UPDATE:B&B Confirms Details Of GBP400 Million Enlarged Rights Issue
Friday July 4th, 2008 / 19h24
By Erica Herrero-Martinez Of DOW JONES NEWSWIRES LONDON -(Dow Jones)- Troubled U.K. mortgage lender Bradford & Bingley PLC (BB.LN) late Friday confirmed details of its GBP400 million enlarged rights issue. The company said the board proposes to issue 828 million new shares in connection with the enlarged rights issue, with an unchanged subscription price of 55 pence a share. The company also postponed an Extraordinary General Meeting scheduled for Monday after U.S. investment firm TPG canceled plans to take a 23% stake in Bradford and Bingley. "The EGM will be adjourned for a short period to a later date, currently expected to be in the week of July 14," the statement said. The EGM was to allow shareholders to vote on the TPG investment. TPG was to invest GBP179 million in B&B in return for the stake with a further GBP258 million to be raised through a rights issue at 55 pence a share. It was B&B's second capital injection plan. TPG withdrew its plans after Moody's downgraded B&B's senior unsecured and long-term debt ratings to Baa1 from A3, while maintaining the short-term rating at P2. The ratings agency said this reflected a substantial deterioration in the bank's asset quality so far in 2008 as well as the expectation that it will weaken further during the rest of the year, and because of B&B's obligation to acquire mortgages from GMAC RFC - mortgages which have displayed significantly faster deterioration of asset quality than the bank's own-originated loan portfolio. The downgrade gave TPG the right to pull out of its earlier deal. B&B said it will now raise the GBP400 million from a rights issue supported by a number of its largest shareholders, including M&G Investment Managers, Legal & General Investment Management, Insight Investment and Standard Life Investments. Banks in the U.K. and elsewhere in Europe have been under pressure from asset write-downs and higher borrowing costs since late last year. Though some have moved to increase retail deposits and to focus on higher quality lending, several have had to turn to capital markets for additional cash. Royal Bank of Scotland Group PLC (RBS) announced a GBP12 billion rights issue. HBOS followed with a GBP4 billion capital hike as it braced against a worsening housing market. Shares in B&B closed 18% lower Friday at 50 pence in an overall slightly lower market. Company Web site: www.bradford-bingley.co.uk -By Erica Herrero-Martinez, Dow Jones Newswires; 44 20 7842 9353; erica.herrero-martinez@dowjones.com (Vladimir Guevarra in London contributed to this article.) Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=N3pJNd1FyFKKQZIFIr7Pgg%3D%3D. You can use this link on the day this article is published and the following day.
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