Will you be buying shares in Lloyds TSB?

Decadent_Fool

I just thought this thread may be worth a revisit.

I spoke to Lloyds this week and they're now not wholly sure that there'll be an issue given the price increase.

sabretoothtigger

Theres a trading statement on friday and the agm is next month. They could just sell shares on the open market at the going rate to raise money, along with Barclays they raised about a bn last sept doing this I think

Problem is they need more then a bn, its like 4bn. Issuing that amount of shares into normal or weak demand is going to send the price plummenting.

They only have the authority to give out so many new shares afaik and it must be within a certain range of the last five days trading price, so not possible without a strong surge in demand

As a shareholder you have the right to first pickings on new funding via discounted shares, this is what upset the barclays institutional holders and they dropped the shares into the free float and supply exceeded demand, massive price falls, etc

What your suggesting is not so simple, I think if you got that from lloyds retail you can disregard it

Financial Calendar
2009 27 February Results for 2008 announced

8 May Record date for Capitalisation Issue

11 May Ex-date for the Capitalisation Issue and shares admitted
to trading. CREST accounts credited
22 May Latest date for the despatch of shares in respect of the
Capitalisation Issue
5 June Annual general meeting in Glasgow

5 August Results for half-year to 30 June 2009 announced*

* this date is provisional and may be subject to change

Page 2 of the APS document contains the following paragraph:

"The preference shares will be redeemed at 101 per cent of their issue price. Dividends will continue to accrue on the preference shares until redemption. The redemption of the preference shares held by HM Treasury will remove the annual cost of the preference share dividends of £480 million and will improve the Group’s cashflow and capital generation. In addition, upon redemption of the preference shares, the block on payment of ordinary dividends will be removed. However, it is not the Board's intention to pay a dividend on ordinary shares in 2009."

[asp]Participation fee of £15.6 billion, amortised over c.7 years, paid in core tier 1 eligible B shares with a dividend of 7 per cent per annum

The B shares are convertible at any price above 115p. If the share price for Lloyd's ordinary shares averages 150p over a 30 day period then conversion is compulsory.

If all B shares are issued and converted, that gives Lloyd's an issued capital of around 40 billion shares and HMG a majority stake in the group company.

Cannot remember what the issue price is for the B shares, however 42p seems to ring a bell.

Anyway somewhat irrelevant as the public shareholders are not invited to participate.

Hard to see how HMG can lose on this deal, especially when you consider that Lloyd's are responsible for the first 25 billion of losses on their APS loan book which exceeds their current capital and renders them bankrupt anyway.

Personally never ever understood the commercial logic behind either this deal or the HBOS merger.

http://www.iii.co.uk/investment/detail?code=cotn%3ALLOY.L&display=discussion&action=detail&id=4778932

1. The 38,5p placing and open offer price is fixed and will not be changed.

2. The purpose of the new offer is to raise capital to extinguish the Preference shares issued to HMG and will allow Lloyd's to rejoin the dividend list.

3, It is both a placing and an open offer. In other ords the lacing element gives existing shareholders pre-emptive rights, at the still t be announced record date. Effectively this means you have the right to buy the shares at 38.5p, but you cannot sell them until they have been bought and paid for (unlike a rights issue which can be sold before you have paid for them). The open offer element is to cover any shares not taken up by existing shareholders as is available to all.

4. The current share price will be discounted from the record date onwards as if the new shares were already in issue. The discount may not fully reflect the dilution.

5. There is a further class of shares being issued, Ordinary B shares which carry no voting rights but qualify for dividend. These shares are specifically to pay for the Asset Protection Scheme and if full issued would raise the number of shares in Lloyd's to 40 billion Issued.

6. The B shares may well be issued pro-rata as the Asset Protection Scheme runs for a maximum of seven years.

7. The B shares are convertible to ordinary voting stock once the price reaches 115p and a mandatory conversion takes place once the average share price over a 30 day period is 150p. This is a further capital dilution and cause a discount to the ordinary share price.

How this will actually affect Lloyd's share price performance in reality, I have little or no idea.

But IMHO, the best thing for Lloyd's is to exit the APS as soon as possible, get costs from the merger under control and start making real sustainable profits.


Lloyd's can elect to exit the Asset Protection programme at any time.

http://www.iii.co.uk/investment/detail?code=cotn%3ALLOY.L&display=discussion&action=detail&id=4731771

So my understanding is as follows. The shares issued will be enough to cover redemption of the preference shares.

They will be issued at 38.5p as this was part of the terms and conditions.

There is no restriction on Lloyd's offering more of these shares at this price and they may well elect to do so to reduce the number of B shares issued to cover the cost of the Asset Insurance Protection.

Any shares not taken up as part of the placing will then become subect to open offer and exsitng shareholders can apply for more than their entitlement under the placing.

In the event of the full amount of shares not being taken up under the placing the existing shareholders who apply for more, will receive those first and then the rest effectively auctioned off in the general market.

Given that Lloyd's share price maintains its current level, all the shares offered in the placing will be taken up, however immediately upon record date, Lloyd's share price will be discounted as if all the new shares were in the market

http://www.iii.co.uk/investment/detail?code=cotn%3ALLOY.L&display=discussion&action=detail&id=4718396

sabretoothtigger

Seems a decent run down of the status quo








http://www.t1ps.com/clickthru/redirect.asp?id=3369

Buddy195

Still no ideas when the 38.4p offer will come about then? If ever?

sabretoothtigger

After the AGM which is in June 5th I guess if they wont raise the money elsewhere, Im pretty sure it'll go ahead

They went ex-div today I think and looks to have formed a short term double top at 124p

http://www.investorresearch.mdgms.com/factsheet/factsheet.html?ID_NOTATION=9454345

08/05/09 10:00 Trading statement Interim Management Statement

sabretoothtigger

UPDATE: Lloyds Banking Group Still Sees 09 Pretax Loss

(Adds detail and market comment.)

By Ragnhild Kjetland
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Lloyds Banking Group PLC (LYG) said Thursday it still expects to make a pretax loss this year, although first-quarter revenue grew in what it said was a difficult time for financial services companies.

The bank - providing its first trading update on the combined group including HBOS - already flagged that it would make a loss this year as rising impairments weigh on profitability.
"In extremely challenging market and economic conditions, the group has made good progress in its first few months," Chief Executive Eric Daniels said.

Panmure Gordon analysts cut their rating on Lloyds to sell from hold after the statement, saying, "We don't think the outlook on fundamentals justifies this strength" in the share price. Panmure has a 40-pence target price.

Lloyds' shares, along with other U.K. banks, have rallied of late, moving from a low of 33 pence in January to 103.8 pence as of 1300 GMT. They were down 9.4 pence, or 8.3%, for the day.

Lloyds didn't provide detailed figures in the management statement for its first-quarter performance.
The bank said impairments on the corporate loan book are expected to be even higher this year.

"We had about GBP9 billion to GBP10 billion in corporate impairments across Lloyds and HBOS together (in 2008) and we expect that to increase by 50% (this year)," Chief Financial Officer Tim Tookey told analysts.

"A majority of the assets relate to commercial real estate in the U.K. and Ireland," Tookey said.
The increase is a result of declining commercial property prices and reduced levels of corporate cash flows, but Tookey noted that the vast majority of these higher impairments will occur on assets that are insured by the government's asset protection scheme.

Lloyds has insured assets worth GBP250 billion - after impairments and write-downs already taken - in the scheme, of which commercial and corporate loans, including commercial real-estate and leveraged finance loans, account for GBP151 billion.

The group is paying GBP15.6 billion to take part in that scheme, and will also carry a first-loss of GBP25 billion on the assets, in addition to 10% of ensuing losses.

Thursday, analysts asked CFO Tookey if there was any risk that the terms of participation in the scheme could be amended after due diligence had been completed.
"The terms are not re-negotiable," Tookey said.

Lloyds also expects retail impairments to rise significantly this year, both in the secured and unsecured lending portfolios, although Tookey said so far they are performing "as we expected them to."

The CFO declined to say whether the group would have been profitable this year if it excluded assets that are now in the government insurance scheme.

"We can easily see this business as loss-making for the coming 18-24 months," Collins Stewart analyst Alex Potter said.

Potter also said that while management insists there will be no renegotiation on the APS, the scheme is "subject to due diligence and (the) scale of deterioration means we cannot entirely discount this possibility." Potter cuts rating to sell from hold with an 80-pence target.

Lloyds is 43%-owned by the U.K. government after receiving a GBP17 billion capital injection in the fall of 2008. In order to pay for the APS, Lloyds will issue B-shares that could lift the government's stake to 62%.

Company Web site: www.lloydsbankinggroup.com

Masomnia

There are still skeletons in the closets it seems!

sabretoothtigger

I think their biggest negative is future regulation, the merger will make a profit sooner or later but how much leverage can they gain from it.

The disparity between estimates on value for this and barclays doesnt seem right to me though they are in some seperate markets I think they'll not do so differently

00ec25

can anyone confirm if May 8th was the record date for whatever action LLOY may eventually take? i had a letter from my bank to that effect but also another letter with the same info but the dtes had been left blank!

The_MoneySavingKid

Rollerball wrote: »

Lloyds rescuing hbos was one of the dumbest moves in UK corporate history.

So the overall end outcome is going to be negative?