Leeds Building Society 13.375% PIBS (LBS) Tender Offer

[Bern]

AJ Bell have now reissued their notice with an option 4 -- Don't tender, vote against and get the 2%.

They say they have received an update.

[Laughton]

Twas the same with BOI - holders had to explain to brokers what it was all about.

[Borderline]

This just in from HL:

Leeds Building Society is offering to buy some or all of your 13.375% PIBS at a price of £1.90 per PIBS.

At the same time, the company is seeking shareholder approval to amend the terms of the PIBS so that any PIBS not submitted in acceptance of the tender offer can be redeemed in full. This proposal is subject to shareholder approval at a meeting to be held on 2 April 2024, and if approved all PIBS will be redeemed at the tender offer price.

You have 2 options

Option 1 – Tender your PIBS and approve the changes. You can ask to sell some or all of your PIBS in the offer. Any tender must be
for a multiple of 1,000 PIBS.

Accrued and unpaid interest up until the redemption date will also be paid on successfully tendered PIBS. If you tender your PIBS, you are automatically counted as voting in favour of the resolution and you will receive a voting fee of 2p per PIBS tendered, if the proposal is approved.

Option 2 – Don’t tender your PIBS but vote on the changes. You can vote for or against the proposal but keep all your PIBS. If you do this and the proposal is approved, you’ll receive a voting fee of 2p per PIBS.

If you don’t wish to sell your PIBS in the offer, or vote on the resolution, you don’t need to do anything. Depending on the outcome of the meeting, your PIBS may be compulsorily redeemed by the company.

Please act by noon on Friday 22 March 2024

[JohnEdwards]

Cut & paste from BoI. It doesn't mention the need for a 75% majority though.

[hiriskpaul]

I thought the HL communication was very clear:

Leeds Building Society is offering to buy some or all of your 13.375% PIBS at a price of £1.90 per PIBS.

At the same time, the company is seeking shareholder approval to amend the terms of the PIBS so that any PIBS not submitted in acceptance of the tender offer can be redeemed in full. This proposal is subject to shareholder approval at a meeting to be held on 2 April 2024, and if approved all PIBS will be redeemed at the tender offer price.

You have 2 options

Option 1 – Tender your PIBS and approve the changes. You can ask to sell some or all of your PIBS in the offer. Any tender must be for a multiple of 1,000 PIBS.

Accrued and unpaid interest up until the redemption date will also be paid on successfully tendered PIBS. If you tender your PIBS, you are automatically counted as voting in favour of the resolution and you will receive a voting fee of 2p per PIBS tendered, if the proposal is approved.

Option 2 – Don’t tender your PIBS but vote on the changes. You can vote for or against the proposal but keep all your PIBS. If you do this and the proposal is approved, you’ll receive a voting fee of 2p per PIBS.

If you don’t wish to sell your PIBS in the offer, or vote on the resolution, you don’t need to do anything. Depending on the outcome of the meeting, your PIBS may be compulsorily redeemed by the company.

Please act by noon on Friday 22 March 2024

[hiriskpaul]

Sorry for the duplicate post!

[BobGe]

I've no idea if it can be done but I was thinking it might be interesting to have a poll of voting intent (for/against) which would also give an indication voting power (holding). I don't know how to set one up, or the limitations of what can be achieved. But, if others think it a good idea, maybe someone could have a go?

[GoSeigen]

Anyone seen an offer memorandum yet?


I don't see any point in holding a poll until all the facts are known.


GS

[Borderline]

My intention is to vote against the resolution but as my holding is just 8000 Pibs that equates to about 0.032% of those in issue.
As a responsible business regulated by and subject to the rules of the FCA, and with a Credit Rating of A-, a 7% yield works for me.
And who knows, if the resolution fails then they may even get around to enabling Crest settlement.
It might even discourage les autres.

[Dod101]

If they are yielding 7% I cannot see that holder has an incentive to vote for redemption. It is not as if Leeds is a plc. Then obviously existing shareholders would have an incentive to persuade holders re redemption but a mutual building society? Clearly it will benefit the business to redeem but unless they intend to demutualise I cannot see any benefit in redemption otherwise.

Dod

[Seasider]

I think link should get you to the Offer Memorandum.
https://www.dfkingltd.com/lbs/disclaime ... uncements/

I was wondering about voting against but I will have a read of the Memorandum to see what they say happens if the resolution is defeated.

[Borderline]

From the Offer Memorandum

Page 7:
(8) Do I have to take any action in connection with the Offers?

If the Resolution is not passed, PIBS Holders who do not participate will continue to hold their PIBS.

Page 46:
Other purchases of the PIBS

Whether or not the Tender Offer is completed, the Society, the Dealer Manager, the Receiving Agent, the Retail Information Agent, the Registrar and their respective Affiliates may, to the extent permitted by applicable law, continue to acquire, from time to time, PIBS other than pursuant to the Tender Offer, including through open market purchases and privately negotiated transactions, or otherwise, upon such terms and at such prices as they 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 in the Tender Offer.

[OldBoyReturns]

It is a frustrating situation. The offer looked fairly generously priced relative to the pre-offer market price. BUT the pre-offer market price was low / yield was high relative to other similar issues. This was largely due to the fact that Leeds BS had not arranged for its LBS PIBS to be settled in CREST. Hence it was very illiquid and many retail brokers (such as HL) would not allow clients to buy or transfer it to them. Leeds BS has been somewhat disingenuous because they have been making the right noises about resolving the CREST issue in response to inquiries over the past year but have now made this offer intended to buy back all the PIBS instead.

[GoSeigen]

Reading the "prospectus" AJ Bell do seem to be right. Its an acceptance bribe.

I think link should get you to the Offer Memorandum.
https://www.dfkingltd.com/lbs/disclaime ... uncements/

I hope it is now clear to everyone that it is a bona fide voting fee and not a so-called "bribe".



GS

[GoSeigen]

It is a frustrating situation. The offer looked fairly generously priced relative to the pre-offer market price. BUT the pre-offer market price was low / yield was high relative to other similar issues. This was largely due to the fact that Leeds BS had not arranged for its LBS PIBS to be settled in CREST. Hence it was very illiquid and many retail brokers (such as HL) would not allow clients to buy or transfer it to them. Leeds BS has been somewhat disingenuous because they have been making the right noises about resolving the CREST issue in response to inquiries over the past year but have now made this offer intended to buy back all the PIBS instead.

What alternative did they have? They were in an invidious position. They couldn't divulge to individuals that actually they hoped to purchase all their PIBS very soon. OTOH people would have been annoyed if they had mysteriously said they would not be taking any action on the CREST issue for the time being.

Frustrating, but as I implied up-thread there is always the option of organising a blocking vote.

GS

[Bern]

Prices over the weekend assuming the buy price would be at the top of the spread imply yields you could swap into, from Leeds’s 6.97% at 192p, would be
PIBS
Coventry 6.74
Skipton 7.00
Nottingham 7.36
Newcastle 7.17
Newcastle ex Man. 7.02
All the pref yields I’ve looked at are lower yields and gilts much lower. So if you vote to accept it seems to me you would be voting to close out some FI space without gaining anything in terms of yield. The situation could be worse by the time you get the proceeds. The 192p is fixed but not the other SPs. I suppose it may be that if the offer fails all the PIBS SPs might fall back. But would they? If Leeds or anyone else is so keen to get rid there is just as much chance of future offers being better. I don’t regard either BOI’s or Leeds’s offer as generous but investor unfriendly having chosen a 15 year high in interest rates and a consequential low in SP’s to make their move. So I have voted no thanks.

[prv34]

If this offer fails to mop up all of the stock is it possible Leeds will increase the tender offer.
To be honest I am 50/50 as to accept the £1.92 or not, any comment would be appreciated.

[JohnEdwards]

If you really can't decide, then vote no - both to maintain the universe of such issues for everyone and to encourage a higher offer if it fails, while persuading other issuers that they need to be more generous (or to leave well alone).

[prv34]

That all makes sense but I am in getting on in years and have the opportunity to transfer a six figure sum to cash ISA’s if I go for 2 year fixed I lose about 2.5% more after say a 2/3 year fixed comes to an end that’s assuming interest rates come down. However it gives me total security of my capital which has some attraction at my age. Having said that I feel in the current environment with interest rates more likely to reduce than increase this issue is probably worth nearer £2.05 a yield of 6.5% that’s my dilemma. I have to let my broker know my the 20th so any further views would be welcome.

[BobGe]

prv34,
If you hold "a six figure sum" in LBS now you must be generally happy with the capital risk and enjoying the level of return you receive. A vote "against" is a vote for the chance to maintain the status quo.

More generally:
As the various Governments seem set in getting inflation down to around a 2% target and thus establish conditions to enable interest rates to fall back, downward pressure on yields would seem almost inevitable (to some degree).

The outcome of the BOI vote was much determined by the significant percentage of institutional holders. I don't think that is the case with LBS. To reach the 75% figure to enable this resolution to pass it would seem that LBS are relying upon a) some 'short term' holders being keen to take the tender premium and b) quite a lot of holders doing nothing.

I think JohnEdwards makes reasonable argument here when he wrote "...vote no - both to maintain the universe of such issues for everyone and to encourage a higher offer if it fails, while persuading other issuers that they need to be more generous (or to leave well alone)"