I am long RBS prfds, and always appreciate your insights.
I have a question re the ahl-pa prfds you mention. While the release would imply they are redeeming at par, the share action indicates otherwise.
In Aspen's filing, do you know if it states a redemption price? Also, do you know how many total shares of ahl-pa are outstanding and how they go about allocating the buyback?
I'm not asking you to do the research, just curious if this is info you have handy.
I guess I just never thought about buybacks below par before (except in the case of bankruptcies), but it seems to be becoming a common practice these days. While companies can't buy back their preferreds in the open market(below par), I guess they are free to offer pennies on the dollar to holders of preferreds through these filed offerings.
Given ahl-pa's action, I am suspecting that the market thinks that's what is happening here -- or the buyback represents such a small percentage of shares outstanding that it's not moving the price (other than a brief spike) -- or lastly that it is thinly traded and few people have picked up on this.
Aspen has just posted the 8k on their website and I just got off the phone with Bermuda. The offering price on this is $12.50 (where the stock has traded down to today.
Also, I'm not sure from my conversation if this is open to all shareholders, or appealing to small holders as you can often do better in the open market.
Reading between the lines, I think Aspen has a large holder of prfds who wants to get out and this is how they are accommodating. This offering represents about 1/3 of these shares outstanding, and flooding the market would drive down the price even more.
The numbers Aspen put in the press release are a bit misleading -- 2.6+ million shares and $66+ million dollars as the math (2.6 million x $25 = 65 million) implies they are redeeming at par... which they are not.
Thanks for the insight, I didn't know they were offering to buy at just 50%. Since these are not callable till 2017, I assumed they would purchase on the open market instead of a limited offer.
You are correct, it is just a % of outstanding shares as there are 8M outstanding. I think I will hold an continue to collect my 15% yield for a few more years.
Aspen Insurance Holdings Ltd, 7.401% Perpetual Non-Cumulative Preference Shares, liquidation preference $25 per share, redeemable at the issuer's option on or after 1/1/2017 at $25 per share plus declared and unpaid dividends, and with no stated maturity. Non-cumulative distributions of 7.401% ($1.85025) per annum are paid quarterly on 1/1, 4/1, 7/1 & 10/1 through 1/1/2017 to holders of record on 12/15, 3/15, 6/15 & 9/15 respectively. Beginning 1/1/2017 dividends will be paid at a non-cumulative floating rate of the 3-month LIBOR plus 3.28% which will be reset quarterly. Dividends paid by the preference shares are eligible for the 15% tax rate on dividends under normal holding restrictions but are NOT eligible for the dividends received deduction for corporate holders since this is a foreign security In regards to payment of dividends and upon liquidation, the preferred shares rank equally with other preferreds and senior to the common shares of the company.