Pressure grows on Bradford & Bingley as HBOS £4bn cash call backed
RESTRUCTURING group Resolution upped the pressure on Bradford & Bingley today by saying that it has won the backing of a quarter of shareholders in the troubled bank for its £400m investment plan.
Clive Cowdery, who runs Resolution, is leading a plan to inject the cash into the buy-to-let lender, but its target has refused to allow it access to its books.
Resolution said that institutions representing about 25% of B&B’s shares had contacted it to support its request to be given access to due diligence.
That represents about 40% of the Yorkshire-based bank’s institutional investor base, as retail investors own about 40% of the lender’s shares.
Resolution said retail investor lobby group the UK Shareholders Association also wants B&B to consider the proposal.
Resolution has proposed to buy B&B shares at 72p each and would allow all shareholders to invest on the same terms. It also said B&B’s board would remain in control of the lender.
But B&B rejected an initial approach this week and is continuing with a plan to sell a 23% stake to US private equity firm Texas Pacific Group for about £179m and raise a further £258m through a rights issue.
Among the shareholders backing Resolution and pledging to put money into B&B are some of its top investors – Standard Life, Legal & General and Prudential.
Meanwhile Halifax owner HBOS yesterday won backing from shareholders for its £4bn rights issue after a majority of investors voted in favour of the banking giant’s cash call.
At a meeting in Edinburgh, shareholders representing more than 98% of HBOS shares approved each of three separate proposals relating to the issue.
Existing shareholders can buy at a “discount” price of 275p per share. HBOS shares closed down 5.5% at 276p last night.
The plan was first announced at the end of April, after write-downs due to the international credit crunch.
Private shareholders own about 27% of the bank’s shares. Most of them have held shares since the bank’s demutualisation in 1997.
The shares are being offered at a 45% discount to the market price of 495.75p the day before the rights issue was first announced.
