Swiss-based UBS AG announced today that it would raise $15.5 billion by issuing 760,295,181 new shares at a 31 percent discount from its current share price. This is UBS' second major cash injection in recent months.
Suffering from heavy exposure to the U.S. mortgage crisis, UBS will now sell new shares at $20.09 each to existing shareholders. Compare that to the closing price of $29.75 on Wednesday. In this move, shareholders will receive one subscription right per share held, with 20 of the rights entitling the holder to buy seven new tradeable shares. Subscription rights will be traded from May 27th to June 9th in Zurich and on the NYSE.
According to Peter Thorne from Helvea, there should be a sizable turnover in the new shares because UBS' traditional investors bought the stock as a risk-free investment, and UBS has not become a bank recovery stock.
To reduce negative exposure to housing securities, UBS also finalized the sale of $15 billion in sub-prime and Alt-A mortgage assets to U.S.-based BlackRock Inc. yesterday. The securities had a nominal value of $22 billion.
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