TPG says 'no' to B&B rescue

Posted Jul 4th 2008 12:00PM by Tom Taulli
Filed under: Private Equity

While there were challenges, it looked like Texas Pacific Group would snag a 23% equity stake in Bradford & Bingley PLC, a UK mortgage company. True, the deal was highly dilutive, but at the same time, B&B has been suffering from the credit crunch.

Now, TPG has walked away and instead, a syndicate of investors has rounded up $793 million to bolster B&B. Apparently, the company will need to raise even more capital.

Why? Basically, Moody's Investors Service downgraded the debt of B&B because of rising mortgage delinquencies and continued balance sheet problems. As a result, the economics of the deal changed significantly. In fact, TPG had negotiated an "out" clause for such a scenario.

Actually, the deal implosion points to the fact that the credit crunch is global. It even appears that things may be getting worse, especially in Europe, where there may be a need for many more capital infusions for the financial services sector.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Tags: bradford and bingley, europe, europe private equity, inthenews, Moodys, private equity, TPG

Print this

Reader Comments (Page 1 of 1)

7-04-2008 @ 2:01PM

william lindblad said...

Tom: Where have you been at? Credit problems have been on the other side of the pond since Nov. 07. We had (have) Countryside and the U.K. had Northern Rock. Both are un-resolved issues. We had Bear Sterns and they had some small banks. There is more to come on both sides and what is on the books in Asia remains unknown. HSBC is a multi national that has ties over there and they were into sub-prime just like the rest of the world. Don't you recall when Citi went looking for partners for the Paulson backed "super fund" idea that they tried Europe and did not return with any partners?
That's months ago and there is no indication that the credit market has improved.