More misery for Manch­ester Pibs hold­ers

The Daily Telegraph - Your Money - - YOUR MONEY - Richard Evans

In­vestors who own per­ma­nent in­ter­est-bear­ing shares or Pibs is­sued by Manch­ester Build­ing So­ci­ety are to miss out on an­other in­ter­est pay­ment, the mu­tual has in­di­cated.

The em­bat­tled so­ci­ety, which has said there is “ma­te­rial un­cer­tainty” over its sur­vival, has two tranches of Pibs in is­sue: one that is sup­posed to pay 8pc an­nual in­ter­est and an­other with a 6.75pc “coupon”. In­vestors have al­ready missed the in­ter­est pay­ments due in April this year and Oc­to­ber 2016.

An­nounc­ing its half-year re­sults on Thurs­day, when it said that losses had fallen to £698,000 from £1.4m for the same pe­riod last year, the mu­tual added: “On March 14 2017, the so­ci­ety an­nounced that there was un­cer­tainty over its abil­ity to make coupon pay­ments on its two tranches of Pibs af­ter April 2017 given the risks fac­ing the busi­ness.

“This un­cer­tainty con­tin­ues and while no de­ci­sion has been taken re­gard­ing the Oc­to­ber 2017 coupon pay­ments presently, its pay­ment is un­likely at this time. Any fur­ther non-pay­ment of Pibs coupons will be an­nounced to the mar­ket.” The loss arose from a £1.7m “im­pair­ment” charge on costs “re­lated in the main to an in­crease in the in­surance risk on the Span­ish loan book”.

In­vestors who de­cide to sell their Pibs in the mar­ket face crys­tallis­ing se­vere losses.

The 8pc is­sue was trad­ing at 27.25p on Thurs­day af­ter the lat­est an­nounce­ment, while the 6.75pc Pibs were priced at 20.5p.

The so­ci­ety said it was in “open di­a­logue” with reg­u­la­tors over its plans to strengthen its fi­nances.

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