The ongoing credit crunch, generated by the US subprime mishmash can trigger upheaval for the Royal Bank of Scotland-led consortium to finance the $95.51bn offer to ABN Amro.
Due to lack of liquidity in the market, hedge funds are believed to have sold down their ABN holdings, which raise the apprehension for consortium to raise $88.97bn cash for the funding.
Market turmoil hits on the banking business, which slashed ABN’s share value too. Taking advantage from market muddle, the RBN-led consortium buy 3% of shares at well below its offer price. The Consortium approached the Dutch bank with its $51.48 a share offer, but amidst the market volatility, ABN shares traded at just $45.24.
In the present situation, investors are worried that Fortis will struggle to get its planned $17.52bn rights issue, while lack of demand for banking bonds has raised new questions about the attraction of $8.1bn bond issue by RBS. The consortium needs Fortis to complete its rights issue before October 5, the closing date for acceptances; otherwise, Dutch regulator can veto the deal.
Via: Telegraph
