Britain's Lloyds Bank reveals cash call
LONDON: Lloyds Banking Group PLC revealed details Tuesday of a 13.5 billion pounds ($22.3 billion) rights issue designed to enable it to maintain a level of independence from British government control.
The pricing details show that shareholders can buy 1.34 new shares for each existing share at 37 pence -- less than half of Lloyds closing price Monday evening. The 36.5 billion new shares represent 57.3 percent of the bank's enlarged share capital.
The government has already agreed to exercise its rights for new shares, thereby maintaining its equity stake in the bank at 43.4 percent.
Lloyds said earlier this month that it will not join the British government's insurance plan to protect against losses on toxic assets, and that it will raise funds by disposing of its TSB brand and will sell the branches, savings accounts and branch-based mortgages of its Cheltenham & Gloucester unit. This week's cash call is another part of its moves to maintain a degree of independence by raising funds.
On Monday, Lloyds completed the other part of its fundraising, securing over 8.8 billion pounds from a debt conversion offer. The bond issue was substantially oversubscribed.
The bank has also agreed to pay the government a fee of 2.5 billion pounds in return for the implicit protection already provided by government support.
Lloyds shareholders will vote on the details Thursday.