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HBOS Rights Issue Goes To The Wire

It may have gone down to the wire, and there are some who suggest that the share price was assisted of late, but the HBOS right issue has been voted through by shareholders. As a consequence we can take some of the confusion and debate out of the market and look to the future of the group which consists of Bank of Scotland and Halifax. The road has been long and hard to get this rights issue away, but it has been passed. What next?

We now enter the period whereby shareholders will need to make up their minds as to whether they want to take up their new share entitlement, or leave them to the underwriters who will pick up any shares not taken up. The share price fell just over 5% today, closing at 276p which is just a penny above the rights issue price.

This positive vote brings to an end a very difficult and volatile period for HBOS which has seen a number of prominent hedge funds take short positions in the stock, banking on short term share price weakness. While the share price may still be volatile over the days and week ahead, at the least the £4 billion needed to repair the balance sheet is now guaranteed.

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