The mortgage lender is bracing itself for poor sales of its share offering, as its stock underperforms on the FTSE.
Mortgage lender Bradford & Bingley (B&B) is expected to reveal poor shareholder take-up for its latest rights issue later today.
The firm launched the £400 million sale of new shares as a capital-raising exercise earlier this year, as its balance sheet was hammered by the ongoing credit crunch. However, falls in the price of B&B stock on the FTSE recently have brought shares close to the 55p offer price, making sales less attractive to investors.
One analyst even told City AM that he would therefore be "very surprised" if even one-fifth of new shares were sold. This would leave UBS and Citigroup, who have agreed to underwrite the sale, with millions of pounds worth of unwanted stock on their hands.
Recent rights issues from HBOS and Barclays have also sold sluggishly, with barely one-third and less than one-fifth of stock on offer being snapped up respectively. RBS has had more success with its £24 billion sale launched earlier in the year, which cleared over 97 percent of stock.
B&B has endured a troubled 2008, hit by credit crunch-related writedowns, the loss of its chief executive for medical reasons, a failed attempt to sell 22 percent of stock to a US private equity firm and two previous false-starts in its attempt to launch its rights issue. At one point, shares were even trading at 90 percent down on 2007's highs.
The deadline for the rights issue falls at 11am.
Compare mortgages via money.co.uk
