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City worry as HBOS shares dip again
12.06.08
Shares in HBOS, the Bank of Scotland and Halifax owner, fell further below the 275p price of its £4 billion rights issue today, increasing fears that the fundraiser could prove very expensive for the City.
At this level virtually all the new shares being issued would end up with underwriting investment banks Morgan Stanley and Dresdner Kleinwort or any institutions they have, in turn, brought in as sub-underwriters.
Shares in the bank fell almost 12% yesterday to 258p, and shed another 4p to a new low of 254p today, ignoring the bank's attempt to reassure on the rights issue.
Analysts said the market is now simply waiting for next week's updated trading statement in the rights issue document.
HBOS has more than two million private shareholders, making it the most widely held company in Britain. They are being offered free share dealing facilities to encourage them to take up at least part of their rights but are unlikely to do so at these levels.
