Sunday, Jul 20, 2008
Morgan Stanley and Dresdner, will have to place £3.6 billion of shares over the course of Monday or Tuesday!
Times: High-street bank HBOS faces rights issue disaster
HBOS will tomorrow admit to one of the most disastrous rights issues in corporate history when it concedes that as few as 10% of its investors took up its £4 billion share offer.
Barclays said on Friday that only 19% of its investors took part in its £4.5 billion placing. When HBOS originally announced its rights issue two and a half months ago, it was seen as being heavily discounted against a share price that was then standing at 500p now it's 282p! But the knowledge that a large percentage will have to be sold on the market could see them drift beneath the rights price.
Posted by who stole my pension? @ 06:28 AM (469 views) Add Comment
4 Comments
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1. uncle chris said...
The Bradford and Bingley rights issue is priced at 55 pence - the current share price is 52 pence - great discount .... not. Looks like the B&B issue will be even more disastrous than the HBOS one.
2. plato said...
Bail Out! Bail Out!
Shares could crash when they are placed tomorrow. The dilution is too heavy.
"It is expected that the low take-up will encourage regulators ------------------ to shorten the time taken to conduct a rights issue."
Translation : To catch out the unsuspecting and uninformed.
3. paul said...
They'll be going to Darling cap-in-hand and Darling will be telling them there's nothing left in the pot.
4. p. doff said...
There are winners and losers.
Shareholders lose because their shares are worth less due to 'dilution'. Hedge funds are winners by shorting the shares - as the value tanked to below the issue price, when they presumably bought them cheap to lock-in profits. The hedge funds buying them helped push up the value - now over the issue price, so the underwriters have technically made a profit as well.
It remains to be seen which way they go when the underwriters start shifting their holdings. Logic suggests downwards, but who knows.