Saturday, July 5, 2008
Decision time ... HBOS wants to raise £4bn
BRADFORD & BINGLEY led mid-cap fallers on its latest funding debacle.
As the shares fell 11 to 50 — below the 55p at which B&B is selling new stock — Bruce Packard, of broker Pali, set a target price of ZERO.
He said: “We believe deposit-holders’ money is safe, but from a shareholder perspective we believe the investment is unattractive.”
ALLIANCE & LEICESTER also skidded as Clive Cowdery’s RESOLUTION ruled out another tilt at B&B — which he would then have used for other banking takeovers.
With no lead from Wall Street, shut for Independence Day, volumes were low as banks and insurers hauled down the FTSE-100. HSBC, RBS and BARCLAYS contributed a quarter of falls.
FRIENDS PROVIDENT led blue-chip decliners as SWISS LIFE quit the auction for its wealth management arm Lombard.
J SAINSBURY was hit despite Qatar’s Investment Authority upping its stake to 26 per cent.
Among mid-caps, SOUTHERN CROSS HEALTHCARE lost another 13.25 to 78 after Monday’s profits alert, while a Goldman Sachs note hit RANK and WILLIAM HILL.
Lower down, wound dressings firm YORK PHARMA rose 1.5 to 43.5 on buying two new brands, while news of a bid approach lifted insurance broker COBRA HOLDINGS 9.5 to 107.
Direct marketing firm TMN rose 2 to 41.5, on confirmation it remains in takeover talks, while GRESHAM COMPUTING added 2.5 to 59 on a trading update.
But vehicle management systems firm MINORPLANET lost 5 to 26 as it rejected a 40p-a-share takeover approach.
THE FTSE-100 fell 63.8 to 5412.8
For all the latest share information click here
Email: Ian.king@the-sun.co.uk
IT’S make your mind up time for the 2.1million small shareholders in HBOS.
They will be sitting down this weekend to decide whether to take part in the bank’s £4billion cash call.
Those wishing to do so have until 11am next Friday to get their forms back — so time is running out.
But if the forms look complicated, don’t worry, here’s our guide to what’s happening.
HBOS is giving shareholders the right to buy two new shares for every five they already hold at the discounted price of 275p each.
Shareholders have four options:
FIRSTLY, they can take up their rights. For example, a typical small investor with 374 shares is being invited to buy 149 new shares at a total cost of £409.75.
If you want to take up this option, simply send a cheque back to the bank for the amount specified on your letter.
THE second option is to sell your rights. The rights may have a market value because they give the owner the chance to buy shares at 275p each. At last night’s close, the “nil-paid” rights were trading at 7.45p each.
To take this option, tick the box next to Option D on the form you have been sent by HBOS before signing and returning it to the bank in the business reply envelope you should have received.
THE third option is to sell some of your rights and use the proceeds to take up what is left.
This is known in City jargon as “tail swallowing” and is Option C.
If you hold shares in the HBOS Shareholder Account or in an HBOS ISA, doing this is free.
But if you are one of the 640,000 small investors who hold share certificates, you will need to contact your regular broker, who will probably charge you for this service.
FINALLY the fourth option is to do nothing. This will mean your rights lapse when the offer closes on Friday July 18.
HBOS will sell your rights on automatically and you will receive a cheque later on.
So, what should you do?
With the shares closing at 271.5p last night, Sun City believes there is no point in taking up your rights at 275p. If you want more shares, you can simply buy them in the market for less.
Tail-swallowing has benefits, but bear in mind the value of the rights is now so shrivelled, there is very little point in going for this. You will only end up with an irritating handful of extra shares — maybe just two or three.
We definitely don’t recommend this option for anyone who has to pay for it — but if you can use the free HBOS service, you may feel there is little to lose. Remember if the worth of your rights comes to less than £2.75, you will not be able to take up any new shares.
That leaves selling your rights in the market or doing nothing.
If the value of your rights comes to less than £5, HBOS will give the proceeds to charity. The 149 rights owned by the typical small investor were worth £11.10 last night. It’s not much, but better than nothing.
We suggest selling them — or leaving HBOS to sell them for you — is the least hassle for most small shareholders.
TRANSPORT firm TDG has agreed a £203million takeover by US private equity firm LAXEY PARTNERS.
TDG shares rose 18.75 to 242.5 on the 250p-a-share deal. Rival bidder WINCANTON walked away last month.
KEEP up to date with the latest business news by watching the latest broadcasts from Sun City TV.
BRADFORD & BINGLEY last night increased the sum it is raising from investors to £400million.
The move follows private equity firm TPG’s abrupt decision not to go ahead with an investment.
It planned to pay £179million for a 23 per cent stake in B&B — with other investors chipping in a further £258million — but walked away after a cut in B&B’s credit rating.
Now some of B&B’s top investors, LEGAL & GENERAL, M&G, STANDARD LIFE and HBOS, will step in to provide more cash.
B&B’s 800,000 small shareholders are also being invited to buy new shares.
They get the right to buy 67 new shares at 55p each for every 50 they already own. B&B shares fell 11 to 50.
Bail-out ... B & B bank
JOHN LEWIS has admitted the sales slowdown at its stores is gathering pace.
The UK’s No1 department store chain said sales in the week to last Saturday fell 8.3 per cent on the same week last year. They fell 1.2 per cent the week before.
It was the biggest drop in weekly sales since April last year — and the news sent shares of rival MARKS & SPENCER down another 9 to 227.
JL admitted trading conditions were “challenging”.
But sales at JL’s WAITROSE supermarket arm rose three per cent.
EDUCATION services firm NORD ANGLIA has agreed a £190million, 460p-a-share takeover by Baring Private Equity Asia. Shares of Staffs-based Nord, which runs UK-style schools worldwide, rose 81.5 to 460.
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