HBOS offers “cashless take-up” of rights issue

by Gill Montia

Story link: HBOS offers “cashless take-up” of rights issue

HBOS is trying to woo its small shareholders over its £4 billion rights issue.

The group, which owns Halifax and Bank of Scotland, has a large number of small private investors because it was formed from the demutualisation of Halifax Building Society a decade ago; around 800,000 hold 200 shares or less.

In a move aimed at rallying support from this group, around 1.4 million shareholders will be offered the chance to opt for a cashless take-up.

This involves a process known as “tailswallowing” whereby investors sell some of their entitlement to their rights to provide the cash needed to allow them to take up their remaining rights.

HBOS is offering a free service to those who wish to sell all or part of their entitlement.

However, applicants will need to hold HBOS shareholder accounts or an HBOS share ISA, or be customers of Halifax Share Dealing. Others are excluded because of logistical reasons.

The new HBOS shares are being offered at 275p each, representing a 45% discount on the market price of the group’s stock the day before the rights issue was announced.

Private investors can buy two new shares for every five they already own.