Sunday, June 1, 2008

Possible failure of Rights Issue?

Know your rights, as B&B goes begging

"Cast your mind back to December 2000. That was the month that Bradford & Bingley floated on the stock market, triggering windfall payments to almost 2.7 million members - many of whom were "carpetbaggers" who had signed up with the building society purely in the hope of making some easy money." The issues is priced at 82p and the share prices is heading that way (surely not managers unloading their shares?) so the market is saying the shares are worth maybe even less than the rights issue price - in which case no one would take up the rights issues and the Investment Bank Underwriters are left holding the baby. Leading to ... a seize up of rights issues ...

Posted by mken @ 09:42 AM (904 views)
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8 thoughts on “Possible failure of Rights Issue?

  • Sorry about the excess “s”s

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  • dohousescrashinthewoods says:

    That sounds an ominous prospect – one more engine on the economy’s 747 shuts down.

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  • From memory, I think only 19% of B&B’s mortgage book is sound business, the rest being self-cert or BTL.

    The share price is down nearly 80% over 12 months, to just 88p, so the rights issue looks set to flop.

    I’m a bit surprised there aren’t queues down the street of people getting their savings out..

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  • justwatching says:

    UT
    I’m a bit surprised there aren’t queues down the street of people getting their savings out..

    Thats what we don’t want. That will be the trigger for Bruwn/Darling to make another ill thought out purchase.

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  • mark wadsworth says:

    There was a fine article in Friday’s FT – the ‘investment banks’ who underwrote these deeply discounted rights issues may well be left holding the baby. So then the assets of investment banks will have to be written down, so they’ll have to do rights issues … and so on and so forth in a merry circle!!

    Where’s my deckchair?

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  • whiteknight says:

    There are a number of reasons that people dont buy things

    1. They think the price is too high

    2. They don’t have the cash. They literally need to spend it on more food for their car that week rather than buying more shares.

    Number 2. could be the issue. This is far more worrying.

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  • @whiteknight
    Add these
    3. Nobody will lend them enough to do buy
    4. More simply, they think prices are going lower!

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  • “I’m a bit surprised there aren’t queues down the street of people getting their savings out..”

    That’s only because Darling has promised that BB, no matter how badly it has been run, will not be allowed to go bust. One rule for the banks, another rule for the rest of us. Kinda makes you wonder who’s running the show.

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