Lloyds Non-Cumulative Preference Shares?

I have a few of the Lloyds Non-Cumulative Preference Shares, which were given to me years ago.
I have just received a letter from Lloyds offering to buy @ 70p per share, should I sell or hold on, the dividend was £12.95 every 6 months but that has now come to an end due to an EU ruling.
I am not in need of the cash at the moment.
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Comments

  • purch
    purch Posts: 9,865 Forumite
    The EU ruling will only stop divi's for the next couple of years.

    Were you not offered the option to convert the Pref's to the new fangled ECA paper, that offers a higher coupon than the equivalent Pref which is not subject to the EU ruling ?
    'In nature, there are neither rewards nor punishments - there are Consequences.'
  • royP_2
    royP_2 Posts: 222
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    No offer was made to convert only the cash.
  • melbury
    melbury Posts: 13,250
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    I also had this letter from Lloyds today. I think I got the preference shares when Birmingham Midshires was taken over by Halifax? (or something like that).

    They are offering 70p per share - does anyone know if this is a reasonable offer, bearing in mind they were only paying quite a small dividend and I think this has been stopped now.

    Why do they want to buy them back?
    Stopped smoking 27/12/2007, but could start again at any time :eek:

  • purch
    purch Posts: 9,865 Forumite
    Whats the divi rate on these pref's ?
    'In nature, there are neither rewards nor punishments - there are Consequences.'
  • roddydogs
    roddydogs Posts: 7,478
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    Ive got the same offer, and as the price at the moment is only about 50p, would seem a good deal, but wernt they worth aboput £1 each when issued? seem terribly complicated for the average person, so 400 are worth about £280 or so
  • The information Lloyds have provided is so unhelpful for the average person holding these shares that it is unreal! There are three questions upon which it would be helpful to have an answer from a financial expert in order to make an informed decision about whether to sell or not:

    1. Lloyds say they "expect" to be prevented from paying dividends for 2 years from 31 Jan 2010 because of European Commission negotations. That is not the same as "will" be prevented. What is the actual position?

    2. What is expected to happen after the two years are up?

    3. Why are Lloyds offering 70p for what used to be one pound shares before they swapped for Lloyds shares. By swapping the shares have they reduced my four hundred pound shareholding to two hundred and eighty pounds without telling me that is the case?
  • kfm
    kfm Posts: 146
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    skegby73 wrote: »
    1. Lloyds say they "expect" to be prevented from paying dividends for 2 years from 31 Jan 2010 because of European Commission negotations. That is not the same as "will" be prevented. What is the actual position?

    2. What is expected to happen after the two years are up?

    3. Why are Lloyds offering 70p for what used to be one pound shares before they swapped for Lloyds shares. By swapping the shares have they reduced my four hundred pound shareholding to two hundred and eighty pounds without telling me that is the case?

    1. I believe Lloyds are not allowed to pay unless the dividends are compulsory.

    2. Lloyds are free to resume dividends on preference shares.

    3. Your shares aren't "worth" one pound. They most likely have a par value of one pound. They are worth whatever the market price is; if you hold the same prefs as an earlier poster, that would be around 50p in the pound.
  • The preference share certificate I have states that each share has a liquidation preference of £1. So if Lloyds went bust, my shares would be worth more than the 70p Lloyds are "offering" now? Excuse my financial innocence but do bankers have a different interpretation of "preference" than the rest of humanity?
  • dzug1
    dzug1 Posts: 13,535
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    regg wrote: »
    The preference share certificate I have states that each share has a liquidation preference of £1. So if Lloyds went bust, my shares would be worth more than the 70p Lloyds are "offering" now? Excuse my financial innocence but do bankers have a different interpretation of "preference" than the rest of humanity?

    Maybe.

    But 'preference' in this context always means and always has meant that dividends on preference shares must be paid in preference to dividends on ordinary shares where there is conflict. Plus the liquidation preference - which doesn't mean that they would be worth more than 70p, just that paying (up to) £1 comes in advance of (certain) other debts.
  • melbury
    melbury Posts: 13,250
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    I have filled in the form and I am taking the £280; the twice yearly dividend of £12 odd won't really be missed.
    Stopped smoking 27/12/2007, but could start again at any time :eek:

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