Bradford & Bingley's (B&B) 14 percent stock plunge: now 43p

Bradford & Bingley’s (B&B) finished last week 50p down to finish on just 48p, now they have taken a 14 percent plunge to an all-time low of 43p today, this is 12p below the bank’s rights issue price, it is thought that the decision to walk away from its £400 million rescue deal was to blame.

This recent drop in value has now raised the prospect that the retail shareholders could snub the bank’s rights issue; this could be a serious problem for B&B as this is vital to propping up their bank sheets.
This cash injection was vital for Bradford & Bingley, but now with the current stock plunge they will now find it even harder to get the cash that they need from small investors.

TPG were all set to purchase a 23% stake for B&B which was a sum of £179 million, another £250 million was going to be via a rights issue. Another deal before this for £300 had already fallen through.

B&B executive chairman, Rod Kent, along with their advisers Goldman Sachs has received much criticism for telling their shareholders that the deal with TPG was watertight. However; the deal seemed to depend on if there was a ratings downgrade, then TPG had the choice to pull out of the deal.

Source