B&B shareholders step in to plug funding gap

Jul 4 2008 LDP Business

BRADFORD & Bingley’s major shareholders were today stepping in to salvage the lender’s £400 million funding plan after a US private equity firm walked away from the deal.

Texas Pacific Group, which was due to buy 23% of the company as part of a wider funding package, announced last night it was withdrawing its £179 million cash injection after the lender’s investment status was downgraded by a ratings agency.

But B&B said a group of its largest shareholders including M&G Investment Managers, Legal & General Investment Management, Insight Investment and Standard Life Investments were now backing the deal.

The bank, which has been badly hit by the credit crunch, is raising the money to help shore up its finances.

TPG's cash had been lined up alongside a deeply discounted rights issue - a call on existing shareholders for cash - which would have raised another #258 million.

B&B said it was proceeding with its capital plans through a bigger rights issue, which would raise £400 million after fees. This is being underwritten by banks Citi and UBS.