British banking major Lloyds TSB said it has revised its offer to acquire troubled mortgage lender HBOS and has decided to raise fresh capital.
LONDON: British banking major Lloyds TSB on Monday said it has revised its offer to acquire troubled mortgage lender HBOS and has decided to raise fresh capital to the tune of 5.5 billion pound.
The revised terms agreed include HBOS shareholders would receive 0.605 Lloyds TSB shares for every one HBOS share. At the same time, an offer would also be made to HM Treasury for exchanging the preference shares it holds in HBOS to an equivalent amount of shares in Lloyds TSB, the company said in a filing to the London Stock Exchange.
The takeover panel has given its consent to the revision of terms.
In addition, 17 billion pound of capital would be raised, of which 11.5 billion pound (8.5 billion pound in ordinary shares and three billion pound in preference shares) would be raised by HBOS and 5.5 billion pound (4.5 billion pound in ordinary shares and one billion pound in preference shares) by Lloyds TSB, it added.
The equity capital being raised by Lloyds TSB comprises a subscription by HM Treasury of around 2.6 billion new ordinary shares at 173.3 pence per share, representing an 8.5 per cent discount to Lloyds TSB's closing price on 10 October 2008 and raising about 4.5 billion pound in aggregate.
Lloyds TSB shareholders would be given the opportunity to claw back their proportionate entitlement to these new Lloyds TSB shares through an open offer, the timing of which would be announced later.
"Today's news is good for investors and customers alike. Lloyds TSB's already robust financial position is further enhanced by today's capital raising which in turn allows us to drive forward with our plans to acquire HBOS. Our customers can feel confident that their money is secure," Lloyds TSB Chairman Victor Blank said.
Besides, HM Treasury would subscribe for one billion pound of Lloyds TSB preference shares. The preference shares would carry an annual coupon of 12 per cent (non-tax deductible), and would be callable after a period of five years.
Further,the equity capital raising by Lloyds TSB is conditional on the passing of various resolutions, including those relating to the acquisition of HBOS at the Lloyds TSB general meeting.
Under the terms of the preference shares, the enlarged group would be precluded from paying a cash dividend on its ordinary shares whilst any of the preference shares remain outstanding.
The revised terms and the 8.5 billion pound equity capital raising by HBOS would result in the issue by Lloyds TSB of 7.80 billion new ordinary shares in respect of the acquisition.
If the acquisition were not completed, HM Treasury would expect to take appropriate action to address the position in the light of the policy objectives set out in its announcement of October 8 on financial support to the banking industry.
Upon completion of the transaction, if neither Lloyds TSB's nor HBOS's shareholders participate in the claw back, existing Lloyds TSB shareholders would own 36.5 per cent, with existing HBOS shareholders owning 20 per cent of the ordinary capital of the enlarged group.
In these circumstances, the remaining 43.5 per cent would be owned by HM Treasury.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}