Rights issue to fall flat at troubled B&B
Bradford & Bingley’s attempt to raise cash could see a take up as low as 8 per cent
Bradford and Bingley faces a meagre take-up of its rights issue when it closes at 11am today, with shareholder support expected to be minimal.
Shares in the troubled mortgage lender have skirted the 55p issue price for nearly two months and with the price currently at 54.75p, executive chairman Rod Kent is bracing himself for a take-up as low as the 8 per cent seen on the HBOS cash call last month.
One veteran analyst said: “I would be very surprised if the take-up is anywhere near the 19 per cent who answered Barclays’ cash call.”
If the response from shareholders is as lukewarm as expected, UBS and Citigroup will be left with a rump of millions of pounds of unwanted stock, with Citigroup acting as the majority underwriter.
Sub-underwriters including Abbey, Barclays, HBOS, HSBC, Lloyds TSB and Royal Bank of Scotland will take a substantial portion of that rump, having guaranteed more than half of the £400m to be raised.
Standard Life, Legal & General, Prudential’s M&G and HBOS’s Insight have also promised to take up some of the leftover rights.
B&B’s attempts to raise cash have hit the rocks on several occasions, as the lender suffered from setbacks including a shareholder rebellion, a profits warning, desertion by investors TPG after a credit-rating downgrade, and the sudden departure of chief executive Steve Crawshaw due to a heart condition.