UNICREDIT shares had to be suspended yesterday as it revealed it has been forced to heavily discount its rights issues after current shareholders said they would sign up to buy just 14 per cent of the new equity.
The bank’s stock plunged over ten per cent in less than half an hour yesterday, with its initial fall enough to trigger an automatic “time out” in trading. It closed 14.5 per cent down.
The rout was sparked by the revelation that UniCredit’s $7.5bn in new equity capital will be sold at a 43 per cent discount to its estimated post-deal share price. That is a 69 per cent discount to its closing price on Tuesday.
Bankers on the deal said they were confident of finding takers for the rights, which they have underwritten and so will be left with billions in unwanted stock if they cannot find enough investors.
Institutional investors have signed up to buy 10.68 per cent of the new stock, with the non-profit Cariverona Foundation agreeing to take on 3.51 per cent. UniCredit said that other investors had expressed interest in another 10 per cent. And high uptake is expected among retail investors, who account for a fifth of shareholders. Banks will also be seeking buyers among sovereign wealth funds.
must raise the cash to comply with temporary capital rules.