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B&B shareholders back £400m cash call

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by Kay Mitchell

UK troubled lender Bradford & Bingley (B&B) held its extraordinary general meeting today in Sheffield and its shareholders are backing the £400 million rights issue to shore up its balance sheet.

Existing shareholders, who voted in favour of the rights issue, will now have the opportunity to purchase new shares.

B&B, which is the UK’s biggest mortgage lender, has suffered due to the property market slowdown.

Furthermore, its shares have been trading at near record lows after two previous attempts at fundraising collapsed.

Earlier this month, US private equity firm Texas Pacific Group (TPG) pulled out of a deal, after credit rating agency, Moody’s, downgraded the lender’s debt. TPG had planned to inject £179 million into B&B in exchange for a 23% stake.

In addition, financier Clive Cowdery who runs Resolution investment group, walked away from a deal with B&B after he planned to pump £400 million into the troubled UK lender.

Mr Cowdery accused B&B of obstructing all his efforts to put his plans forward and said the entrenched position of the board of B&B has prevented the constructive engagement necessary to finalise this proposal.

Rival banks Barclays and HBOS will discover this week if their attempts to raise funds have been successful.

The two banks also face concerns over their moves to improve their balance sheets.

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Story link: B&B shareholders back £400m cash call

News posted: July 17, 2008

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