1.   The rights of the preference shareholders rank behind those of the provider of debt and the creditors, but before those of the ordinary shareholders.

2.   Where the company has preference share capital, the ABI requests that class meeting consent should be obtained from the preference shareholders.

3.   Normally, however, ordinary shareholders expect lower yields than preference shareholders and loan stock holders because of their participation rights.

4.   Preference shareholders receive nothing on a liquidation until all creditors have been paid, although they will rank ahead of ordinary shareholders for a distribution in the winding up.

5.   A preference shareholder does, however, usually have the right to be paid his dividend before any dividends can be paid to the ordinary shareholders.

6.   Subordinated loan stock will rank behind all unsecured creditors but ahead of preference shareholders and ordinary shareholders.

7.   The structure of the takeover may require the consent of preference shareholders, lenders or optionholders or holders of convertible securities in or to the target.

8.   From the point of view of the existing preference shareholders, liquidity in current stock will be reduced.