UniCredit shares plunge on heavily discounted rights issue

UniCredit has seen its shares suspended for the second time after they plunged almost 10% as it unveiled the price of a €7.5bn (£6.3bn) rights issue.

The troubled Italian bank has announced it will offer its shares for sale at a 43% discount to yesterday’s closing price of €1.943 per share, excluding the value of rights, and will offer two shares for each one held.

The move is an attempt by the bank to strengthen its capital position, and to comply with European Banking Authority capital ratio requirements.

Trading in the stock was also suspended on 1 November when shares fell by 8% following the Greek Prime Minister’s call for a referendum over the latest bailout deal.

The bank first announced a rights issue on 14 November following reported losses of €10.64bn. Its share price has declined 26% since the rights offering was first announced, Bloomberg reports.

The 10% fall in the beleagured bank’s shares today was the largest intraday decline since 1 November.

UniCredit said in a statement the offer price reflects “current market conditions.” A group of underwriting banks have guaranteed the rights offer, the bank added.

UniCredit investors can buy stock from 9 to 27 January, and the rights will be tradable from 9 to 20 January, according to Bloomberg.


This article first appeared on Investment Week


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