RSA raises £773m through rights issue
Troubled insurer RSA has issued a rights issue to raise £773 million, following its announcement in February, 2014.
The group has issued 1,380,976,863 of ordinary shares of 27.5 pence each at a price of 56 pence per New Ordinary Share, which represents a discount of approximately 40 percent to the closing price of 93.4 pence on March 24, 2014 and a 32.7 percent discount to the theoretical ex-rights price based on the closing price on March 24, 2014.
"Following a comprehensive review of the options available to RSA, the Board believes that the Rights Issue will enable the Group to restore its capital position and keep ahead of anticipated industry capital trends, and that this will allow the business to carry out its action and improvement plans without undue risk of suboptimal decisions forced by capital shortage or instability,” said Stephen Hester, CEO, RSA.
“We thank shareholders for their ongoing support. We remain focussed on delivering the transformation programme we outlined at our preliminary results presentation in February and look forward to sharing more details on our plans in the coming months."
The net proceeds of the Rights Issue will be held as cash or low-risk investments in order to improve the Group’s capital strength and surplus over its capital requirements.
The Rights Issue was fully underwritten by BofA Merrill Lynch and JP Morgan Cazenove.
In 2013, the company’s Irish unit was investigated for a £200 million fraud, which led to the resignation of the unit’s head, Philip Smith.
