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Tue, Jun 03, 2008 - Page 10 News List

TPG in talks to buy Bradford & Bingley stake

CONFIDENTIAL TALKS The Texas firm has reportedly offered US$296 million for a 20 percent share in the British lender, whose CEO resigned on Sunday for health reasons


TPG Inc, the leveraged buyout firm started by David Bonderman and Jim Coulter, may buy 20 percent of Bradford & Bingley Plc, the UK's biggest mortgage lender to landlords, two people with knowledge of the discussions said.

The Forth Worth, Texas-based firm will pay about £150 million (US$296 million) for the stake, said the people, who declined to be identified because the talks are confidential.

Bradford & Bingley plans to raise an additional £250 million from shareholders in a rights offering, the people said.

TPG is planning to make the purchase two months after it led a US$7 billion investment in Washington Mutual Inc, the largest US savings and loan.

Bradford & Bingley, whose chief executive officer Stephen Crawshaw quit yesterday citing health reasons, probably will also say today that profit missed analysts’ estimates as loan defaults increase.

“The mortgage market is getting a lot more difficult, with mortgage approvals down,” said Ed Collins, who helps oversees US$41 billion at New Star Asset Management in London. “The operating environment for them has gotten very tough.”

Almost 1 percent of so-called buy-to-let mortgages for landlords in the UK were more than three months in arrears in the first quarter, up 50 percent from a year earlier, the Council of Mortgage Lenders said last month.

Mortgage lending may fall 45 percent this year, HBOS Plc, Britain’s biggest mortgage bank, estimated last week.

Owen Blicksilver, a TPG spokesman in New York, and Nickie Aiken, a spokeswoman for Bingley, England-based Bradford & Bingley, declined to comment on the negotiations, which were reported earlier by the BBC.

Bradford & Bingley is down 67 percent this year in London trading, valuing the bank at £545 million following the worst share performance of the eight companies in the FTSE 350 Banks Index. The stock fell 14 percent last week, 7.6 percent above the strike price for the rights offer.

Bradford & Bingley was already seeking about £300 million from investors in a rights offering underwritten by UBS AG and Citigroup.Bradford & Bingley was forecast to have net income of £150.5 million this year, a median estimate of 11 analysts surveyed by Bloomberg showed. The bank’s profit last year dropped 48 percent to £93.2 million as it wrote down investments and sold assets.

Crawshaw, 47, announced plans last month to raise £300 million in a rights offer after denying weeks earlier that the firm needed funding.

The company has curtailed lending amid higher financing costs as house prices deteriorate.

“Due to a serious cardiovascular condition, Stephen Crawshaw is stepping down as chief executive with immediate effect,” Bradford & Bingley said in an e-mailed statement on Sunday.

Chairman Rod Kent will be executive chairman until a replacement is found, the company said.

Bradford & Bingley announced its rights offer after Royal Bank of Scotland Group and HBOS asked their investors for £16 billion to shore up their balance sheets.

Financial services companies have announced writedowns and credit losses of US$386.7 billion globally related to the collapse of the subprime mortgage market in the US, data compiled by Bloomberg shows.

Bradford & Bingley was hurt by the seizure in credit markets because it depends on capital markets for more than 50 percent of its funding.

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