B&B shareholders react angrily to TPG rights deal

Investors in struggling buy-to-let lender Bradford & Bingley (B&B) have expressed anger over the bank's announcement that it will grant private equity firm TPG Capital anti-dilution rights to protect its planned £179m investment.

Reports claim that the rights will allow TPG to participate in any offer or granting of rights made by the bank in the next 12 months, despite the fact that the group will hold only a 23.3% stake, less than the 25% needed for a blocking minority. The move has caused anger among the bank's existing shareholders, who do not have similar entitlements, as many feel it will create a division between TPG and other investors in the same class.

However, sources close to B&B have suggested that the protections would apply only if the bank raised additional capital from another external investor, something that most feel is highly unlikely. TPG has also agreed to a one-year lock-up and standstill clause that will prevent it from selling its shares or increasing its holding beyond the 30% threshold at which it would be legally bound to make an offer for the whole company.

B&B has responded to the criticism by giving investors three separate votes on the rescue package: one to approve the capital increase, a second to approve the rights issue and the third to approve TPG's investment.

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