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Banks rescue B&B after TPG pulls out of £179m deal

US investment group Texas Pacific Group has withdrawn its £179 million cash injection for Bradford & Bingley after learning that ratings agency Moody’s is to downgrade the bank once again.

Moody’s has decided to downgrade B&B’s senior unsecured and long-term debt ratings from A3 to Baa1.

This downgrade allowed TPG the right to terminate its proposed investment made on June 2, 2008.

B&B will now instead receive a capital injection of £400m from four of its largest shareholders M&G Investment Managers, Legal & General, Insight Investment and Standard Life Investments.

These four investors were part of a bid made by Resolution boss Clive Cowdery to inject £400m but B&B rejected the proposal last week.

The enlarged rights issue will have an unchanged subscription price of 55 pence per share. Original underwriters Citi and UBS will continue to underwrite the enlarged rights issue.

B&B’s extraordinary general meeting will, planned for next Monday, will be postponed for a short period, currently expected to be in the week of July 14.

Executive chairman Rod Kent says: “Whilst we are disappointed that TPG intends to terminate its Subscription Agreement, I am pleased that Citi and UBS and our major shareholders continue to support our proposed capital issuance. Bradford & Bingley continues to be well-funded and the capital raising will reinforce our position as one of the better capitalised banks and one of the leading mortgage and savings banks in the UK.”


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