HBOS to mobilise private shareholders to help raise £4bn

Jun 5 2008 by Peter McCusker, The Journal

THE United Kingdom’s biggest mortgage lender is preparing to mobilise its two million-strong army of private shareholders to back its £4bn fundraising plans.

Halifax Bank of Scotland’s legion of smaller investors – gained when the former Halifax building society demutualised in 1997 – owns around 27% of the group with around one billion shares. Their backing for the rights issue will be crucial as HBOS looks to strengthen its financial base. The bank yesterday sent out a circular with the background and the full timetable for the cash call.

Under the terms of the rights issue, it will cost the average investor – holding 374 shares – £409.75 to take up the 149 new shares they will be entitled to.

Around 1.4m people who do not have share certificates – instead holding their stock in a shareholder nominee account or a share ISA – will receive a form of election on or around June 20 telling them how many new shares they are eligible to.

Assuming shareholders approve the rights issue at a general meeting in Edinburgh on June 26, these investors must return the forms by July 11 if they wish to take part in the rights issue. Shareholders holding certificates – around 640,000 – will receive a “provisional allotment letter” after the general meeting, again detailing the new shares they are entitled to. They have until July 18 to take part.

The “nil-paid rights” – the right to buy the new discounted shares – will begin trading on the London Stock Exchange from June 27.