Woodford investors to receive initial £185.7m distribution

Redress to be paid out today, almost five years on from fund’s initial suspension

Neil Woodford


Woodford Equity Income investors are set to receive an initial £185.7m distribution as part of Link’s scheme of arrangement today (28 March), almost five years on from the fund’s suspension in June 2019.

Depending on the share class, investors will receive between 4p and 5.2p per share in the initial distribution.

The scheme, which became effective on 5 March, allows payments of up to £230m to be made in redress to investors. This means the first pay-out falls £44.3m below the agreed maximum amount.

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On top of the initial payment, LFSL has set aside a reserve from the overall settlement fund in order to cover certain costs and liability contingencies.

A Link spokesperson told Portfolio Adviser that setting a reserve amount allowed the first payment to be made to investors as soon as possible.

The reserve amount has been set at £46.5m, which Link said would be reviewed on a regular basis, with further distributions to be made to investors if contingencies can be released.

According to Link, it will take additional time for creditors who have invested through intermediaries to receive their payments, depending on the time it takes for intermediaries to process distributions.

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AJ Bell Investments interim managing director Ryan Hughes said: “This settlement scheme is not without controversy, as despite nearly 94% of investors voting to approve the scheme, many investors remain of the view that it does not go far enough.

“With around £230m available to distribute to investors, this first payment of just under £186m makes up around 80% of the total with subsequent smaller payments to follow.

“The amount investors receive is effectively a unit rate per share, along similar lines to the various distributions that have been made since suspension as the underlying assets have been sold down.”

He added: “While this won’t be enough to satisfy many of the investors who have suffered as a resulted of this fiasco, for others it will represent an opportunity to move forward having voted to approve the scheme through gritted teeth recognising that this may be their best chance of receiving some form of redress.”