Sunday, July 20, 2008

Morgan Stanley and Dresdner, will have to place £3.6 billion of shares over the course of Monday or Tuesday!

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 (780 views)
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4 thoughts on “Morgan Stanley and Dresdner, will have to place £3.6 billion of shares over the course of Monday or Tuesday!

  • uncle chris says:

    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.

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  • 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.

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  • They’ll be going to Darling cap-in-hand and Darling will be telling them there’s nothing left in the pot.

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  • 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.

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