TIDMGACA TIDMAV.
RNS Number : 4780M
General Accident PLC
30 April 2018
30 April 2018
Aviva plc and General Accident plc preference shares
Announcement of Goodwill Payment
Today Aviva plc ("Aviva" or "the Company") and General Accident
plc are announcing that they will offer a discretionary goodwill
payment to shareholders who sold preference shares* in the period
from 8 to 22 March 2018 (inclusive).
In its full year results announcement on 8 March 2018, following
clear legal advice, Aviva noted its ability to cancel existing
preference shares as part of considering its options to return
capital to shareholders. Following that announcement, Aviva spoke
to a large number of investors and received some strong feedback
and criticism.
On 23 March 2018, in light of that feedback, Aviva announced it
would take no action to cancel the preference shares. That
announcement enabled our preference shareholders to rest secure in
their holdings. Under current regulation the preference shares will
no longer count as regulatory capital in 2026 and Aviva will work
towards obtaining regulatory approval for the preference shares, or
a suitable substitute, to qualify as capital from 2026 onwards. If
as we approach 2026 Aviva needs to reconsider this position, it
will do so after taking into account the fair market value of the
preference shares at that time.
Aviva recognises the uncertainty created for preference
shareholders whilst Aviva was considering its options and the
impact it had on the wider reputation and trust in the Company.
Today, Aviva announces a further step towards restoring that trust.
Aviva will offer a discretionary goodwill payment to shareholders
who sold preference shares in the period from 8 to 22 March 2018
(inclusive) at a share price that was lower than the price that the
preference shares returned to following our announcement on 23
March 2018. This goodwill payment is intended to put those
shareholders in the same financial position they would have been in
had they sold their preference shares following the 23 March
announcement, rather than the first announcement.
Based on the information currently available, Aviva estimates
that fewer than 2,000 individual investors sold their preference
shares in the period from 8 to 22 March 2018 (inclusive) and that
the total cost of the goodwill payment scheme should not exceed
approximately GBP14 million.
Since this voluntary goodwill payment was first proposed by
Aviva, Aviva has consulted with the FCA and will continue to engage
with the FCA in its investigation of the preference share
issue.
Aviva has appointed KPMG LLP as an independent administrator to
handle the goodwill payment process. By 31 July 2018, Aviva expects
to have completed the preparations required to open and operate
that process and will make a separate announcement along with
writing to each affected registered holder individually at that
time setting out full details of how eligible shareholders can
claim their payment. Eligible shareholders will have up to six
months to make a claim from the date the goodwill payment process
opens.
Mark Wilson, Group Chief Executive Officer of Aviva plc,
said:
"Our announcement on 23 March meant that Aviva's preference
shareholders could rest secure in their holdings. However, we
recognise that whilst we were considering our options for the
preference shares this caused uncertainty and led some investors to
sell their shares.
"The Board and I want to do the right thing and make this
goodwill payment.
"Preference shares remain an industry-wide issue and it is clear
now that the best way forward is to seek a regulatory solution
before the 2026 deadline when the shares no longer count as
regulatory capital under Solvency II.
"We accept that whatever action we take, we will continue to
hear divergent views on this topic from various stakeholders.
However, together with our previous announcement not to proceed
with the cancellation of the preference shares, we hope this
goodwill payment goes some way to restoring trust in Aviva."
Further detail on the goodwill payment can be found at the end
of this announcement. Questions and answers relating to the
goodwill payment can be found at
www.aviva.com/investors/preference-shares. A dedicated helpline has
been established for any investors wishing to discuss the goodwill
payment scheme on:
UK Freephone: 0800 046 8988
International: +44 (0) 1603 606389
(Open 0900 - 1700 Monday to Friday)
Please note that the helpline is unable to provide any further
information than that already provided on our website and we are
unable to answer any specific questions about individual
circumstances at this time. Aviva will issue a further market
announcement when the scheme opens and will at that stage update
the information available on the website and write to all
registered holders of preference shares who have been identified as
entering into a sale of preference shares in the period from 8 to
22 March 2018 (inclusive).
*Preference shares issued by Aviva plc and General Accident plc
(a member of the Aviva Group)
-ends-
Enquiries:
Media:
Nigel Prideaux +44 (0)20 7662 0215
Andrew Reid +44 (0)20 7662 3131
Sarah Swailes +44 (0)20 7662 6700
Analysts:
Chris Esson +44 (0)20 7662 8115
Diane Michelberger +44 (0)20 7662 0911
Notes:
Goodwill payment
-- The base amount for the goodwill payment will be the amount
by which the volume weighted average price of the relevant series
of preference shares over the five business days from (and
including) 23 March 2018 exceeded the sale price for that
shareholder's preference shares transacted in the period 8 to 22
March 2018 (inclusive) (the "Basic Goodwill Payment"). For each
eligible shareholder who wishes to accept the offer of a goodwill
payment, the amount of the Basic Goodwill Payment will be
calculated as follows:
- Aviva plc 8.375% preference shares (ISIN: GB0002114154): the
amount by which 150.81p exceeds the price at which the preference
shares were sold
- Aviva plc 8.750% preference shares (ISIN: GB0002124963): the
amount by which 158.02p exceeds the price at which the preference
shares were sold
- General Accident plc 7.875% preference shares (ISIN:
GB0003692513): the amount by which 140.01p exceeds the price at
which the preference shares were sold
- General Accident plc 8.875% preference shares (ISIN:
GB0003692737): the amount by which 157.42p exceeds the price at
which the preference shares were sold.
-- Eligible shareholders may also claim an amount equal to third
party transaction costs (e.g. broker commission) incurred in
respect of the sale of preference shares ("Transaction Costs").
Further details on the transaction costs which may be claimed and
the evidence required to support a claim will be provided when the
scheme is launched.
-- An additional amount will be added to the sum of the Basic
Goodwill Payment and the Transaction Costs calculated by applying a
rate of 6% per annum to that amount for the period from 23 March
2018 to the date that is 3 months after the launch of the goodwill
payment scheme (inclusive) (the "Additional Amount"). The
Additional Amount is intended as a notional investment yield to
recognise the fact that if investors had received the Basic
Goodwill Payment on 23 March 2018 they would have had the
opportunity to re-invest it for income. The rate of 6% is broadly
in line with the yield available to investors had they decided to
invest in the preference shares at that time.
-- Any gains made by a shareholder from investing in preference
shares during the relevant period will be offset against the
goodwill payment. What this means is that if a shareholder who sold
preference shares between 8 and 22 March 2018 (inclusive) following
the initial announcement also purchased preference shares between 8
and 22 March 2018 (inclusive), and thereby benefitted from the
increase in the share price of the relevant series of preference
shares following the 23 March 2018 announcement, then any goodwill
payment for which that shareholder is eligible will be reduced by
the amount gained from the reinvestment.
-- We expect to announce further details of the goodwill payment process by 31 July 2018.
-- Eligible shareholders will be the beneficial owners of the
preference shares (i.e. the party with the ultimate right to
receive the income and the proceeds of sale from the preference
shares) who entered into a sale of preference shares with a
transaction date of 8 to 22 March 2018 (inclusive). Following this
announcement, KPMG will liaise with brokers and nominees to agree
the process by which communications are provided to underlying
beneficial owners of preference shares and the most efficient way
they are able to claim the goodwill payments.
-- To receive the payment, shareholders will be required to
release Aviva and KPMG from claims the shareholder may have in
relation to the preference shares and the administration of the
goodwill payment process. We will provide full details on the terms
of the release when the scheme is launched (which we expect to be
by 31 July 2018).
-- Eligible shareholders will need to take their own advice on
the tax treatment applicable to receipt of the goodwill
payment.
Preference shares
-- On 23 March 2018, Aviva announced that it will take no action
to cancel its preference shares.
-- Under current regulatory environment the preference shares
will no longer count as regulatory capital in 2026. Aviva will work
towards obtaining regulatory approval for the preference shares, or
a suitable substitute, to qualify as capital from 2026 onwards. If
as we approach 2026 Aviva needs to reconsider this position, it
will do so after taking into account the fair market value of the
preference shares at that time.
-- On 8 March 2018 Aviva stated it has the ability to cancel the
preference shares at par value, having received clear legal advice.
The review of the preference shares was initiated as a result of
Aviva's duty to examine what is right for the business, balancing
the interests of ordinary shareholders and preference shareholders.
Aviva needed to address the issue principally because the
preference shares would no longer count as regulatory capital in
2026 and their annual cost to Aviva.
-- Aviva is in a strong financial position and still plans to
deploy GBP2 billion of excess cash in 2018 to reduce hybrid debt,
fund bolt-on acquisitions and buy back ordinary shares.
Aviva
-- Aviva provides life insurance, general insurance, health
insurance and asset management to 33 million customers.
-- In the UK we are the leading insurer serving one in every
four households and have strong businesses in selected markets in
Europe, Asia and Canada. Our shares are listed on the London Stock
Exchange and we are a member of the FTSE100 index.
-- Aviva's asset management business, Aviva Investors, provides
asset management services to both Aviva and external clients, and
currently manages over GBP350 billion in assets. Total group assets
under management at Aviva group are GBP490 billion.
-- Aviva helps people save for the future and manage the risks
of everyday life; we paid out GBP34.6 billion in benefits and
claims in 2017.
-- By serving our customers well, we are building a business
which is strong and sustainable, which our people are proud to work
for, and which makes a positive contribution to society.
-- The Aviva newsroom at www.aviva.com/newsroom includes links
to our image library, research reports and our news release
archive.
-- For an introduction to what we do and how we do it, please click here www.aviva.com/about-us
-- Follow us on twitter: www.twitter.com/avivaplc/
-- Follow us on LinkedIn: www.linkedin.com/company/aviva-plc
-- For the latest corporate films from around our business, subscribe to our YouTube channel: www.youtube.com/user/aviva
-- We have a Globelynx system for broadcast interviews. Please
contact the Press Officer noted above if you would like to make a
booking.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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