Three of the big four banks, Royal Bank of Scotland (RBS), HBOS and Lloyds TSB have announced that they will try and raise some capital via open offers to their current shareholders, in addition to receiving new capital from the government in exchange for preference and/or ordinary shares (depending on the particular company).
An open offer is similar to a rights issue, in that shareholders are entitled to buy newly issued shares in proportion to their existing holdings often at a discount to the current market price. The purpose, as with a rights issue, is to raise new capital for the company, but unlike a rights issue, an open offer does not allow shareholders to sell the right to subscribe to shares. This means that the shareholders have an entitlement rather than a tradeable right to subscribe to new shares. For this reason an open offer is sometimes called an entitlement issue. Any entitlement that is not taken up is simply allowed to lapse.
The RBS issue was announced as being ex-entitlement on 10 November 2008. This means that anyone holding ordinary shares as of opening of business on 8am at that day was entitled to participate in the open offer. The terms of RBS' offer was that shareholders were entitled to purchase 18 new shares for every 13 share already held at a cost of 65.5p per share. This offer had an excess facility which meant that shareholders could have applied for additional shares on top of their basic entitlement. Any new shares that were not taken up by RBS shareholders were placed with HM Treasury at the same price. A copy of the offer document can be found under 'Useful Links'. It has now been confirmed that as a result, HM Treasury now own approximately 57.9 per cent. of the enlarged issued ordinary share capital of RBS.
HBOS has announced that their open offer is at the issue price of 113.6 pence per new share. All those investors who held shares as of the opening of business on 15 December 2008 are entitled to purchase 1.3839 new shares for every 1 share they hold at a call price of 113.6 pence per share. As with the RBS open offer, HBOS are offering applicants an opportunity to apply for excess shares over and above their basic entitlement. This offer will close on 9 January 2009, however in order for The Share Centre to consolidate all our client's instructions we will request that clients forward their applications to us by 7 January 2009.
On Friday 19 November 2008 Lloyds TSB Group confirmed the details of their open offer whereby all those investors who held shares as of the opening of business on 15 December 2008 are entitled to purchase new shares. This time the terms of the offer are that shareholders will be offered the opportunity to purchase 0.4347 new shares for every 1 share they hold at a call price of 173.3 pence per share. As with the other offers, Lloyds TSB are offering shareholders an opportunity to apply for excess shares over and above their basic entitlement. This offer will close on 9 January 2009, however as above in order for The Share Centre to consolidate all our client's instructions we will request that clients forward their applications to us by 7 January 2009.
Lloyds TSB Group shareholders approved the acquisition of HBOS at the company's General Meeting held on 19 November 2008, and HBOS shareholders approved the acquisition at their meeting on 12 December 2008. To confirm, the terms of the offer are 0.605 new Lloyds TSB Group shares for every 1 share held in HBOS. If approved by the Courts, then the acquisition will be processed by way of a Scheme of Arrangement and will be effective and binding on all shareholders as of the opening of business on 16 January 2009.
On 31 October 2008 Barclays announced that they are raising the majority of the additional capital from sources in the Middle East, however the bank has now announced that the capital raising will also now be offered to 'institutional investors'.