But that fact can only mean that some people who wanted to exchange their securities could not do so. Among them were thousands of individual private investors who hold two issues in particular of the group's preference shares - the 9.25 per cent series and the 9.75 per cent (the TIDMs are LLPC and LLPD, respectively). Many bought these instruments for the reliable income they offered.
Investors in these and many other notes were offered the opportunity to exchange their existing holdings for new Enhanced Capital Notes (ECNs), or accept shares or cash in lieu. The first problem was that the new ECNs could not be settled through Crest, making the shares difficult to trade without access to a Euroclear account. Lloyds hurriedly made arrangements to have the ECNs trade as Crest Depositary Instruments, but that still didn't solve the problem of not enough stock being available.
And it certainly hasn't stopped the complaints to us. The most obvious moan is that the two preference share series referred to above were not exchanged in full, or in the case of LLPC, at all. So holders of those are left with shares that will pay nothing for a couple of years.
Then, there's the haste with which it was all concluded. I've seen correspondence from brokers that basically told investors to make a decision by return of post, or in some cases, not to bother posting anything as there was insufficient time!
Many shareholders have also been critical of the communications. Details of the exchange offer were contained in a 240-page prospectus loaded with legal jargon. It contained little discussion of the tax treatment of ECNs, which is potentially complex. And there was little time to solicit independent advice.
Let's be clear: Sir Win's proposal to resist the expensive and inflexible Asset Protection Scheme in favour of a private refinancing was the right one. The ECNs are an innovative solution to a thorny regulatory problem, offering a generous coupon and fixed maturity in return for the possibility of forcible conversion to equity. But many private investors justifiably feel that they've been railroaded into an unsatisfactory arrangement, and treated like an expensive inconvenience rather than genuine co-owners of the business.
