|
Lloyds Banking Group announced a large capital restructuring / exchange offer on 3 November 2009 which did not allow for investors who did not have broker access to a Euroclear or Clearstream account to participate. The offer was the largest of its kind in the UK and affected over 120,000 retail investors. Following the successful campaign to lobby Lloyds on this issue they came up with an amendment to the offer to provide a solution for Crest holders. This success was covered in the Investors Chronicle at:
However, the campaign does not end there and a number of further issues have emerged as follows:
1. A large number of certificated holders of old securities have had their application forms rejected because they did not provide a Euroclear / Clearstream account number.
2. A number of issues Lloyds Preference Shares were not accepted for exchange because of their low positions in the exchange priority lists. Other issues of preference shares placed higher in the lists were accepted. We believe that Lloyds should have treated the various issues of preference shares equally and so have breached their rights.
3. Accrued Dividend Payment
Lloyds have made an accrued dividend payment, for the period from 1 Sept 2009 to 17 Feb 2010, to holders of the 9.75% preference shares accepted for ECA exchange under the Exchange Offer. This payment is clearly stated to be an accrued dividend in the EOM (which specifically states it is not part of the Exchange Offer Consideration) and all brokers have treated it as such. Under the terms of the various parity preference shares and securities Lloyds are obliged to make a distribution of profits for the corresponding period to holders of parity securities. They have not done so.
4. Dividend Restriction Clause
The terms of the preference shares contain a dividend restriction clause which requires that Lloyds will not pay a dividend on an (internal) issue of preference shares (the 2004 6% Preference Shares) if it does not pay a dividend on its listed preference shares. The 2004 Preference Shares are stated to be mandatory in the Articles and Prospectus of the listed preference shares. Lloyds have not redeemed the 2004 Preference Shares but appear to have waived their mandatory dividend in order to avoid having to pay the dividend on the listed preference shares. The 2004 Preference Shares are held by Lloyds TSB Group plc which is the issuer of the listed preference shares. For the directors of this company to waive, without authority or consent, a mandatory dividend entitlement in order to avoid paying a dividend to their own preference (and by impact ordinary) shares appears to be an act of extreme bad faith and corporate governance. It is also clearly not in the best interest of shareholders. I AM SENDING CAMPAIGN UPDATES BY E-MAIL. IF YOU ARE AFFECTED AND WOULD LIKE TO JOIN THE CAMPAIGN PLEASE COMPLETE THE FORM BELOW: |
|
|
|
|
Lloyds Exchange Offer Campaign |