B&B 'to issue profits warning'

The buy-to-let lender is believed to be poised to announce a deal which will see Texas Pacific Group take up around a fifth of B&B shares before pumping £150 million of new funds into the business, according to a BBC report.

The two companies have been locked in discussions throughout the weekend, sources told the Press Association.

It has been reported that B&B will warn that profits for this year are likely to be lower than analysts' forecasts. The trading statement is also expected to make mention of the talks with TPG.

On Sunday, the lender announced that its chief executive had resigned due to ill health. A statement from the bank confirmed that Steven Crawshaw stepped down with immediate effect. Chairman Rod Kent will assume the position of executive chairman until a replacement to Mr Crawshaw is found, it added.

The buy-to-let lender was in the process of raising £300 million from shareholders through a rights issue. It had offered investors the chance to buy discounted stock at 82p a share, but ahead of the fund raising its share price has tumbled to just 6.25p above this level.

The BBC reported that the price of new shares for TPG and for B&Bs existing shareholders was expected to be just above 50p a share. It also said that under a radical reconstruction of B&B's business plan, investors would now be asked to provide £250 million of new capital through the rights issue. The shortfall would be filled by a cash injection of £150 million from TPG, the BBC reported.

A spokeswoman for B&B said: "We are not going to comment on any speculation." Texas Pacific Group also refused to comment. But sources confirmed that the British bank had been in talks with the US private equity giant.

Commenting on the reported 20% buyout, Justin Urquhart Stewart, analyst of Seven Investment Management, said: "This move doesn't surprise me at all. The mortgage market is down, buy-to-let has fallen apart, the share price has collapsed and they still have a reasonable asset base - they are open to finding a strategic partner."

The city expert predicted a takeover move would follow, with the 20% buy out serving as warning to other potential suitors.