Bradford & Bingley has been forced to tap up its largest shareholders for additional capital after US private equity firm TPG dropped plans to inject £179m in the ailing lender.
TPG abandoned its deal to snap a 23% stake in B&B late last night after it emerged ratings agency Moody's was about to downgrade the bank for the second time in just over a month.
The centrepiece of B&B’s £400m fundraising effort unveiled on 2 June, the TPG capital plan had a termination clause in the event the lender was downgraded twice.
B&B this morning confirmed it will push on with a full £400m rights issue – backed by large shareholders M&G, Legal & General, Insight and Standard Life. The enlarged rights issue has an unchanged 55p subscription price.
TPG’s exit throws spotlight on the B&B board, which last month rejected two rescue package offers from Resolution Limited chief Clive Cowdery in favour of the private equity-led plan.
The entrepreneur, backed by the same four large shareholders, walked away from the deal last Friday after the B&B board refused access to the lender’s books.
B&B's Monday EGM has been postponed and is expected to be scheduled for the week starting 14 July.
"Whilst we are disappointed that TPG intends to terminate its subscription agreement, I am pleased that Citi and UBS and our major shareholders continue to support our proposed capital issuance,” B&B executive chairman Rod Kent says.
“Bradford & Bingley continues to be well-funded and the capital raising will reinforce our position as one of the better capitalised banks and one of the leading mortgage and savings banks in the UK."IFAonline
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