HSBC’s rights issue details

HSBC, Europe's biggest bank on Monday announced a 48 percent discount rights issue to raise 12.5 billion pounds ($17.7 billion), or 12.85 billion pounds ($18.32 billion) including fees.

Below are the details for the deal, which is fully underwritten by Goldman Sachs and J.P.Morgan Cazenove.

Number of new shares:

To issue 5.06 billion shares, equivalent to 41.7 percent of the current outstanding number of shares, and 29.4 percent of the enlarged share capital.

Terms:

– Five new shares for 12 shares held.

– Subscription price of 254 pence or HK$28.00 each.

– Representing discount rates of 47.5 percent and 50.2 percent, respectively.

– A 40 percent discount to the dividend adjusted theoretical ex rights price (TERP) of 421 pence/HK$46.

Financial implications:

– Core tier 1 increases by 150 bps from 7 percent to 8.5 percent

– Total tier 1 increases to 9.8 percent from 8.3 percent.

– Tangible net asset value (TNAV) per share falls to $4.90

from $5.45 reported

– Dividend per new share set at 8 cents for the first three

quarters of 2009, final dividend variable.

– Analysts expect 2009 dividend of 34 cents per share,

implying a yield of 5.7 percent.

Timeline: Mar. 3 – circular to shareholders

Mar. 17 – publishing of prospectus

Mar. 19 – shareholders' meeting

Mar. 20 – stock to trade ex rights

Bookrunners: Goldman Sachs

JPMorgan Cazenove

HSBC

Co-bookrunners: BNP Paribas

Credit Suisse

RBS Hoare Govett