Societe Generale, the French bank hit with a $7 billion loss in a massive trading fraud, will replenish its cash reserves through an $8 billion stock offering at a heavily discounted rate, the company said today. Shares will be priced at €45.50, or 39% off the Feb. 8 closing price, lower than the 30% discount analysts predicted. Existing shareholders can buy one share for every four they own, Bloomberg reports.
SocGen also raised its 2007 profit prediction from last month's forecast, despite reporting an additional €600 million in writedowns, for a total of €2.6 billion. The No. 2 French bank is seen as a takeover target, but the credit crunch may work in its favor. "The lack of liquidity in the market may help Societe Generale stay independent,'' a French analyst tells Bloomberg. "With the rights issue, it certainly has the means to stay independent.''