* Investors agree to sell bonds worth nominal 58.5 mln stg
* Offer had been criticised by activist investor
* Pays between 104 and 144 percent of nominal value
(Adds details, background)
LONDON, April 17 Lloyds Banking Group
said on Thursday that private retail investors holding 58.5
million pounds worth of the enhanced capital note (ECN) bonds
which were issued to help rescue the bank during the financial
crisis had accepted its offer to buy them back.
Lloyds, 25 percent-owned by the government, issued the
bonds, which were designed to boost the bank's capital if it ran
into trouble, in 2009. But new UK and European capital rules in
force this year mean the bonds may no longer count as core
capital to cushion the bank if it runs into financial problems.
Private retail investors were given the chance to sell their
holdings for cash at the market price. The bank said bonds worth
a total nominal amount of 58.5 million pounds had been accepted
for purchase in a tender offer at prices ranging between 104
percent and 144 percent of their nominal value.
Banking industry sources said less than 10,000 private
retail investors held the bonds.
Lloyds said earlier in April that institutional investors
had agreed to exchange 5 billion pounds worth of the ECNs for
new bonds worth around 5.35 billion pounds.
The bank surprised some investors in February when it said
it could buy back the ECNs at face value although analysts did
not expect it to offer the bare minimum as upsetting bondholders
including hedge funds and other big investors could prove
damaging for future fundraisings.
The bank's treatment of retail investors had been criticised
by Mark Taber, who led successful campaigns for retail
bondholders in Bank of Ireland and the Co-operative
Taber had said that if Lloyds believed there was an issue
with the capital status of the ECNs it should have engaged with
all shareholders, including private investors, to find a
Shares in Lloyds were up 0.17 percent at 72.98 pence by 0721
(Reporting by Matt Scuffham; Editing by Brenda Goh and Greg