Resolution rises on deal plans but bosses half-miss cash call
RESOLUTION shares made their steepest one-day gain in eight months yesterday as the insurance consolidation vehicle released details of its rights issue and £2.8bn takeover of AXA UK.
Resolution’s paper, which has slumped since November, rose five per cent to 63p in the first trading since it was suspended a fortnight ago. Analysts and investors’ faith in entrepreneur Clive Cowdery’s ambitious project has been partially restored by the long-awaited move on AXA’s life and pensions business.
A £2bn cash call to part-finance the deal will begin on 21 July and close on 5 August.
Resolution directors including Cowdery, John Tiner, Jim Newman and Ian Maidens will take up roughly half their allotment of rights – £8m – with £4.5m of that recycled from fees payable to Resolution’s in-house team for arranging the takeover. The prospectus said the directors would also sell rights in order to take up some of the remainder – a process known as “swallowing the tail”.
A spokesperson defended the team’s decision not to participate fully in the rights issue. “ They clearly don’t have that kind of money in their current accounts,” he said.