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Friday, November 27, 2009

ING's $11.2B Rights Issue Comes In at 52% Discount

By Matt Egan

FOXBusiness

ING (ING) may wish it chose a different day to raise cash as the Dutch bank’s $11.2 billion rights issue came in at a 52% discount Friday amid a plunge in global markets sparked by Dubai’s debt crisis.

The Amsterdam-based bank issued 1.768 billion new shares at 4.24 euros each, compared to its closing price of 8.916 euros on Thursday. However, the sale represented a 37.3% discount to the theoretical ex-rights price.

ING’s shares slumped to $10.12 in the premarkets Friday.

ING’s rights issue appeared to be hurt by the fallout from Dubai, where one of its state-owned conglomerates announced a six-month standstill in debt payments. The news sparked fears of a second wave of the credit crisis and sent global markets diving.

The ING cash call was fully underwritten by a syndicate of banks, including Goldman Sachs (GS) and JPMorgan Chase (JPM). ING said it will use the proceeds to finance repayment and cover charges for additional payments to the government.

“This rights issue is a critical component of the measures we announced to regain our independence and to chart a clear course forward. With investors' support, we will be able to repay half of the funds we received last year from the Dutch State and maintain our capital strength,” ING CEO Jan Hommen said in a statement.

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