Is This Wrong ?

jased10s

I know there is a thread in banking but i feel this has as much to do with how they approach ecominics in this country as they do joe public.

So wanted to know if im correct in assuming share holders in ILP will now lose their shares through no action of there own ? ( i dont hold shares and hate banks ).

http://www.rte.ie/news/2011/0720/irishlife_permanent.html

fliball123

jased10s wrote: »

I know there is a thread in banking but i feel this has as much to do with how they approach ecominics in this country as they do joe public.

So wanted to know if im correct in assuming share holders in ILP will now lose their shares through no action of there own ? ( i dont hold shares and hate banks ).

http://www.rte.ie/news/2011/0720/irishlife_permanent.html

True sure I would rather leave them too it dont give them anymore money

Scofflaw

jased10s wrote: »

I know there is a thread in banking but i feel this has as much to do with how they approach ecominics in this country as they do joe public.

So wanted to know if im correct in assuming share holders in ILP will now lose their shares through no action of there own ? ( i dont hold shares and hate banks ).

http://www.rte.ie/news/2011/0720/irishlife_permanent.html

Yes - shareholders always get wiped out in these recapitalisations. Theirs is the first capital to be burned.

cordially,
Scofflaw

keithclancy

You buy shares you take a risk.

later12

Shareholder activism has always been particularly weak in Ireland, I'm not sure why that has been the case. Certainly, it was pretty weak during the credit & property boom. Even now, the main force behind the shareholders is Scotchstone Capital, a Maltese group. Anyway, they can whistle.

Now will BKIR take us to the half dozen mark in the nationalisation extravaganza?

rodento

As I'm not the smartest cookie around, what happens in say 5 years time and the nationalised bank returns to profitability, are your shares still worthless

View

rodento wrote: »

As I'm not the smartest cookie around, what happens in say 5 years time and the nationalised bank returns to profitability, are your shares still worthless

I would presume the state takes ownership of all pre-existing equity when they take-over the bank. Hence you don't have any shares in it, so whether it is profitable in 5 years doesn't matter directly to you.

Scofflaw

rodento wrote: »

As I'm not the smartest cookie around, what happens in say 5 years time and the nationalised bank returns to profitability, are your shares still worthless

As View says - recapitalisation by the government involves them taking over the shareholdings.

cordially,
Scofflaw

rumour

Scofflaw wrote: »

As View says - recapitalisation by the government involves them taking over the shareholdings.

cordially,
Scofflaw

How does that work in practice?

I can understand shares are diluted but the share certificate is still valid surely even if it is a smaller share of a vastly larger pile of shares.

I don't understand how a share certificate becomes not a share certificate even if the value is zero.

Just curious, its never happened to me fortunately.

SBWife

The shares are cancelled and the share certificate becomes a pretty piece of paper.

beeftotheheels

SBWife wrote: »

The shares are cancelled and the share certificate becomes a pretty piece of paper.

Do we know this for certain?

I haven't seen any details of how they're going to structure it, but I thought existing shareholders were to be left with about 1% which suggests swamping and not cancelling which is also in line with the circular.

http://www.irishlifepermanent.ie/~/media/Files/I/Irish-Life-And-Permanent/Attachments/pdf/egm/circular-12072011.pdf?

rumour

SBWife wrote: »

The shares are cancelled and the share certificate becomes a pretty piece of paper.

By what authority are they cancelled?

beeftotheheels

rumour wrote: »

By what authority are they cancelled?

The High Court can cancel shares - it is how you effect a scheme of reconstruction. So, if you held a share in IAWS Group Plc the high court cancelled it and you got given a fresh portion of a share in ARYZTA AG.

You stlll had your IAWS share cert, it just has become a piece of paper signifying nothing.

I'm just not clear that that is what is envisaged here.

rumour

beeftotheheels wrote: »

The High Court can cancel shares - it is how you effect a scheme of reconstruction. So, if you held a share in IAWS Group Plc the high court cancelled it and you got given a fresh portion of a share in ARYZTA AG.

You stlll had your IAWS share cert, it just has become a piece of paper signifying nothing.

I'm just not clear that that is what is envisaged here.

Thanks, i understand the dilution of an ordinary shareholders share, and as you've said in the case of a large merger for example you get some equivalence (presumably consideration) by right of your previous share.

What I don't understand is how the acquired right to a share can be extinguished entirely with no consideration.

beeftotheheels

rumour wrote: »

Thanks, i understand the dilution of an ordinary shareholders share, and as you've said in the case of a large merger for example you get some equivalence (presumably consideration) by right of your previous share.

What I don't understand is how the acquired right to a share can be extinguished entirely with no consideration.

I don't think that is the plan at all. I think it is dilution.

However, the High Court can cancel a share - usually in return for some consideration, cash or another share - but not always.

I seem to recall that the IAWS deal was a 2 for 1 deal so if you had 13 shares in IAWS you got 6 shares in ARYZTA so your last lonely little thirteenth share got cancelled for no consideration.

So while only a tiny number of shares got cancelled for no consideration, it was done and that was just under the vanilla laws (albeit the shareholders had voted for it in that case).

This time around we have the Credit Institutions (Stabilisation) Act in play giving the Minister and High Court even more powers.

Muppet British MP is apparently a shareholder (and a BOI PIBS holder)

http://www.irishtimes.com/newspaper/finance/2011/0715/1224300761323.html

Scofflaw

beeftotheheels wrote: »

Do we know this for certain?

I haven't seen any details of how they're going to structure it, but I thought existing shareholders were to be left with about 1% which suggests swamping and not cancelling which is also in line with the circular.

http://www.irishlifepermanent.ie/~/media/Files/I/Irish-Life-And-Permanent/Attachments/pdf/egm/circular-12072011.pdf?

That seems right. So if you had a 1% shareholding in the company, you now have 0.01% (assuming 100% share capital, which I haven't bothered checking). Still, currently your shares are worth 5c - if the government's intervention can get them back to €5 (and they've been worth €20), then you're OK.

cordially,
Scofflaw