Investors only want a quarter of B&B rights shares

London (CITYWIRE) - Bradford & Bingley's attempts to shore up its balance sheet have flopped, with investors taking just 28% of its rights issue shares.

The buy-to-let mortgage lender's underwriters, Citi and UBS, are stuck with the remaining 597 million shares, or just over 72% of the £400 million issue. They have until Friday to place this remainder.

Bradford & Bingley made the announcement on Monday morning, alongside the confirmation that it had recruited Alliance & Leicester's former group boss Richard Pym as its new Chief Executive, to start with immediate effect.

The company's shares hit a morning high of 56p, or a 2.8% rise, on the news.

Although only a small proportion of shareholders took up B&B's cash call, it was a greater success than HBOS's own rights issue which concluded recently with fewer than 10% of shares taken up.

B&B announced its cash call in May, but it had to be restructured last month for the second time after US private equity firm TPG pulled out of a potential deal to inject £179 million into lender after its debt was downgraded by ratings agency Moody's.

B&B's chairman Rod Kent had come under fire for supporting TPG's deal and was also criticised for the clause in TPG's contract which allowed them to walk away if its debt was downgraded

Kent also refused to allow Clive Cowdery's Resolution buyout vehicle access to the company's books after he had offered a higher 72p per share deal to inject £400 million into the credit crunch-hit lender.

B&B had initially set its first attempt at a £300 million rights issue at rights issue at 82p per share before TPG's intervention and subsequent defection which at the time had represented a 48% discount to its share price.

(c) Citywire Financial Publishers Ltd 2008.