The B&B rights issue circular is available here. There’s not a great deal new – we were already aware that the fees were eyewatering (1.1875% commitment fee + 3.5625% underwriting fee) – although the section on the underwriters right to terminate the underwriting agreement is interesting:
The Underwriting Agreement confers on the Sponsors … the right to terminate the Underwriting Agreement … in the event of:
…
(v) … certain material adverse changes or prospective material adverse changes relating to the Group, certain events relating to the occurrence of adverse market conditions … or ratings downgrades of the Group’s debt securities of two notches or more from the position as at the date of the Underwriting Agreement (since the Company’s Trading statement on 2 June 2008, each of the main ratings agencies has reduced the ratings of certain of the Groups debt securities by one notch and placed the ratings on negative watch).
The Underwriting Agreement is dated 2 June 2008, so I assume that the one notch downgrade that happened subsequent to the trading statement counts towards the two-notch termination right.
One notch on the debt and 13p on the shares and the deal will likely fall through again. If this happens, it will not be repriced, it will be taken over by another bank or PE firm, probably at around 20p.
Posted by quonga 