November 19, 2009 / 4:33 PM / 9 years ago

Manulife stock plunges after C$2.5 bln issue

* Manulife stock down as much as 8.3 percent

* Issue equivalent to about 8 pct current shares

TORONTO, Nov 19 (Reuters) - Shares of Manulife Financial Corp (MFC.TO) tumbled on Thursday after Canada’s biggest insurer said it would raise at least C$2.5 billion ($2.3 billion) in a bought deal equity financing, diluting share values for a second time in less than a year.

Manulife stock was down 7.4 percent at C$18.69 by late Thursday morning, after being down as much as 8.3 percent earlier in the day.

The Toronto-based company said late on Wednesday it planned to close the public offering on or about Nov. 30, and had granted underwriters an over-allotment option that could boost its deal’s value to C$2.875 billion.

At a C$19 per share offer price before the over-allotment, that would mean adding 131 million shares to Manulife’s current outstanding float, equivalent to about 8 percent of the 1.62 billion share float as of Sept. 30.

Manulife, which is also the biggest insurer in North America and one of the largest in the world, sold C$2.125 billion in common equity last December.

Chief Executive Donald Guloien told Reuters late on Wednesday the issue would boost company capital reserves to “fortress levels” and allow it to turn its eye to acquisitions, where he saw some of the best opportunities in his lifetime.

Manulife said earlier this month it had a third-quarter loss as lower corporate bond yields and a change to actuarial assumptions offset stock market gains.

The insurer reported a net loss of C$172 million, or 12 Canadian cents a share, in the quarter ended Sept. 30, compared with earnings of C$510 million, or 33 Canadian cents a share, a year earlier.

$1=$1.05 Canadian Reporting by Pav Jordan; editing by Rob Wilson

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