Fifth Announcement in Respect of the Proposed Settlement of the Omnibus Claim - 27/02/2013

This fifth announcement provides customers with an update to the composition of the portfolio of securities that LBIE expects to recover from LBI (the “LBI Portfolio”) previously presented in our third announcement on 20 December 2012. We also take the opportunity to set out an illustrative range of estimated outcomes for customers sharing in the distribution of the LBI Portfolio based on certain simplifying assumptions.

LBI Portfolio composition

The aggregate estimated value of the cash (including post filing income), common stock and equity type products and fixed income securities in the LBI Portfolio is set out below.

The LBI Portfolio value has risen in the month reflecting market conditions at the time, the pricing of securities which were previously unpriced and cash movements reflecting ongoing reconciliation activity, corporate actions and redemptions.

LBIE cannot guarantee 100% accuracy in respect of this information nor confirm that it or the assumptions made in rolling the securities forward for corporate actions fully reflect what has actually occurred. The ultimate value of the LBI Portfolio is dependent upon the settlement with LBI being approved, delivery of the LBI Portfolio to LBIE from LBI thereafter and the cash proceeds realised from the liquidation of the non cash assets.

Details of the LBI Portfolio are included in the tables below together with comparisons from the third announcement.

• Table A – Details of common stock and equity type products by geography, type and industry
• Table B – Concentration of common stock and equity type products
• Table C – Market Capitalisation of applicable common stock and equity type product issuers
• Table D – The country of issue for fixed income securities and their maturity profile
• Table E – Industry and rating information for fixed income securities
• Table F – Concentration of fixed income securities

Illustrative range of estimated outcomes

LBIE has previously announced its intention to propose a consensual arrangement to facilitate distributions of the LBI Portfolio by LBIE to its customers within the Omnibus Claim. Elements of the consensual arrangement have been provisionally described in our second and fourth announcements. The proposal is expected to be made imminently and will be announced via this website and our portal. Customers should read the illustrative outcomes below with a high degree of caution and should not rely on them when contemplating the value of their claims. In particular, the LBI settlement and consensual proposal which underpin this illustrative outcome have yet to receive approvals.

Finally, the outcome is dependent on the realised value from a securities population of $4.360bn which remains subject to ongoing market movements. The date when these securities may be available for liquidation is not yet known.

Notes

• The Level of overall acceptance by customers is based on LBIE’s value of customers’ Best Claims. We have assessed indicative scenarios of acceptance from unanimous acceptance to 80%. Below this level the consensual proposal would not be implemented.
• LBI Portfolio headline value and Provisions illustrate two indicative alternatives (a Low and High) for each scenario where provisions may be needed against the headline value for items such as costs arising on liquidation of the LBI Portfolio, adverse movements from the historic November 2012 valuation to realised proceeds once the securities are liquidated in due course and other general provisions (not related to beneficiaries). The Low and High alternatives should not be seen as creating a boundary around the final outcome (recognising the actual outcome may fall outside either of these alternatives).
• Reserves for Non Consenting Beneficiaries have been included in two scenarios where a minority of customers do not commit to the proposal. The reserve is for these customers’ Best Claims (per LBIE’s valuation) plus a further provisional supplement of 35% and 10% for the Low and High outcomes respectively. The actual level of reserves will be determined based on the final aggregate level of acceptance and individual circumstances of Non Consenting Beneficiaries when known after the offer closes.
• The Aggregate of Consenting Beneficiaries’ Best Claims reflects the total value of Consenting Beneficiaries’ Best Claims before deductions for indebtedness, taxes and fees. It assumes LBIE’s Best Claim figures are not subject to valuation disputes or other challenge. The estimate of claims is $8.5bn as at 30 November 2012.
• Illustrative return as % of Best Claim assumes full utilisation of the Non Consenting Beneficiaries’ reserves and provisions where included. Please note, illustrative returns do not represent a minimum or a maximum recovery.
• This analysis is shown before adjustment for tax, indebtedness and any other deductions.

The 19/9 shortfall claim (pre-cap) has not been included in the table above as this will be driven by actual acceptances.  On a 100% acceptance, the aggregate shortfall for customers whose gross recovery is lower than their 19 September 2008 values  $74m in the Low case and $12m in the High case. 

Customers should note that this illustration should not be used to assess the likely percentage level of an interim distribution or the timing thereof.

Important Disclaimer

The information and contents of this update communication are being provided to you by LBIE for discussion purposes only. This update does not constitute a commitment or offer on the part of LBIE or its Joint Administrators, and should not be construed as such, nor does it constitute any form of advice to the recipients. The contents of this communication are based on provisional analysis by LBIE and/or information provided by LBI, which has not been audited and LBIE reserves the right without specifying any reasons to amend all or part of this communication.

Any party (including any recipients) who obtains access to and chooses to rely on this update communication (or any part thereof) will do so entirely at its own risk. No person has, nor is held out as having, any authority to give any statement, warranty, proposal or undertaking on behalf of LBIE or its Joint Administrators in connection with this communication.

LBIE and its Joint Administrators will be under no obligation to provide the recipients with access to any additional information, to update this document or to correct any inaccuracies in it which may become apparent.

LBIE and its Joint Administrators, and their respective officers, employees and agents disclaim any liability which may arise from this communication, or any other written or oral information provided in connection herewith, and any errors and/or omissions herein or therein.

Nothing contained in this update communication is an acknowledgement of any claim that a recipient or any other claimant may have against LBIE or any other entity. Neither LBIE nor its Joint Administrators shall have any liability to any recipient or to any other person in respect of the information contained herein or for any defect or incompleteness in it. No representation is made by LBIE or its Joint Administrators about any claim that may be asserted against LBIE in respect of the LBI positions or any shortfall in recovery of the LBI positions.