Aviva (AV.) is on a charm offensive. It plans to make a discretionary goodwill payment to preference shareholders that panic-sold their holdings after it mooted cancelling four classes of the shares. Not only that, but it will buy back up to £600m in ordinary shares as part of its plan to deploy £2bn in excess capital this year.
The life assurer sparked fury among preference shareholders when it said it was considering cancelling £450m of the high-yielding ‘irredeemable’ shares at par value, news that wiped around 30 per cent off the value of some issues in just one day. Investors argued that the cancellation rights had not been communicated clearly enough prior to the announcement. Management subsequently scrapped the plans on 23 March.
Qualifying investors are those that sold their preference shares between 8 and 22 March at a price that was lower than the value they returned to on 23 March. They can also claim any transaction costs associated with the share sale and a sum intended as a notional investment yield. Aviva estimates fewer than 2,000 investors sold their shares during this period, putting the aggregate goodwill payment at around £14m.
