Analysts at Collins Stewart today called on Bradford & Bingley shareholders to vote against the repriced rights issue and force management to go back to its original scheme.Collins Stewart analyst Alex Potter described the renegotiation of the rights issue as "little short of a disgrace".Anger is growing among B&B shareholders after the bank scrapped its original £300m cash call. UBS and Citi, the investment banks underwriting the fund raising, had agreed to guarantee a price of 82p six weeks ago but forced B&B to cut that price to 55p, reducing the size of the cash call to £258m. "Management claim it wanted to avoid the stock trading below the previous issue price of 82p - the share price move yesterday is clearly much more damaging to shareholders than the previous issue having been left in place and the underwriters potentially holding significant amounts of stock," Potter said. "We believe shareholders should vote against the new issue at the upcoming EGM and force management to revert to the old scheme."
Collins Stewart analyst Alex Potter described the renegotiation of the rights issue as "little short of a disgrace".
Anger is growing among B&B shareholders after the bank scrapped its original £300m cash call. UBS and Citi, the investment banks underwriting the fund raising, had agreed to guarantee a price of 82p six weeks ago but forced B&B to cut that price to 55p, reducing the size of the cash call to £258m.
"Management claim it wanted to avoid the stock trading below the previous issue price of 82p - the share price move yesterday is clearly much more damaging to shareholders than the previous issue having been left in place and the underwriters potentially holding significant amounts of stock," Potter said. "We believe shareholders should vote against the new issue at the upcoming EGM and force management to revert to the old scheme."
Jeepers. What a way to start a week. Any remaining doubt that the housing market is in freefall was blown away by figures showing a collapse in mortgage approvals, an unprecedented rights issue repricing and profits warning from Bradford & Bingley - and an increase in the Nationwide's fixed-rate mortgages.With house prices falling, there is a full-scale retreat from the mortgage market. Would-be homebuyers don't want to buy something they might get much cheaper next year, while lenders won't lend on assets that might soon be under water. None of the Nationwide's fixes are available below 6%, more than a full point above base rates. The squeeze is on.In the early stages of a housing market slump, activity indicators are often more relevant than price data, which tends to lag. So when mortgage approvals fall by half and net new home reservations are down by three-quarters there is a problem. Right now the data is telling us just one thing, that the housing market is in meltdown.
With house prices falling, there is a full-scale retreat from the mortgage market. Would-be homebuyers don't want to buy something they might get much cheaper next year, while lenders won't lend on assets that might soon be under water. None of the Nationwide's fixes are available below 6%, more than a full point above base rates. The squeeze is on.
In the early stages of a housing market slump, activity indicators are often more relevant than price data, which tends to lag. So when mortgage approvals fall by half and net new home reservations are down by three-quarters there is a problem. Right now the data is telling us just one thing, that the housing market is in meltdown.
