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Bank of Ireland Investors Order 60% of Rights Offering Stock
July 27, 2011, 4:56 AM EDT
By Joe Brennan
(Updates with analyst comment in third paragraph.)
July 27 (Bloomberg) -- Bank of Ireland Plc, the country’s largest lender, said investors ordered 1.14 billion euros ($1.65 billion) in its rights offering, equivalent to 60 percent of the stock on sale.
The Dublin-based bank’s advisers will “use reasonable endeavors” to find buyers for the shares not taken up, it said in a statement. The government, which is underwriting the transaction, said on July 25 it will sell as much as a 37 percent stake in the bank to a group of institutional investors, limiting its long-term holding in the bank to a maximum 32 percent. The final outcome may be known as early as today, Dan Loughrey, a bank spokesman, said by telephone today.
The rights offering take-up “is positive for the bank,” said analysts including Michael Cummins and Jim Ryan at Dublin- based fixed-income firm Glas Securities, in a note to clients. “This should result in government ownership of the bank in the 20 percent to 30 percent area.”
Bank of Ireland was ordered by the central bank in March to raise 4.2 billion euros of equity and 1 billion euros in contingent capital by the end of July to boost reserves and cover loan losses after the country’s real-estate bubble burst.
The lender is selling 11.4 billion new shares for 10 cents each to investors that subscribed to the rights offering, it said. The stock rose 6.9 percent to 10.9 euro cents in Dublin trading yesterday.
The bank said on July 8 it would raise about 2 billion euros by inflicting losses on subordinated bondholders, a further 510 million euros through unspecified “further capital- raising measures,” and 1.9 billion euros from the rights offering.
The government plans to sell its stake to 10 institutional investors from outside the country, three people with knowledge of the matter said yesterday. U.S. billionaire Wilbur Ross and Toronto-based Fairfax Financial Holdings Ltd. are among the investors, Dublin-based broadcaster RTE reported.
--Editors: Edward Evans, Francis Harris
www.businessweek.com/news/2011-07-27/...ts-offering-stock.html
