Bradford & Bingley upset shareholders

Grovelawn Financial News 04/06/2008

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Cut-price sell off of shares causes upset

Bradford & Bingley has upset its existing shareholders after if pulled out of a rights issue which would have given their shareholders a chance to buy into a significant additional share of the society. B&B sold the cut price 23 per cent stake to an American private equity investor TPG Capital. The society had sent a circular to its shareholders two weeks ago which they have now been asked to ignore as new letters will be produced. They currently have 970,000 small shareholders and each will be offered 19 shares for every 25 they currently own with the option to buy more if they already own 250 or more.

The existing shareholders are unhappy with B&B as by selling the shares to TPG at 55p rather than at the 82p they would have paid, it has meant B&B has lost £59 million of its value by not honouring the rights issue. Listed companies would normally be expected to offer their shareholders the option to buy more and only offer the shares to others once shareholders had refused to buy them. The chairman of B&B said that TPG would bring credibility and new skills.

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