Analysts try to grasp the finer points of the deal between TPG and B&B

Posted under General by Michael

Analysts are trying to understand the finer points of the proposed deal between Texas Pacific Group and Bradford & Bingley, the UK’s top buy-to-let mortgage lender. Close to £150m of funds are going to be infused into B&B, according to media reports, which state that its existing stakeholders would also be asked to offer about £250m of new capital.

The expected price of the new shares for Texas Pacific Group and for Bradford & Bingley’s existing shareholders is just above 50p per share, which is well below the original rights price (82p per share).

According to BBC Business Editor Robert Peston, the reason it (B&B) needs all this money is that its profits are going to far lower this year. The analyst adds: “The City was expecting profits of about £250m this year. Unfortunately, owing to the downturn in the housing market, B&B is probably only going to register about £150m of profits. That is a big drop, but nonetheless, it is still in profit.”