UBS AG (UBS), which tops the league tables in mortgage-gambling losses, raised an emergency $15.1 billion at a massive discount–delivering another body blow to battered shareholders.
Shares will be sold for 21 francs, a 31% discount from the firm’s closing price on Wednesday, and current shareholders will be entitled to 7 new shares for each 20 already held. UBS has recorded $25.4 billion in net losses so far during the turmoil on $38 billion in mortgage-related writedowns. This most recent share sale follows a 13 billion franc capital injection early this year as UBS scrambles to shore up its demolished balance sheet. Bloomberg:
“The amount raised is slightly higher than the 15 billion francs originally indicated,” said Peter Thorne, a London-based analyst at Helvea with an “accumulate” rating on the stock. “Lots of UBS investors are in it because they thought it was a safe financial growth stock and in the last few months it’s become a recovery basket case, so a lot of them won’t take up the offer.”
UBS fell 18 centimes, or 0.6 per cent, to 30.46 francs at 11:31 a.m. in Swiss trading, giving it a market value of 66.3 billion francs. The bank has gained 11 per cent since the rights issue was announced on April 1. It’s still down 59 per cent over the past 12 months.