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August 19, 2008

B&B achieves 28% take-up of cash call

by Gill Montia

Story link: B&B achieves 28% take-up of cash call

Bradford & Bingley’s (B&B) shareholders have taken up just 28% of the buy-to-let lender’s £400 million rights issue.

Underwriters Citigroup and UBS, have been left with around 72% the stock, which they will need to place by Friday of this week, or take onto their balance sheets.

B&B announced its cash call in May, only weeks after denying reports that it needed to raise funds.

The bank was then forced to revise its plans when its credit rating was downgraded by Moody’s, prompting US private equity firm, Texas Pacific Group, to abandon plans for a £179 million injection of cash into the business.

A loss of confidence in the bank, which was accompanied by the resignation on health grounds of its chief executive, Steven Crawshaw, meant that the rights issue price of 55p was slightly above Friday’s closing price of 54.75p.

However, the response by investors was above analysts’ expectations and compares favourably HBOS’s 8% take-up of its £4 billion rights issue, in July.

Yesterday, B&B announced that Richard Pym, a former chief executive of Alliance & Leicester, has replaced Mr Crawshaw with immediate effect and that it is also recruiting a new chairman, who will be replacing the incumbent, Rod Kent.

 

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