Bradford & Bingley shareholders advised to consider revolt

01 July 2008 / by Rebecca Sargent
Bradford & Bingley has been hit with more controversy as the UK Shareholders Association (UKSA) advises its investors to vote against the banks proposed rights issue.

The rights issue itself has sparked outrage amongst shareholders, as it is thought to ignore shareholders' basic rights to first refusal of shares. The pending agreement offers Texas Pacific Group (TPG) a 23 per cent stake in Bradford & Bingley and was a revised version of a previously arranged £300million rights issue that called exclusively upon shareholders for a cash injection.

The TPG rights issue is due to be confirmed on July 7 through a shareholder vote. However, UKSA is advising shareholders to consider voting against the rights issue. The advice comes following a rival bail out offer from investment company Resolution.

According to UKSA, Bradford & Bingley failed to provide an adequate explanation for why Resolution's proposals were unacceptable. Resolution would have reportedly pumped in £400million at 72p a share, much more than the TPG price of 55p, but has been forced to withdraw. However, Bradford & Bingley blocked Resolution from gaining access to the financial information necessary to make its offer official and clarify its proposals.

UKSA commented that prior to the Resolution offer it would have urged shareholders to think carefully before opposing the TPG offer due to a lack of alternatives. However, the interest from Resolution puts investors in a stronger position to oppose the deal.

Despite rumours circulating suggesting that Resolution would return its offer if invited by Bradford & Bingley, the UKSA warns that there is no certainty of this and shareholders should still consider the risks involved before going ahead with a rebellion.

© Fair Investment Company Ltd