Saturday, June 18, 2016

Barclays Capital Raising 2008 Timeline

Technical Note:  For some reason the footnotes in the text don't go to the respective URLS.  So you have to go down into the Endnotes Section and click on them there.
31 October 2008
Barclays announces a GBP 5.8 billion “hard” capital raising with a potential additional GBP 1.2 billion if associated Warrants are exercised.  
Qatar Holdings and  a company representing the personal interests of HE Shaikh Hamad Bin Jassim Bin Jabr Al Thani, Chairman of Qatar Holding initially subscribe for GBP 2 billion  and HH Sh. Mansour Bin Zayed al Nahayan (Sh. Mansour) for GBP3.5 billion.[i] 
The generous deal terms suggest that Barclays is seeking to avoid participation in a UK Government rescue scheme that could impose constraints, including on executive salaries.
Sh. Mansour (UAE) Share Only
GBP 2 billion of Mandatory Convertible Notes (MCNs)[ii]
GBP1.5 billion in Reserve Capital Instruments (RCIs)[iii] Later reduced to GBP 1.25 billion.
The RCIs are accompanied by warrants (Warrants) for the purchase of 758,437,618 common shares of Barclays at 197.775 pence each[iv].    The Warrants are a “true” bargain.  They cost GBP76 pence roughly equal to $1.20.
Barclays initially identifies UAE investor as Sh. Mansour. [v]
25 November 2008 Barclays announces that Sh. Mansour will fund his investment through “an Abu Dhabi government investment vehicle which will become the indirect shareholder of the Warrants, the MCNs and the RCIs.”[vi]
This entity later identified as International Petroleum Investment Company (IPIC) Abu Dhabi (100% owned by Abu Dhabi Government) in Barclays' filings with UK and US regulators.[vii] Sh. Mansour is Chairman of IPIC.
IPIC uses special purpose companies to hold the individual investments.
PCP Gulf Invest 1 Ltd. for the MCNs. [viii]
PCP Gulf Invest 2 Ltd for the RCIs.[ix]
PCP Gulf Invest 3 Ltd for the Warrants. [x]
PCP companies are directly owned by Kadin Holdings Inc. which in turn is owned by IPIC.[xi]
This structure allows Kadin to sell off individual investment types.  
Barclays paid GBP110 million (approximately $174.9 million) in fees to Sh. Mansour on the deal.[xii]  He later pays GBP 30 million to a foreign intermediary per Euromoney.[xiii]  
The fee does not appear as income in IPIC’s 2008 or 2009 financial statements. [xiv][xv]  It does not appear to have been netted against the cost of the MCNs and RCIs. 
Thus, it appears that Sh. Mansour retained the remaining GBP 80 million.
18 November 2008
Qatar Holding and UAE agree to each sell GBP 250 million of RCIs back to Barclays.   No Warrants returned. [xvi] 
Reduction in UAE share of RCIs to GBP 1.250 billion.
The returned GBP 500 million in RCIs were placed by Barclays with institutional shareholders.[xvii] 
These investors had complained about being excluded from acquiring the richly priced 14% coupon RCIs. 
1 June 2009
As per SEC filing, KAQ Holdings (KAQH) announces 8 June 2009 that on 1 June 2009 it acquired the option to acquire 100% of Kadin Holdings Ltd any time after 5 June 2009.[xviii]  As per the same SEC filing, KAQH described as 100% owned by HE Khadem Al Qubaisi (KAQ).[xix] 
Sale price and reason for KAQH’s involvement are not disclosed.
The sale doesn’t appear to be an attempt to avoid appearance of conflict of interest because both KAQ and Sh. Mansour are members of IPIC’s Board.
5 June 2009
As per SEC filing, 8 June 2009 IPIC/Kadin announces that it has sold shares on 5 June arising from conversion of MCNs but that it still holds the Warrants.[xx]   
The MCN’s are exchangeable into 1,304,835,721 shares.  IPIC converts MCNs to common shares and sells.
IPIC’s 2008 annual report states that all Barclays investments sold after 31 December 2008.   E & Y’s audit is signed 22 June 2009 placing the sale of “all” Barclays investments prior to that date.[xxi]
No public information on who bought the Barclays shares.
IPIC engaged Credit Suisse to sell shares and place RCIs, as per Bloomberg.[xxii]
1 September 2009
As per SEC filing KAQH announces it has exercised an amended Option on 1 September 2009 that allowed it to acquire PCP 3 the owner of the Warrants.[xxiii]
There is a discrepancy between IPIC’s report it had sold “all” Barclays investments in June and KAQH’s 1 September date.    
Perhaps, PCP3 wasn’t sold till September and was held at its original cost carrying value ($1.20) and so considered de minimis?
Sale price is not disclosed.
Estimated fair value of the Warrants (341.79P less 197.775P) x 758 million-- about GBP1.1 billion based on 1 September5 share price.  [xxiv]   Using the 5 June share price of 263.27P, the fair value is some GPB 497 million. [xxv] 
 31 December 2009
IPIC recognizes $2,198,074 in profit on sale of its interests in MCNs, RCIs, and Warrants.[xxvi]
As per Note 20 to IPIC’s financials, profit is $2.2 billion equal to net proceeds of GBP 4.7 billion ($7 billion) less derived cost of GBP 3.2 billion ($4.8 billion).[xxvii]
The net proceeds of the MCNs are estimated to have been GBP3.4 billion based on Barclay’s closing share price of GBP 2.6327 on 5 June of 2009.[xxviii]   
The sales proceeds of the RCIs are estimated at GBP 1.25 billion given that the RCIs trading at near par in early June as per London Stock Exchange provided data.[xxix]
This suggests that the Warrants were sold at nominal cost.
12 February 2010
As per SEC filings, 12 February KAQH announces it transferred PCP 3 to Nexus Capital Investing Ltd. (NCIL). [xxx] [xxxi]
In the same SEC filing, NCIL declares its ownership of all the share capital of PCP 3.[xxxii]
Transfer of ownership of the Warrants from KAQH to NCIL.
KAQH’s name changed to Future Capital Management Ltd. [xxxiii]
NCIL.  According to SEC filing, Abdul Aziz Al Ketbi owns 100% of shares of NCIL.[xxxiv]  Fatima bint Mubarak al Ketbi is mother of key sons of Sh. Zayed
FCML is transferor of record of PCP 3 to Nexus.[xxxv]
Note transaction is “transfer” not “sale”.  Does this indicate no payment made?
Reason for KAQH’s name change and transfer not disclosed.
17 February 2010
As per SEC filing, PCP3 exercises Warrants to buy 626,835,443 shares of Barclays' common stock, leaving it Warrants to purchase an additional 131,602,175 shares.[xxxvi]
Shares were not sold so profit was not realized. [xxxvii]
Barclays' closing price per share 17 February 2010 was 279.25.[xxxviii]   Because cost of the Warrants appears to be zero or near zero, the estimated unrealized profit on exercise is (share price less Warrant price of 197.775) times number of shares.   GBP 511 million or $803 million.[xxxix]
7 July 2010
As per SEC filing, Al Ketbi “transfers” 100% of NCIL to Abu Dhabi International United Investments LLC.[xl]
As per the SEC filing, Sh. Mansour owns 100% of Abu Dhabi International United Investments LLC (ADIUI) which in turn owns NCIL.[xli]
Another “transfer” instead of sale. 
11 October 2010
As per SEC filing, NCIL exercises remaining Warrants acquiring 131,602, 175 shares of Barclays.[xlii]  NCIL (Sh. Mansour) now owns 758,437,618 shares. [xliii]
Barclays' closing price per share 11 October 2010 was 275.55.[xliv]  Estimated unrealized profit on exercise GBP102million or  $163 million.[xlv]  
Value of all shares held and thus Sh. Mansour’s total unrealized profit is estimated GBP590 million or $938 million.
20 June 2013
As per SEC filing, PCP 3 no longer holds any Barclays shares.[xlvi]
The reason given is the “closing and settlement of hedging transactions”.  The details of the hedging transactions are not public and so it’s not possible to determine the final profit realized by Sh. Mansour on the Warrants/Barclays shares.


[xxxii] http://www.sec.gov/Archives/edgar/data/312069/000094787110000108/ss84563_sc13g.htm                                                                

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