They pay interest of 9.75 percent until they are converted to stock at 153.3 pence apiece on June 30.
Qatar Holding and Sheikh Mansour also bought 3 billion pounds of securities known as reserve capital instruments. These require Barclays to pay annual interest of 14 percent and give the investors warrants to buy more than 1.5 billion Barclays shares at about 198 pence apiece. Barclays fell to 59.2 pence in London today, valuing it at 5 billion pounds, less than it raised from the Gulf funds last year.
The contracts with the investors would prevent the U.K. government from taking a majority stake in the bank, the Times and Telegraph in London reported earlier today."
Barclays Prefers to Pay Cash for U.K. Guarantee, Varley Says:
"Barclays Plc would prefer to pay for the government's toxic asset guarantee plan in cash rather than equity, Chief Executive Officer John Varley said in a video broadcast on the Web site of Cantos Communications Ltd.
"Our predisposition would be to pay in cash," Varley said. "The government was very clear it's not looking for ordinary equity as a means of satisfying that payment."
The U.K. government announced plans, Jan. 19, to guarantee toxic assets for a fee and gave the Bank of England power to buy 50 billion pounds ($69 billion) of securities in the second effort in three months to underpin confidence in the banking system. Barclays has declined 55 percent in the past week on speculation it may take more writedowns and could be nationalized.
"There is no truth" in speculation the government is unhappy with how Barclays has valued some of its assets, Varley said. "We have a real-time obligation to ensure that the numbers that we publish are reliable and our numbers are reliable. We take that obligation with deadly seriousness.""