Industry | 2009.11.24
Lloyds makes world's biggest rights issue
• Lloyds Banking Group asks its shareholders for £13.5bn
• 36.5bn shares will be offered to investors at 37p each
Lloyds Banking Group today launched the biggest cash call ever seen, asking its long-suffering shareholders to come up with £13.5bn .
These investors are being invited to buy 1.34 new Lloyds shares for each one they already own. The rights issue price of 37p is slightly higher than expected, and is a 59.5% discount on last night\'s closing price of 91.47p.
Shareholders will vote on the plan on Thursday and (assuming they approve it) have until early December to decide whether to take up their rights. Anyone who decides not to take part will see their shareholding significantly diluted, as the 36.5bn shares being created will make up 57.3% of Lloyds\' enlarged share capital.
Lloyds needs the money to repair its balance sheet following the HBOS takeover, and the cash call will mean it has no need to join the government\'s asset protection scheme.
As Lloyds is 43% state-owned, taxpayers will contribute £5.8bn of the total - although Lloyds will hand back £2bn to pay for the \'implicit protection\' provided by the government.
News of the cash call comes a day after Lloyds agreed a deal with its bondholders to raise another £8.8bn, and announced plans to cut another 800 jobs .
The previous record for a UK rights issue was HSBC\'s £12.5bn cash call , which helped to drag the FTSE 100 index to a six-year low in March 2009. We\'ll bring you more reaction to Lloyds\' fundraising throughout the day.
In other City news... building group Galliford Try has launched an appeal against the £8.3m fine imposed by the Office for Fair Trading in September for its role in a bid-rigging cartel. Galliford will tell the Competition Appeals Tribunal that the penalty is excessive.
In the water industry, Severn Trent has posted a 9.8% rise in underlying profits to £287.1m in the last six months - but warned the profitability could suffer if it fails to keep bad debts under control.
Bank note printer De La Rue has raised its dividend by 3%, despite a 6% drop in first-half pre-tax profits .
And William Hill has lured Neil Cooper, the current group finance director of Bovis Homes, to be its new finance director .
For more information, please visit
http://www.guardian.co.uk/business/marke[...]oyds-banking-group-williamhill
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