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SocGen to Raise $8B With Discount Shares

Replenishing capital could help struggling French bank avoid takeover
By Lucas Laursen,  Newser Staff
Posted Feb 11, 2008 8:04 AM CST
SocGen to Raise $8B With Discount Shares
Societe Generale bank employees stand outside the bank headquarters in a show of support for Chief Executive Daniel Bouton, Wednesday Jan. 30, 2008 in La Defense, outside Paris. Societe Generale offered shareholders a heavily discounted rights issue to raise capital in the wake of write-downs and losses...   (Associated Press)

(Newser) – 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.

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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.'' (Read more Société Générale stories.)

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