Lloyds Banking Group escape route
The mechanism and price of the escape route for Lloyds Banking Group out of the APS programme is now agreed. Due to the success of the first element which was to issue £8.8bn worth of contingent convertible bonds, the rights issue is somewhat stronger than initially thought and as set out in this diary dated 9th November.
The rights issue is valued at £13.5bn and means it is the highest ever attempted beating the HSBC issue by some £.3bn. Of equal significance is that Lloyds has the largest private shareholder base of any company listed on the London Stock Exchange at 2.8 million people and amounting to about 7.5% of the equity. The event is therefore of major public interest. Furthermore, since the taxpayer owns 43.4% of the business and intends to keep it that way, the Government (that is the taxpayer) is going to stump up a further £5.8bn just to stay still.
The issue, (as approved by a vote of shareholders on the 26th November) is of 1.34 shares for each existing share (previously 2 for 1 was mooted) at a price of 37p per share. The market overall seems pleased since the share price ahead of the issue had passed the 93p price. Post the approval, it fell as expected to around 58p.
The taxpayer does have some compensation in that £2.5bn has already been paid for insurance of the assets up to this point and £144m will be the underwriting fee. The investment banks will also have a fee bonanza – as usual.
Was it all worth it to escape the insurance scheme? The market seems to think so. As a fairly large private shareholder, I hope so.
More comment at http://www.jgwalkersmith.co.uk
No comments:
Post a Comment