B&B shares plunge as £400 million fundraising relaunched

by Gill Montia

Story link: B&B shares plunge as £400 million fundraising relaunched

Bradford & Bingley (B&B) saw its shares plunge to 43p yesterday, well below the 55p issue price of its £400 million fundraising.

The buy-to-let lender has had its credit rating cut by Moody’s, from A3 to Baa1, with the result that private equity firm, Texas Pacific Group, has withdrawn from an agreement to inject £179 million into the bank.

Had the plan proceeded, B&B would have raised £258 million from shareholders rather than the £400 million it now needs.

The rights issue is underwritten by Citigroup and UBS. It is also being supported by Royal Bank of Scotland, HSBC, Barclays, Lloyds TSB and HBOS which have each pledged to provide £20 million of sub-underwriting, and the lender should be successful in raising the larger amount

However, recent events have badly damaged B&B’s reputation and the costs involved in shoring up its balance sheet are rising, with a report in The Times suggesting that it could become one of the most expensive rights issues in UK corporate history costing £55 million to raise only £400 million.