Lloyds pitches rights issue at 59.9% discount

by Gill Montia

Story link: Lloyds pitches rights issue at 59.9% discount

Lloyds Banking Group is offering shareholders a 59.5% discount on Monday’s closing share price in a rights issue aimed at raising £13.5 billion.

The bank, which is 43% state owned, has embarked on a £22.5 billion fund raising to avoid participation in the Government’s Asset Protection Scheme (APS).

The rights issue, which will create a new UK corporate record, takes the form of 1.34 new shares for every share held by investors, at a price of 37p.

The bank says it will offer 36.5 billion new shares, equating to just over 57% of the group’s enlarged share capital once the rights issue is completed.

Yesterday Lloyds raised around £9 billion in a bond exchange that was oversubscribed, indicating that it will be successful its fundraising strategy.

However, the group still faces a hefty Treasury bill, estimated at £2.5 billion, for an implicit guarantee given for the £260 billion in bad loans that the bank originally said it would place in the APS, back in March.