Qatar cashes in Barclays warrants, shares drop

Mon Nov 26, 2012 6:20am EST
 
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By Greg Roumeliotis

(Reuters) - Qatar has cashed in its remaining warrants in Britain's Barclays Plc BARC.L, a move that should yield a $280 million profit and still leaves the sovereign wealth fund as the bank's top shareholder following a controversial fundraising in 2008.

Deutsche Bank AG DBKGn.DE and Goldman Sachs Group Inc GS.N said they would sell up to 303.3 million shares - worth 740 million pounds - to comply with Qatar's request. They sold shares at 244 pence apiece, a 4 percent discount to Friday's closing share price, but did not confirm whether all the shares had been sold.

Qatar Holding said in a separate statement late on Sunday it had monetized its remaining holding of 379 million units of Barclays warrants - instruments that convert into shares - without affecting its 6.65 percent stake.

The warrants have not yet been converted, but can do so at 198 pence per share in the next year, which would reap a 180 million pound profit at current prices.

Conversion would bring in 750 million pounds for Barclays and lift its core Tier 1 capital ratio by about 20 basis points, but it would dilute the holding of shares by other investors.

The warrants were part of a controversial fundraising by Barclays at the height of the financial crisis in 2008, when it raised billions of pounds from investors in Qatar and Abu Dhabi to avoid taking emergency funds from the UK government.

But existing shareholders said the terms offered to the new investors were too attractive, especially the warrants they were given as part of the deal.

Barclays is now being investigated by Britain's Serious Fraud Office (SFO) and Financial Services Authority (FSA), which are scrutinizing payments made by Barclays to Qatar as part of the 2008 fundraising.   Continued...

 
A lamp featuring a logo of Barclay's bank is seen outside a branch in London October 31, 2011. REUTERS/Suzanne Plunkett