Tender offers Bristol & West prefs and BOI pibs

[daveh]

https://www.investegate.co.uk/announcem ... es/7585628

The Governor and Company of the Bank of Ireland (the "Offeror"), a subsidiary of Bank of Ireland Group plc ("BOIG"), today announces invitations to holders to tender any and all of their £32,593,734 8.125 per cent non-cumulative, non-redeemable preference shares issued by Bristol & West plc (itself a wholly owned subsidiary of the Bank of Ireland Group) (the "Preference Shares") on the terms set out in the offer memorandum dated today (the "Offer Memorandum") and as summarised below (the "Tender Offer").

The Tender Offer is part of the Bank of Ireland Group's process to optimise its capital structure, to achieve among other things, a retirement of inefficient legacy perpetual instruments which no longer qualify as regulatory capital while also providing liquidity to Preference Share Holders.

[b]Offer Price and Payment in Lieu of Dividend Amount[/b]



The Offeror will pay each Preference Share Holder in respect of Preference Shares validly submitted for tender and accepted for purchase by the Offeror (i) the price of £1.17500 per Preference Share (the "Offer Price"); and (ii) a cash amount per Preference Share equal to the amount of the dividends that would have accrued on the Preference Shares from (and including) the date of the relevant preceding preference dividend payment date for the Preference Shares immediately preceding the relevant Settlement Date to (but excluding) the relevant Settlement Date, if such dividends were cumulative and calculated on the basis of a 365 day year and the actual number of days elapsed in such period (the "Payment in Lieu of Dividend Amount").

Liquidation

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.

Not one I hold, buth thought it might be of interest

[daveh]

and this seems to be a part of a larger tender by BoI for other legacy perpetual instruments

https://www.investegate.co.uk/announcem ... ts/7585624

Bank of Ireland Group is today inviting holders of the following legacy perpetual instruments (the "instruments") to tender any and all of their holdings at a premium (the "Offers"):



(i) 12.625% Non-Cumulative Sterling Preference Stock of £1.00 each of the Governor and Company of the Bank of Ireland ("GovCo") pursuant to an invitation by Bank of Ireland Nominee 3 Limited, a subsidiary of Bank of Ireland Group plc;

(ii) 12% Non-Cumulative Euro Preference Stock of €1.27 each of GovCo, pursuant to an invitation by Bank of Ireland Nominee 3 Limited, a subsidiary of Bank of Ireland Group plc;

(iii) 8.125% Non-Cumulative Non-Redeemable Preference Shares issued by Bristol & West plc, pursuant to an invitation by GovCo; and

(iv) 13.375% Unsecured Perpetual Subordinated Bonds of GovCo (the "GovCo Bonds"), pursuant to an invitation by GovCo (acting through its United Kingdom branch).

[Laughton]

Well that's interesting as BOI quite a big holding for me. Now, what to do? Even at the offer price of 190p including the "voting fee" I make the yield 7.039% which is still nice to have. But if I vote against but call goes through (is that just a majority?) then I lose out on the extra 2% and have the bonds taken away from me anyway.

At least that's how I read it.

BOE seems likely to raise interest rates tomorrow given inflation numbers today (and maybe by .5%) so maybe other fixed rate intruments will be available shortly offering better than 7% yields??

Decisions decicisions.

Thoughts from better informed/more knowledgeable FI investors welcomed.

[88V8]

https://www.investegate.co.uk/announcement/rns/bristol-west-plc--bwsa/launch-of-tender-offer-for-preference-shares/7585628

...the price of £1.17500 per Preference Share (the "Offer Price")...

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.

My wife holds a few BWSA, been trading around 105, so this is a significant premium and should hoover up the majority.

BOI has also moved up given the (lesser) premium. We hold a lot of those. Quite a turnaround from a few years ago when OBR had to ride to the rescue of holders.

But once again the investable universe is shrinking

And puts me in mind of GACA/B given that General Accident also exists only through its legacy Prefs. A nice premium offer there would not be unwelcome I imagine.

Now to try and guess which others might be tendered.....

V8

[monabri]

I've bought several prefs recently.....not this one!

[hiriskpaul]

Don't hold the prefs, but do hold the 13.375%. Typical BOI trickiness. If you tender you automatically vote in favour, you don't get the voting fee unless the vote is successful. I am minded to vote against just to say up yours. However, the offer price is not ungenerous, so need to ponder this.

[Jwdool]

The offer is the most generous of offers, but holders might want to bear in mind the post-tender experience of NWBD (priced at around 175p, now trading at ~128p).

The thing to remember is what stops the notes from trading back to ~169p (on the BoI) or 106p on the BWSA after the tender. The notes will, after all, tend towards their respective relative value over time, with the downside being less liquidity. There are also a number of similar names that holders could go into (building society PIBS come to mind) - with higher yields post tender, e.g. Manchester/ Newcastle/ Skipton/ Coventry/ Leeds etc.

[GoSeigen]

Don't hold the prefs, but do hold the 13.375%. Typical BOI trickiness. If you tender you automatically vote in favour, you don't get the voting fee unless the vote is successful. I am minded to vote against just to say up yours. However, the offer price is not ungenerous, so need to ponder this.

BoI are not the only issuer ever to have done this. As I understand it such consent solicitations have not been successfully challenged in court. I don't see much utility in sticking a finger up to them. The offer is good, the issuer is providing liquidity and I'll take advantage, as I did with NWBD at 175p. I need the cash anyway and have other bonds with higher yield.


GS

[air04]

I need the cash anyway and have other bonds with higher yield.
GS

I would be delighted to know what bonds are in your mind if you are happy to share. I will be getting some cash soon to invest.

[hiriskpaul]

Don't hold the prefs, but do hold the 13.375%. Typical BOI trickiness. If you tender you automatically vote in favour, you don't get the voting fee unless the vote is successful. I am minded to vote against just to say up yours. However, the offer price is not ungenerous, so need to ponder this.

BoI are not the only issuer ever to have done this. As I understand it such consent solicitations have not been successfully challenged in court. I don't see much utility in sticking a finger up to them. The offer is good, the issuer is providing liquidity and I'll take advantage, as I did with NWBD at 175p. I need the cash anyway and have other bonds with higher yield.


GS

Yes, I will probably tender as well. To be fair to them I misread the offer first time. It does appear to be possible to vote for the insertion of the call option, but not tender. That would mean you are prepared to accept the offer if you get 190, but not 188. It makes no financial sense to tender and not vote for the call option, so I can see the logic in automatically assuming anyone tendering votes YES. The part I don't much like is that if you vote against, but get swept up anyway, you will receive a lower price to those who voted in favour. IMHO, that's coercive.

[GoSeigen]

I need the cash anyway and have other bonds with higher yield.
GS

I would be delighted to know what bonds are in your mind if you are happy to share. I will be getting some cash soon to invest.

Not sure I'd recommend them to be bought but I hold lots of MBSR (7.7%), imminently to merge with Newcastle BS. Would rather tender BOI than sell these. Similarly WBS, yield is hard to calculate but I make it between 6 and 10% yield depending what happens.

For new purchases others might have better ideas. I'll be paying down debt with my cash.

The part I don't much like is that if you vote against, but get swept up anyway, you will receive a lower price to those who voted in favour. IMHO, that's coercive.

Indeed, but I can't see that being seriously challenged either, not at the moment anyway. One day someone will over-reach with the incentive and then perhaps be sued.


GS

[88V8]

The part I don't much like is that if you vote against, but get swept up anyway, you will receive a lower price to those who voted in favour. IMHO, that's coercive.

Does a donkey deem a carrot coercive?

V8

[Laughton]

I'm sure many of the other usual suspects will be monitoring outcome and the premium being offered to see whether they should make similar tenders.

Lloyds, Nat West, Santander, Aviva all spring to mind.

On reflection, I'm likley to tender BOI for the "extra" 2% assuming iweb get round to telling me about it.

[GoSeigen]

I've offloaded a few ordinary shares today into recent strength/buyback activity as part of a gradual reduction of exposure. If they are much cheaper by the time of the tender I might just recycle the cash back into the ords.

GS

[Swanmore22]

These are my largest bond holding and have been for some time
Fair but not over generous @ 7% ..£2.20 would have taken me out
Illiquidity is a concern..will it be any worse post tender ? Not really..they are already illiquid.
What will happen after this tender ? Another tender perhaps..

Do nothing was my first reaction but checking the improved settlement price today did feel comforting
Tender half and run the balance ?
S/dated Gilts fit my set up currently and would be initial beneficiary of proceeds.
Perhaps some more nwide CCDS to add some spice ..

Swan

[NealMorris]

BOI is one of my largest holdings, these Bonds are well supported by a well capitalised bank. I do not want to sell them, I would prefer to hold them for eternity, the income forms an important part of my pension income and am a little dismayed to see so many others saying they'll accept the offer.

The BWSA ones, I've ready the report but can't really make head nor tail of what I would be left with if a similar majority accept the offer then the company gets liquidated, I assume it would be less than the offer?

[hiriskpaul]

BOI are held in our SIPPs and ISAs so I have to do something with the money as the interest is derisory. Not sure what yet though. At current prices I don't feel inclined to add to existing FI positions. Lloyds LLPC/LLPD, or subordinated bonds if there are any left, might be of interest as I previously tendered all our LLPC/LLPD.

Linkers maybe? Some of these are offering about RPI+1%. Might be even better once the BOI proceeds come through. Potentially decent upside should they revert back to below RPI again and even if they don't RPI+1% with negligible credit risk is still worth having.

[hiriskpaul]

Here we go, just arrived in my inbox - 22% fixed return over 2 years:

https://landing.investsuccess.co.uk/HJ? ... =322054663

(I am joking of course).

[BondSquared]

BOI are held in our SIPPs and ISAs so I have to do something with the money as the interest is derisory. Not sure what yet though. At current prices I don't feel inclined to add to existing FI positions. Lloyds LLPC/LLPD, or subordinated bonds if there are any left, might be of interest as I previously tendered all our LLPC/LLPD.

Linkers maybe? Some of these are offering about RPI+1%. Might be even better once the BOI proceeds come through. Potentially decent upside should they revert back to below RPI again and even if they don't RPI+1% with negligible credit risk is still worth having.

Same here - have been shifting into Linkers 41 and 51 at RPI+1.15%ish over the past weeks. Not just for the real yield but also as a duration play with huge convexity on the longer-dated linkers. Impressed by AJBell execution - usually close to mid interbank pricing via Bloomberg MTF.

[MickR]

The 13 3/8 preffs make up around 5% of my capital, and I hold purely for the long term income they generate. Like many, the offer looks OK, but I've no idea where I'd reinvest at the minute, and I can see if this is successful then a lot of the other similar instruments which I also hold will go the same way.

I've read through the announcement on Investigate, but I can't get onto my broker's website at the minute for other details so can someone clarify in respect to the 13 3/8 preffs

Can you tender some of your holding, or is it all or nothing?

Can you still vote yes or no, irrespective of whether you tender none, any or all of your shares?

Confirm that if the majority of vote yes, then they will call all of the shares

I suppose the big question is if the vote is no, will they call the remainder at par at some point in the future. Can anyone remember what the offer was a few years ago when Mark Tabber took them to court?

Thanks in advance

Mick