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Realistbear

H B O S Rights Issue Threatened By Collapsing Stock Price

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http://www.telegraph.co.uk/money/main.jhtm...7/cnhbos117.xml

HBOS rights issue hit by fall in share priceBy Philip Aldrick

Last Updated: 12:01am BST 17/07/2008
HBOS shareholders were looking increasingly unlikely to take up their rights in the Halifax-owner's £4bn cash-call last night after the shares fell 5½ to 254½p- 7pc below the issue price.
Unless the stock recovers to 275p or above by tomorrow, HBOS's underwriters - Morgan Stanley and Dresdner Kleinwort - are expected to end up with 40pc of the new shares at a cost of £1.6bn.
Their potential losses - amounting to £300m at yesterday's closing price - could dwarf their £100m fee.
Asked if shareholders would support the issue, one said: "Why would we do anything that costs us money? I would expect underwriters to be left with about 80pc of the issue."

With underwriters now facing hundreds of millions in losses when they go along with bank's desperate measures to try to raise cash it could lead to them refusing to underwrite any further rights issue pleas which will leave the banks vulnerable to collapse. IMO, no one is going to buy shares at more than market. With the deposit guarantee set at 35k it is a wonder depositers have not already taken action to spread their savings around a bit.

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I'm going to shift my ISA out of the halifax tomorrow and just leave my current account there. Although I may even shift that back to HSBC.

IMO, no one is going to buy shares at more than market.

I'm surprised Darling isn't rushing in to the buy the shares with taxpayers money, he knows a bargain when he sees one.

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I'm going to shift my ISA out of the halifax tomorrow and just leave my current account there. Although I may even shift that back to HSBC.

Why would you move your money? HBOS are OK - they have shored up their capital to the tune of £4 billion - it's the underwriters who are squirming. Aren't HBOS now one of the best capitalised banks on any of the European bourses?

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Why would you move your money? HBOS are OK - they have shored up their capital to the tune of £4 billion - it's the underwriters who are squirming. Aren't HBOS now one of the best capitalised banks on any of the European bourses?

I suspect their attempt to raise cash via rights issue was an indication that they might be a bit skint.

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Underwriters usually get paid to do nothing.

100m for insuring a rights issue that 99.99% of the time goes without trouble!

Get real

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I suspect their attempt to raise cash via rights issue was an indication that they might be a bit skint.

OK - but now they're not, having taken on board £4 billion. I'm not saying everything's rosy, just that they are now in a stronger position. Also, fwiw the title of the thread differs from the headline in the Telegraph - the Rights Issue is not "threatened" because the share price has diminished...the rights issue will go ahead, the underwriters must feel the pain - no problem for HBOS shareholders or savers. I'm happier now to have my pretty substantial STR fund in HBOS as compared to a couple of months ago when it was doubtful that the RI would be supported at all.

Edited by ronpember

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Great line from the rights

FOR THE LARGE SHORT BASE: There are mainly 3 ways to close out their shorts: (i) either by buying rights and exercise them or (II) by buying shares in the rump (if any) or (iii) by buying the shares in the markets before or after the end of the rights issue. Most HFs in shorting the stock hedged that short through many usual mechanism. In any event if they do not buy the stock now or exercise the rights, their currently hedged shorts will become naked directional shorts with potential for a short squeeze

It could be a great day to buy HBOS in a reverse sort of short, buy now, sell tomorrow at the peak caused by the rush and buy back on Monday when it falls again. Or buy nil paid shares , although they might all be gone.

[i know very little about share dealing, this does not constitute financial advice]

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Nearly there. Shares up already this morning .... well wouldn't know you it.

This issue has to be shown to be a success, regardless.

HBOS are belt tightening

Out of a work force of 65,000, they are losing 650 over the next 18months :blink:

LINK

Edited by Laura

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Why, because the U.S. financials did so well yesterday?

That would make sense, biggest rise in 16 years or something. But I was thinking nobody can short HBOS every month as they have been doing.

If they buy nil paid shares it would let them close the position and settle at the offer price.

After all , HBOS is going to go up afterwards so buying this morning and selling when happy.

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278.00 p up_g.gif9.75 (3.63%)

Yay, I made some money by thinking instead of guessing.

To be fair, the banking sector is up in step with HBOS today, and HBOS was down in earlier trading. Your profits may have nothing to do with your thinking :P

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To be fair, the banking sector is up in step with HBOS today, and HBOS was down in earlier trading. Your profits may have nothing to do with your thinking :P

No, it's from my post yesterday , matching the rise after the offer close and buildup.

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I must be taking my stupid pills!

Can you explain what you did that locked in the profit (in a step-by-step manner any idiot could grasp)? I don't understand your post from yesterday or today

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I must be taking my stupid pills!

Can you explain what you did that locked in the profit (in a step-by-step manner any idiot could grasp)? I don't understand your post from yesterday or today

I understand the confusion, I wasn't taking part in the rights issue or nil paid shares just buying and selling through a broker. By selling the shares I have made

7.5% return.

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