Underwriters left holding 72.2% of B&B offering

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By LILLY VITOROVICH and RAGNHILD KJETLAND
THE WALL STREET JOURNAL ASIA
August 25, 2008

U.K. lender Bradford & Bingley PLC said underwriters of its £400 million ($740 million) rights issue were unable to find additional buyers for its shares during a five-day grace period and have been left holding 72.2% of the issue.

The underwriters, which had until Friday to seek buyers, agreed to keep most of the 597.3 million shares they now hold for at least 20 days from Friday, barring a takeover bid for the company. After the 20 days, they are free to sell at whatever price they can obtain. B&B on Aug. 18 said that shareholders had taken up 28% of the new shares.

In addition to lead underwriters Citigroup Inc. and UBS AG, B&B, which focuses on mortgages for rental properties, had secured the support of other U.K. banks as well as four of its largest shareholders: Legal & General Investment Management Ltd., Standard Life Investments Ltd., M&G Investment Management Ltd. and Insight Investment Management (Global) Ltd. The 170 million shares those four investors bought aren't subject to the lockup.

B&B said Friday that the underwriters believed they couldn't sell more of the shares at the 55-pence ($1.02) issue price plus procurement costs and would therefore keep their shares.

Friday, B&B's shares rose 3.9%, or two pence, to 53.50 pence, as the sector gained on talk of a bid for Lehman Brothers Holdings Inc.

B&B's stock has fallen 80% since the beginning of the year amid a string of bad news. In May, management shelved a planned 82-pence-a-share -- or £300 million -- capital increase, after B&B's share price slipped below 82 pence. The following month, the chief executive left because of illness, and B&B issued a profit warning. In July, U.S. investment firm TPG backed away from a deal that would have given it a large stake in the company.