HBOS fundraising take up as low as 10 pct

LONDON - As few as 10 percent of HBOS shareholders have signed up to a 4 billion pound ($8 billion) fundraising by the British bank, newspapers said on Sunday, without citing sources.

By (Reuters)

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Published: Sun 20 Jul 2008, 5:53 PM

Last updated: Sun 5 Apr 2015, 12:55 PM

The Sunday Times and Sunday Telegraph said the low take up, due to HBOS shares trading below the rights issue price of 275 pence recently, would leave underwriters Morgan Stanley and Dresdner Kleinwort with 3.5 billion to 3.6 billion pounds of unsold stock.

The Sunday Telegraph said the two banks had sub-underwritten between 40 percent and 50 percent of the issue and lined up several UK, US and European institutions to buy a large portion of the remainder.

It said the two banks were expected to be left nursing a loss of about 70 million pounds on the transaction, but that they had both aggressively hedged their positions to mitigate the risk.

HBOS declined to comment.

The projected low take up of the HBAS offer would mirror the experience of British bank Barclays, which saw shareholders take up just 19 percent of its new shares in a recent fundraising.

Britain's third-biggest bank said last month it had raised 4.5 billion pounds ($9 billion) from major investors in Qatar, Japan, China, Singapore and elsewhere, and then it gave existing shareholders the chance to buy on the same terms.

The take-up for HBOS is more critical than for Barclays, as shares not taken in its offer could create a big stock overhang.

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