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June 10, 2008

High Street five support B&B fundraising

by Gill Montia

Story link: High Street five support B&B fundraising

Bradford & Bingley (B&B) will receive the support of the UK’s five largest High Street banks in its troubled fundraising event.

The buy-to-let lender originally planned to raise £330 million from shareholders in a rights issue but had to redraw its plans when a profit warning left its share price plummeting close to the issue price.

The scheme was rescued by a cash injection from private equity firm, Texas Pacific, which allowed the bank to reduce the rights issue to £285 million.

Royal Bank of Scotland, HSBC, Barclays, Lloyds TSB and HBOS will now each provide £20 million of sub-underwriting to the revised rights issue.

Original underwriters, UBS and Citigroup, are reported to have threatened to dump unsold stock if the original rights issue had failed.

Under the new agreement the five High Street banks will together take up £100 million of shares from the main underwriters.

The additional support will go some way to reassure B&B’s shareholders and its retail customers, who have £24 billion on deposit.

 

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