Resolution walks away from B&B

Jun 28 2008 by Peter McCusker, The Journal

INVESTMENT firm Resolution fired a broadside at Bradford & Bingley as it walked away from its £400m fund-raising plans for the lender.

B&B is currently selling a 23% stake to private equity firm Texas Pacific Group (TPG) and carrying out a deep-discounted rights issue to boost finances hit by the credit crunch.

Resolution teamed up with B&B’s institutional investors to lead a rival support package, but its attempt to see the books have been blocked by the bank this week.

The investment firm withdrew its bid yesterday, accusing the B&B board of taking an “entrenched” position which “prevented the constructive engagement necessary” to finalise its proposals. Shares in B&B fell almost 20% after the announcement.

Resolution said its proposals offered a better price than B&B’s current fundraising plans, protected the rights of the group’s shareholders and offered “a clear strategic direction” to the bank.

B&B’s board would have retained full control of the bank, with the voting rights of the institutional investors backing the Resolution plans limited to 29.9%.

The withdrawal by Resolution leaves B&B on course with its current cash-raising plans, which must be approved by shareholders on July 7.

Resolution intends to go ahead with plans to consolidate smaller banks hit by the financial turmoil despite the snub from B&B.