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Preference shares -- keeping it simple

Gilts, bonds, and interest-bearing shares
ChrisNix
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Re: Preference shares -- keeping it simple

#356304

Postby ChrisNix » November 13th, 2020, 6:07 pm

AleisterCrowley wrote:
Gan020 wrote:It is the nature risk analysis. Most of the popluation underestimate risk and overestimate opportunties.

In the case of shares, bonds and everything else to do with the stock market it is apparent to me that 95% of investors do not read a set of company accounts, let along read every word of the bond or pref share prospectus. We know this because of the large number of questions that get asked.

In the case of the RSAB prefs, downloading the listing pariculars from RSA's website gives us some insight into this because you do not get a clean pristine document from the day it was published. What you get instead is interesting because someone has used a computer generated day-glo highlighter on it in 4 places.

I will not touch RSAB unless it goes much closer to par, mainly because if I want a 5.5% yield I can get that with much lower risk to my capital.



The RSAB particulars state that pref holders have a right to vote at any EGM affecting them
It's not clear (to me) if that vote is limited to pref holders or pooled with holders of ordinary shares. In the latter case I guess the ordinary share holders may vote to redeem the prefs at par if it benefits them


AC,

You are right. All shareholders (ords and pref's) can vote and from memory the ords can easily outvote the pref's.

Chris

AleisterCrowley
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Re: Preference shares -- keeping it simple

#356313

Postby AleisterCrowley » November 13th, 2020, 6:32 pm

I have a moderate dollop* of RSAB, so somewhat concerned that it may go to a vote where the pref holders' preferred outcome is diametrically opposed to that of the ord holders

I will dig out the particulars. I guess buying some ordinary shares would be a hedge ?! :-0

*this is a technical term that only Finance Professionals will understand

OwenSwansea
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Re: Preference shares -- keeping it simple

#356347

Postby OwenSwansea » November 13th, 2020, 9:18 pm

Meanwhile, Aviva Prefs have had a very good week!!!!!!!!!

Owen.

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Re: Preference shares -- keeping it simple

#357052

Postby AleisterCrowley » November 16th, 2020, 3:21 pm

Rightly or wrongly I sold my RSAB this morning. That's normally a good sign that that they are going to go up

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Re: Preference shares -- keeping it simple

#357974

Postby ChrisNix » November 19th, 2020, 8:50 am

Offer for RSA contains no offer for RSAB, nor are there any undertakings in respect of same.

Chris

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Re: Preference shares -- keeping it simple

#358311

Postby OwenSwansea » November 20th, 2020, 9:26 am

Meanwhile, in the real world, RSAB are going up!

Owen.

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Re: Preference shares -- keeping it simple

#358318

Postby AleisterCrowley » November 20th, 2020, 9:41 am

I got 126p for mine net. Happy to miss out on whatever gains are ahead - rather than worrying about a potential £650 loss if they are cancelled at par

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Re: Preference shares -- keeping it simple

#359212

Postby stockton » November 23rd, 2020, 10:16 am

OwenSwansea wrote:The word “Irredeemable” only has one meaning, and I think we all know what that is..................

Owen.

The word "irredeemable" clearly has two distinct meanings - which is why it should never appear in a prospectus.
Anyone using it in a prospectus is clearly at risk of a court deciding that the opposite meaning is appropriate in the relevant context.

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Re: Preference shares -- keeping it simple

#359219

Postby scrumpyjack » November 23rd, 2020, 10:29 am

Once RSA has been taken over, the acquirers will own all the equity shares and presumably can then easily, and probably with minimum fuss and publicity, vote to redeem the pref.

From their point of view there is no point in raising this issue in the takeover documents. Better to leave it 6 months and then just do it.

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Re: Preference shares -- keeping it simple

#359252

Postby OwenSwansea » November 23rd, 2020, 12:05 pm

If the word Irredeemable “clearly has two meanings” the English language is no longer suitable for use in legally binding contracts.
Which language should be used from now on, Welsh perhaps?

Owen.

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Re: Preference shares -- keeping it simple

#359257

Postby AleisterCrowley » November 23rd, 2020, 12:15 pm

Klingon

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Re: Preference shares -- keeping it simple

#359260

Postby GoSeigen » November 23rd, 2020, 12:19 pm

OwenSwansea wrote:If the word Irredeemable “clearly has two meanings” the English language is no longer suitable for use in legally binding contracts.
Which language should be used from now on, Welsh perhaps?

Owen.



Practically every word in your two sentences above has more than one meaning. Get a life, man!


GS

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Re: Preference shares -- keeping it simple

#359327

Postby OwenSwansea » November 23rd, 2020, 3:54 pm

GoSeigen,
Certain words may have two meaning, however “Irredeemable” is not one of them.

Owen.

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Re: Preference shares -- keeping it simple

#359378

Postby ChrisNix » November 23rd, 2020, 6:04 pm

OwenSwansea wrote:GoSeigen,
Certain words may have two meaning, however “Irredeemable” is not one of them.

Owen.


irredeemable
/ɪrɪˈdiːməb(ə)l/

adjective

1.
not able to be saved, improved, or corrected.
"so many irredeemable mistakes have been made"
2.
(of paper currency) for which the issuing authority does not undertake to pay coin.

NQED?

Chris

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Re: Preference shares -- keeping it simple

#359393

Postby OwenSwansea » November 23rd, 2020, 6:36 pm

ChrisNix,
Whatever the context is in which you use the word Irredeemable, it only has one meaning, and everyone knows what that is.............

Owen.

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Re: Preference shares -- keeping it simple

#359411

Postby stockton » November 23rd, 2020, 8:04 pm

Interesting page here https://dictionary.cambridge.org/dictio ... redeemable
where they provide a ChrisNix type definition but then provide examples which suggest the opposite definition.

IRREDEEMABLES

bonds that pay interest but have no agreed date on which the borrower must pay the lender:

"Irredeemables have no redemption date at all, so that interest on them will be paid indefinitely."

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Re: Preference shares -- keeping it simple

#359653

Postby ChrisNix » November 24th, 2020, 3:37 pm

stockton wrote:Interesting page here https://dictionary.cambridge.org/dictio ... redeemable
where they provide a ChrisNix type definition but then provide examples which suggest the opposite definition.

IRREDEEMABLES

bonds that pay interest but have no agreed date on which the borrower must pay the lender:

"Irredeemables have no redemption date at all, so that interest on them will be paid indefinitely."


In Bonds (the reference) that is probably right.

In pref's, because they are subject to general right under companies act for companies to be able to return capital, it would not be correct.

Interesting to ponder if there is any reason why a company would be prevented from returning half the par value of a preference share -- ordinary returns are usually for a proportion of capital paid up?

Chris

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Re: Preference shares -- keeping it simple

#359655

Postby GoSeigen » November 24th, 2020, 3:43 pm

OwenSwansea wrote:GoSeigen,
Certain words may have two meaning, however “Irredeemable” is not one of them.

Owen.


Irredeemable has many meanings: your understanding of English seems even more rudimentary than your understanding of preference shares! If you want to understand the rights attached to preference shares you need to read their terms and the law which governs them as per the OP of this thread.

GS

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Re: Preference shares -- keeping it simple

#359658

Postby GoSeigen » November 24th, 2020, 3:48 pm

stockton wrote:Interesting page here https://dictionary.cambridge.org/dictio ... redeemable
where they provide a ChrisNix type definition but then provide examples which suggest the opposite definition.

IRREDEEMABLES

bonds that pay interest but have no agreed date on which the borrower must pay the lender:

"Irredeemables have no redemption date at all, so that interest on them will be paid indefinitely."


Stockton even more lost than OwenSwansea! OS's [mistaken] point was that there is ONLY ONE meaning to the term IRREDEEMABLE.

You quoted the meaning of an entirely different word "irredeemables" which is a noun not an adjective, and the quote refers to bonds, not preference shares.

Wake up at the back!


GS

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Re: Preference shares -- keeping it simple

#359684

Postby OwenSwansea » November 24th, 2020, 4:59 pm

Fortunately, a rudimentary knowledge is all you need to understand the rights attached to Preference Shares. They are not that complicated.
Ambiguous Prospectuses are the problem!

Owen.


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