TPG cancels B&B investment

Texas Pacific Group (TPG) has pulled out of its agreement to invest £179m (US$350m) of fresh equity in Bradford & Bingley (B&B). This deal was agreed at the start of June to ease the £400m rights issue that the bank was undertaking at 55p a share.

Instead underwriters Citigroup and UBS have persuaded existing institutional investors to step and back the refinancing instead. These investors are believed to be Legal & General, the Prudential via M&G, Standard Life and HBOS.

In a statement issued late last night Bradford & Bingley said TPG had decided to withdraw after Moody’s had said it was planning to reduce the bank’s credit rating from A3 to Baa1. This allowed TPG to withdraw without facing legal consequences.

The FSA, the UK’s financial regulator, apparently corralled the four institutions, who had been willing to back a possible takeover attempt by Clive Cowdery, who founded Resolution.

B&B executive chairman Rod Kent said: “Whilst we are disappointed that TPG intends to terminate its Subscription Agreement, I am pleased that Citi and UBS and our major shareholders continue to support our proposed capital issuance.”