More than two million HBOS shareholders, most of them Halifax customers, who received their shares when it ceased to be a building society and merged with the Bank of Scotland, will receive a copy of the 196-page prospectus for its controversial £4 billion fund-raising.
This takes the form of a rights issue entitling shareholders to subscribe for enough new shares at 275p a share to keep their proportionate ownership unchanged.
Few private investors, many of whom received their shares “free” for the loss of their mutual ownership of Halifax, are expected to subscribe for the full amount.
But HBOS directors hope many will opt for a cash-free compromise, known as “tail-swallowing”. This involves selling the rights to enough new shares to raise cash to buy some your entitlement.
When the issue was announced in April, the price of new shares was pitched well below the existing shares. The difference could have made this an attractive option.
But since then HBOS has come under repeated pressure, which has almost wiped out the gap. Yesterday they fell 22p to finish at 296.75p, trimming the discount to 21.75p.
Unless the shares recover strongly before the closing date, July 18, there is a serious risk very few shareholders will subscribe and the bulk of the issue will be left with the underwriters, City institutions that have guaranteed to put up the money if nobody else does, for substantial fees.
Private investors will get a letter with their prospectus spelling out their options with a form where they can tick the box indicating what they want to do.
“We are very committed to making the process as effortless as we possibly can,” an HBOS spokesman said last night.