Raven Property Preference Share conversion

Reaper

* I deleted this post but as discussion followed I'll put this back in so anyone searching for it can find it.

It was about the conversion of all Raven Property Convertible Preference Shares (RAVC) into Ordinary Shares and normal Preference shares (RAVP).
For more details see https://www.theravenpropertygroup.com/media/1502/20200714-rav-circular-and-notice-of-gm.pdf 

bowlhead99

Was this the thread in which you were asking about RAVP?  I didn't have time to reply earlier but this is them collapsing the (newer, issued a few years ago) Convertible prefs into a combination of the ordinary shares and the older 'normal' prefs that you (and I) hold. 

It had been on the cards for a while as there was an agreement to deliver an exit for Invesco (Invesco and Woodford being two long term backers, with buy backs agreed last summer)

Reaper

Thanks bowlhead, you were very prompt, I only had the thread up for a few minutes!

I realised I had my codes mixed up. I have RAVP which is the normal preference shares. I believe (correct me if I am wrong) what is changing is RAVC which are converting into a mixture of ordinary shares and RAVP. In which case it doesn't affect me after all.

bowlhead99

Yes, what is changing is that the convertible prefs will have turned into RAVP plus ordinaries at the end of the quarter. They also had agreements with Invesco to buy back the ordinaries and Prefs that they previously held, and those will be renegotiated - as they'll now have more of both and market conditions will have changed, as well as the capital structure. But those events are not something that 'costs' other RAVP holders, unless the company overpays and it's more difficult to service the ongoing pref divs - or the new RAVP shares are unceremoniously dumped into the market (which would presumably not be a long term effect).

Other than the obvious risk of the ongoing rouble revenues being insufficient to service the pref divs, the main longer term risk is that the total quantity of RAVP in issue falls below the level at which the company can simply decide to redeem them - which could be in the interests of ordinary shareholders if alternate finance can be found, as having a large amount of GBP prefs at a high coupon is not necessarily ideal for a Russian warehouse owner.  

Some of the protection against that happening was that a large part of the ordinary shares are held by investors who also hold prefs and would not want to give up their premium to par value and ongoing high yield, though the agreed departure of Invesco and Woodford (as shareholders who had 18% of the capital and a disproportionately large share of tens of millions of prefs) will erode some of that safety net. Though not anything new or surprising, because their exit was 2019 news.