Old Gamers Brain Short Circuits: More on the Priority Issue ING and Aegon

ADDED 8/27/09: If a payment was made to the Dutch government in May on its Junior Security, this would trigger the Mandatory Payment Event clause: More on ING and AEGON Mandatory Payment Events/Alternative Payment Mechanism:

My brain short circuited some when discussing earlier the priority and stopper issues involving both Aegon and ING. This is what I neglected to understand at first: The ING agreement provides that no dividend is payable to the Dutch government at all unless a dividend is payable on the common shares in the year preceding the coupon date. ING eliminated its common dividend about a year ago, so the Dutch government can not be expecting a dividend now, unless something has changed in the agreement. The Stopper provision will come into play only if the common dividend is reinstated. This is an excerpt from ING's press release:

"The coupon on the core Tier-1 securities is only payable if a dividend - either interim or final - is paid on common shares over the financial year preceding the coupon date. The annual coupon per security will be the higher of EUR 0.85 or an amount equal to 110% of the dividend paid on ordinary shares for the year 2008, 120% for 2009 and 125% from 2010 and onwards.

Given the exceptional circumstances, ING has decided to pass over the final dividend for 2008, leaving the total 2008 dividend at the EUR 0.74 per share that was already paid as interim dividend."ING to strengthen core capital by EUR 10 billion - ING

So once the common dividend is reinstated, the Stopper provision becomes important.

Now, I can not find anything one way or the other about whether Aegon has to make payment even it does not pay a common dividend. I would appreciate anyone leaving a comment if they have information on that subject. I am going to proceed now under the assumption that it does not have to pay either since it eliminated dividends on its ordinary shares last year, at least until I find out whether the same limitation found in ING's agreement with the Dutch government does not apply to Aegon. It seems to reasonable to assume that the deals would be similar in that regard.