B&B bankers stuck with shares

LONDON—Bradford & Bingley, Britain's biggest buy-to-let mortgage lender, said Friday its bankers have been forced to pick up 72 percent of its 400 million pound ($747 million) rights issue after a weak share price made it impossible to find other investors.

B&B revealed on Monday its rights issue, in which a company raises fresh capital by creating and selling new shares to existing shareholders, was taken up by only 27.8 percent of investors.

The bank's underwriters, UBS AG and Citigroup Inc., had the rest of the week to offload the remaining shares or become owners. They informed the B&B board Friday they would be unlikely to find buyers and were subscribing for the stock.

The pair agreed to a lockup deal with B&B, under which they will not dispose of the shares for 20 calendar days from Friday. That agreement lapses in the event of any takeover approach.

The B&B rights issue was one of several by British banking institutions in recent months as they seek to shore up capital lost in the credit squeeze.

B&B in particular has been hit hard by the downturn in the buy-to-let market, where properties are bought specifically to be rented out, usually with a more expensive mortgage.

Its rights issue has been more troubled than most, with the lender forced to restructure the offer twice.

It first announced plans to sell some 300 million pounds worth of shares at 82 pence in May, but as its shares fell below that level -- and following a profit warning -- the lender announced alternative plans to offer cheaper shares and sell a 23 percent stake to Texas Pacific.

It had to switch course again when the U.S. private equity firm backed out of that deal in July, deciding to press on with an enlarged 400 million pound rights issue at a deeply discounted price of 55 pence per share.

UBS and Citigroup agreed to pick up the remaining shares at that price.

B&B shares closed up 3.9 percent to 53.5 pence ($0.99).