Clive Cowdery, the financial entrepreneur, was on Wednesday night denied access to Bradford & Bingley’s books to carry out due diligence as part of his proposed rescue plan for the embattled mortgage lender.
The board of Bradford & Bingley met on Wednesday to discuss new proposals put forward by the financial entrepreneur’s company Resolution which would see £400m being injected into the UK’s biggest buy-to-let mortgage lender. B&B rejected Resolution’s original proposal on Sunday night.
Mr Cowdery has revised his initial rescue plan which would replace B&B’s existing £258m rights issue and a £167m investment from TPG, the US private equity group, in return for a 23 per cent stake. The changes include allowing B&B’s 930,000 retail investors access to take up shares in the capital injection.
However, on Wednesday night B&B rejected Mr Cowdery’s request to carry out due diligence because of the additional uncertainty and delay his proposal would create.
It also believes that Resolution’s plan, which would see new shares issued at 72p, effectively amounts to a change of control because Resolution could potentially end up with up to 55 per cent of the company without paying a premium for this.
Mr Cowdery is racing against the clock to come back with another proposal before B&B’s extraordinary meeting to approve its existing deal on July 7.
B&B believes that its existing TPG deal and rights issue, which was put together with involvement from the Financial Services Authority, offers certainty and stability to the bank.
The deal would effectively enable the bank to receive the necessary capital within 12 working days whereas if Mr Cowdery’s plan were approved, this could delay any fundraising for several weeks, creating more uncertainty for the bank’s retail savers.
Resolution made clear in a statement on Wednesday night that it is not seeking a change of control at B&B and that its proposal was backed by leading investors.
It said that regardless of the size of the shareholding, the voting rights of the investors doing the placing would be limited to 29.9 per cent. In addition full control of B&B would remain with its board.
Mr Cowdery’s proposal has the backing of many of the top 15 shareholders in B&B and investors are expected to put pressure on the bank to re-engage with Mr Cowdery before July 7. B&B itself has not ruled out further talks.
“Shareholders are not going to go away,” said one investor. “B&B cannot discount the possibility of investors voting against the TPG proposal at the extraordinary meeting.”