Aviva’s preference shares issue was undoubtedly one of the biggest news last month, and it looks like the British giant is doing all it can to undo it.
In a move to make amends with preference shareholders who sold their shares at a lower price prior to Aviva’s March 23 announcement that it was no longer taking action to cancel its preference shares, the insurer today revealed its offer of a discretionary goodwill payment. It covers the period from March 8 to 22, inclusive.
You may read about the March 23 announcement here.
“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 March 23 announcement, rather than the first announcement,” said Aviva, which has appointed KPMG LLP as an independent administrator to handle the goodwill payment process.
According to Aviva’s initial estimate, less than 2,000 individual investors sold their preference shares in the March 8-22 period. It said the total cost of the goodwill payment scheme is not expected to go beyond approximately £14 million.
“Our announcement on March 23 meant that Aviva’s preference shareholders could rest secure in their holdings,” said group chief executive Mark Wilson. “However, we recognise that while 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.”
When the process begins, Aviva will be writing to each affected registered holder to set out full details of how eligible shareholders can claim their payment. It has also consulted with the Financial Conduct Authority and will continue to engage with the watchdog in the investigation on the matter.
“We accept that whatever action we take, we will continue to hear divergent views on this topic from various stakeholders,” added Wilson. “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.”