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