference Shares Paul1945, good post. Redeeming the prefs at par for the benefits of the ordinary shareholders is the equivalent of Shell redeeming the A Ords at par, for the benefit of the holders of B Ords
The Dutchman
14 Mar 2018
Re: Preference Shares Aggrieved shareholders should write to the senior Non Exec director and the chairman to complain about the treatment of the Irredeemable Pref shareholders - I certainly will.
cavebear
14 Mar 2018
Aviva vs Pru Given activity in Pru today, it is interesting to compare stock price performance for these two shares over last ten years.
paul1945
14 Mar 2018
Re: Preference Shares Do you hold any Irredeemable which means never redeemable prefs or Gen Acc. Pref ? or did you buy any at 150 or170 p which was the market price? Have you asked the people or given this opinion to the poor devils that did to have them redeemed @100 even in todays capital marketis that not very real money lost in todays capital markets do you own ordinary shares as directors do would you like them redeemed at their nominal value? Very best regards
Jezinho
14 Mar 2018
Re: Preference Shares Those accounting standards about having debt on your books at mark-to-market apply only to when you have a debt trading book. If it is debt that you have borrowed, then the book value is the actual outstanding amount.There seems to be some confusion amongst posters about the status of pref shares; whilst they may have a fixed coupon, they are not debt. They are not held on the balance sheet at market value as they don't belong to the company but to the holders. Thus any redemption is P&L neutral and if the cost of that redemption exceeds the nominal value, then the reserves will have to be reduced accordingly.I hear what you say about the shares being irredeemable but there must come a point when a company should be able to say it has atoned for the sins of its fathers, so to speak. These pref shares were issued some 25 years ago and their holders have had a pretty good run. They are arguably something of an anachronism in today's capital markets.best regardsJezinho
IOMINVESTCOM
13 Mar 2018
Aviva threatens to cancel high yield preference shares Thousands of investors in Aviva (AV + ) preference shares have been dealt a blow after the insurer signalled it may seek to cancel the high-yielding investments.The insurer revealed it is considering cancelling £450 million of preference shares, which will save it £38 million a year in coupon payments.The shares feature high fixed dividends of between 7.875% and 8.875% and their strong yields had led to them trading at high premiums to their 'par' values, or issue price.Aviva's threat to cancel the shares at par value, announced alongside full-year results on Thursday, sent them tumbling. Aviva's 8.75% preference shares are down 30.7% since the announcement, while the 8.375% shares have dropped 28.8%.Preference shares issued by General Accident, the car insurer which merged with Aviva predecessor Norwich Union in 2000, have also been hit by the news. Its 8.875% preference shares have fallen 30.3%, with the 7.875% shares dropping 22.1%.Aviva warned in its full-year results that it had 'the ability to cancel preference shares at par value through a reduction in capital, subject to shareholder vote and court approval'.'The preference shares carry high coupons that are not tax-deductible and they will not count as regulatory capital from 2026.'Bond expert and investor activist Mark Taber of Fixed Income Investments has written to Aviva on behalf of the 580,000 retail investors who could see their incomes hit.He said that the insurer had made ‘no previous public reference to believing the preference shares could be cancelled at par without a class vote [of the holders]’ and that the prospectus stated they ‘shall not be redeemable, save with the approval of the holders’.Taber criticised the insurer for the way it has gone about trying to redeem the preference shares, involving ordinary shareholders who are likely to vote for redemption in order to save £38 million in coupon payments and whose votes outweigh those of the preference shareholders.Taber added that ‘for many years the market has priced the preference shares on the basis that they cannot be redeemed without class consent of holders or a winding up of the company’.‘Aviva will have been well aware of this and has taken no steps to inform the market otherwise,’ he said.The news also knocked the broader preference shares market. Insurer Ecclesiastical, whose preference shares dropped 11% on Aviva's announcement before rebounding, issued a statement to the market yesterday reassuring investors.'Ecclesiastical notes Aviva's governance statement that "as one of the biggest companies in our sector, we aim to make our industry work better for everyone",' it said.'Ecclesiastical trusts that Aviva will follow the principles set out in that statement when considering whether to pursue this course of action.'Ecclesiastical is also a holder of Aviva and General Accident preference shares, but said the holdings were 'not material in size in the context of Aviva's announcement and Ecclesiastical's balance sheet strength'.The situation with Aviva mirrors that of Lloyds (LLOY + ) in 2016, which bought back £3 billion of bonds from investors but not before a Supreme Court battle.The ‘enhanced capital notes’ paid a generous 10% interest but the court ruled that the bank was within its rights to redeem them despite a campaign headed by Taber to prevent it from doing so.[link]
winningstreak
13 Mar 2018
Re: Preference Shares / market value If the Irredeemable shares are in Aviva's books at market value, then Aviva and their Accountants recognize that market value prevails when buying the shares back.And clearly market value has to mean market value before the pricecrashing statement - otherwise the directors would stand accused of market price manipulation, which is a criminal offence.ws.
The Dutchman
13 Mar 2018
Re: Preference Shares Jezinho,Under IFRS accounting standards debt has to be accounted for at market value, therefore debt with a high fixed interest will have a high market value and if redeemed at par a profit has to be booked. As I say I'm not sure if exactly the same rules apply to preference shares.As regards the company ridding themselves of high interest paying debt. The company chose to issue these Irredeemable preference shares at some point in the past, why didn't they issue 3% debt -- of course that was impossible at the time, why didn't they issue 9% convertible preference shares with a fixed term, that would have been better, but maybe impossible at the time. So they must now live with the consequences of their past actions or past circumstances and do the right thing by the preference shareholders.
Jezinho
13 Mar 2018
Re: Preference Shares Dear Dutchmanref. your point about borrowers buying their debt back at a discount - I am not sure that this is P&L neutral. If a company buys back $100 of debt and uses $95 to do this, there has to be a $5 balancing item, i.e. in the P&L - it is reported as being a non-operating item.On the more general point about the redemption of the pref shares, I accept that they might be called irredeemable but what do the terms of the notes say? As an ordinary shareholder, I am all for Aviva trying to reduce its cost of capital. They are not a charity and why should an Aa3 rated corporate pay some 9% on debt in perpetuity.best regardsJezinho
foolish learner
12 Mar 2018
Re: Aviva prefs i hope you are right, unfortunately the scenario reflects the current attitude of of those in power and Aviva promote we are there for you, my Aviva policies will be elsewhere on renewal. The statement in the report with out clarification (which was no problem to Ecclesiastical} to date is morally wrong. no doubt a hand full of solicitors and barrister will be better off at the end of thisFL
clifk
12 Mar 2018
Re: Aviva prefs I am not a holder of Aviva prefs but do hold a chunk of Lloyds high coupon irredeemable prefs which have taken a knock today. Lloyds had the opportunity to seek redemption of the NCIPs alongside their ECNs a while back and IMO would have done so if legally possible. However, the term irredeemable is just that - cannot be legally redeemed without the prior consent of the stockholder. To the best of my knowledge, preference shares may be cumulative or non cumulative ( indicating whether missed payments need to be repaid before recommencement of ordinary share dividends, and in either case must be resumed before ordinary share dividends), irredeemable or redeemable, and if so with a redemption date ( usually atpar), convertible (into equity at a predetermined rate which can change to maintainthe equity proportion in the event of equity dilution) or not, subordinated or not (indicating ranking of the stock in relation to other stocks in the event of the business going bust and in any case preference shares rank above ordinary shares). Each term has some financial impact on the value of the underlying stock. It is also my understanding that changes to any of these terms can only be made with the explicit consent of the individual holders of the stock - only likely if the terms are favourable to the holder.In looking at the Aviva statement and comment in the annual results - the wording seems generic as to intent for all classes of preference holders, and if a holder of irredeemable preference shares I would ask for clarification from the company as to its specific position on their stock. The term irredeemable is incontrovertible, and IMO cannot be legally dismissed other than with the holder's consent.
Radaking
12 Mar 2018
away we go Choose life, choose AVIVA and thats that........
