Tesco share­holder or bond­holder? Get ready to claim your com­pen­sa­tion soon

The Daily Telegraph - Your Money - - YOUR MONEY -

Tesco has con­firmed the details of a com­pen­sa­tion scheme for in­vestors who lost out as a re­sult of in­ac­cu­rate fi­nan­cial in­for­ma­tion pub­lished by the su­per­mar­ket group three years ago. On Au­gust 29 2014 Tesco is­sued a trad­ing up­date that in­cluded details of its ex­pected prof­its for 2014-15. It quickly tran­spired that prof­its had been over­es­ti­mated by £250m and the firm is­sued an­other state­ment to ad­mit the er­ror a month later.

In March this year the City watch­dog, the Fi­nan­cial Con­duct Au­thor­ity (FCA), agreed not to levy a fine but Tesco is to pay com­pen­sa­tion of around £85m to those who bought Tesco shares and bonds be­tween Au­gust 29 and Septem­ber 19 2014.

Bri­tain’s big­gest stock­bro­ker, Har­g­reaves Lans­down, es­ti­mated that 10,000 share­hold­ers could now be due com­pen­sa­tion of an av­er­age of £400 each. Pri­vate in­vestors who are en­ti­tled to com­pen­sa­tion will re­ceive 24.5p per share pur­chased, plus in­ter­est at 4pc from Septem­ber 2014 to Jan­uary 2018.

Share­hold­ers and bond­hold­ers will be com­pen­sated on the ba­sis of the dif­fer­ence in price of the spe­cific as­set dur­ing the pe­riod in ques­tion. Hold­ers of Tesco’s 2029 “re­tail bond”, which is pop­u­lar with in­di­vid­ual savers, are el­i­gi­ble for com­pen­sa­tion.

To be el­i­gi­ble, you must be a “net pur­chaser”, mean­ing that you bought more bonds or shares than you sold, dur­ing the pe­riod. You must also have suf­fered a “gen­uine eco­nomic loss”.

The com­pen­sa­tion scheme will open be­fore the end of Au­gust this year and claimants will need to pro­vide proof of pur­chase.

As de­scribed above, there is a single level of com­pen­sa­tion for share­hold­ers. It is less straight­for­ward for bond­hold­ers as there are dozens af­fected, each with a dif­fer­ent level of com­pen­sa­tion based on how the prices of spe­cific bonds re­acted to the mis­in­for­ma­tion.

The FCA has spec­i­fied how much com­pen­sa­tion is due on each bond. For in­stance, if you hold a nom­i­nal £1,000 of Tesco’s 2029 bond, you will be en­ti­tled to £20.11. Bond­hold­ers will also re­ceive in­ter­est on the com­pen­sa­tion.

Once the scheme opens there is a six-month dead­line, so Tesco ad­vised claimants to get their evidence ready as soon as pos­si­ble. The scheme will be au­dited by KPMG, the ac­coun­tancy firm, to which in­vestors should send claim forms.

In­vestors who lost out in 2014 are fi­nally get­ting pay­outs. By Sam Brod­beck

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