Capital Markets

UBS Aims for $15.5B in Rights Offering

Swiss financial giant wants to issue 760 million shares at a deep discount.
Stephen TaubMay 22, 2008

UBS AG hopes to raise $15.5 billion in a rights issue being offered at a deep discount from its stock’s current price.

The Swiss financial giant said it will issue more than 760 million shares at a price that is more than 31 percent below its prevailing market price. The dilutive deal is reflective of the rash of equity financings being conducted in recent weeks by financial firms looking to shore up their wounded balance sheets after taking huge write-offs that stemmed from the crumbling mortgage market.

Financial firms seemingly have had little trouble raising money in the equity markets, as long as they were willing to sell new shares at well below market price.

Under its rights offering, UBS shareholders will be allotted one subscription right for each existing share held. The exercise of 20 subscription rights will entitle a holder to subscribe for 7 new shares at $20.09 (21 Swiss francs) per new share.

The subscription rights will be traded from May 27 through June 9 on the New York Stock Exchange and in Zurich.

The rights issue was underwritten by a syndicate of banks led by JPMorgan, Morgan Stanley, BNP Paribas, and Goldman Sachs.