LONDON (ShareCast) - Bradford & Bingley's leading shareholders were forced last night to step in and rescue its £400m fund raising after US private equity group Texas Pacific (TPG) walked away.
TPG had agreed to inject £179m for a 23% stake in the mortgage lender but following a ratings downgrade for B&B from credit rating agency Moody's decided to pull out of the deal.
Under a contingency plan put in place by the B&B board, several of its large institutional shareholders will now put up the £179m with the remainder of the cash coming from its already underway rights issue, which is underwritten by UBS and Citigroup.
Reports last night suggested Moody's plans to downgrade B&B's status to a rating of Baa1, which would be the lowest credit rating of any of the mainstream British banks.
Shareholders meet to vote on B&B's controversial rights issue on 7 July. The deal with TPG had already been severely criticised by some shareholders who clamed it flew in the face of pre-emption rights guidelines.
B&B's board also rejected an alternative funding proposal from closed fund group Resolution to inject £400m and scrap its rights issue and stake sale to TPG. Resolution's plan had the backing of the bank's four biggest investors, Standard Life, Legal & General Investment Management, M&G and Insight.
