More selling of Barclays on Monday. Lots more. Shares trading 8 per cent lower at 164 after touching 156p soon after the opening.
The stock has fallen 27 per cent since the bank unveiled its fangled refinancing. Market participants in London – angered at the lack of pre-emption rights and the huge dilution of existing shareholders – seem intent on pushing the stock below 153p, the conversion price of the mandatory convertibles that makes up more than half the cash call.
With observers having had the weekend to consider the £7.3bn cash call, one particular aspect of what are relatively complex terms sees to have rankled existing investors: the commissions being paid to get the deal done.
The effect is to hike the real financing costs and undermines Barclays’ claim that the terms compared favourably with those on offer from HM Treasury.
From Sandy Chen at Panmure Gordon, writing to clients:
The terms of these capital raisings strike us as expensive for BARC, especially compared to the financing terms that had been on offer from the UK government. In particular, we note that BARC will pay a 4% commission (estimated £112m) to Qatar Holding, Challenger and HH Sheikh Mansour Bin Zayed Al Nahyan for their £2.8bn of MCNs ? doesn?t that make the effective annual coupon 13.75%? And Qatar Holding and HH Sheikh Mansour Bin Zayed Al Nahyan will also receive a 2% commission (estimated £60m) for their £3bn purchase of RCIs, which would make an initial annual coupon of 16%. In addition, Qatar Holding will receive a fee of £66m for having arranged some of these subscriptions.
Related links:
Full Barclays statement
The felt Sheikh and the Prince Andrew connection – FT Alphavile
Live blogging the BARC (cash) call – FT Alphaville