B&B shares sink below rights issue price

By Clara Ferreira-Marques

LONDON (Reuters) - Shares in troubled mortgage bank Bradford & Bingley fell as much as 18 percent to hit a fresh record low on Monday, sliding below the price of its planned rights issue as concerns over its future persist.

Britain's largest buy-to-let mortgage lender was forced to increase a planned rights issue to 400 million pounds last week, after a credit rating downgrade from Moody's prompted U.S. investor TPG to pull out of buying a stake.

B&B has said the newly enlarged cash call is supported by its top investors and is fully underwritten, but its shares have tumbled, falling as low as 41p on Monday.

This is well beneath its 55p rights issue price, which could deter shareholders from subscribing to the rights issue.

The shares ended the day at 42 pence, down 16 percent.

"While it (will get) the funding from major shareholders, its credibility has been shattered," one trader said on Monday. "At the end of the day, it's going to struggle."

B&B shares, among the most heavily shorted on the London market, were also hit by Friday's news that entrepreneur Clive Cowdery, who tried to gatecrash the TPG deal with his own plan to inject 400 million pounds through vehicle Resolution, is not preparing to return after walking away late last month.

Other buyers are also unlikely to emerge, analysts say.