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Deutsche Bank Shares Plunge After Details Emerge About Massive Share Offering

Monday, March 20, 2017 5:17
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(Before It's News)

From "http://www.zerohedge.com/news/2017-03-19/deutsche-bank-prices-%E2%82%AC8-billion-stock-offering-35-discount"
target="_blank">Tyler Durden
: Two weeks after href=
"http://www.zerohedge.com/news/2017-03-05/deutsche-bank-sell-85-billion-stocks-announces-major-restructuring"
target="_blank">Deutsche Bank first announced
it would raise €8
billion in capital as part of a comprehensive restructuring, the
German lender on Sunday announced the terms of its upcoming massive
dilution.

In a nutshell, Deutsche Bank said it will raise €8 billion ($8.6
billion) by selling stock at a 35% discount to Friday’s closing
price in a rights offering. The TERP (Theoretical ex-right price)
of €15.79, is based on the last closing price of €17.86. The
transaction subscription price is €11.65. The Subscription price
represents a 26% discount to TERP based on the March 17 closing
price.

The mechanics of the offering: Deutsche Bank will issue 687.5
million new shares at €11.65 apiece, it said in a statement Sunday,
in-line with the firm’s March 5 announcement on the planned sale.
The offer compares with the stock’s closing price of €17.86 on
Friday, and is almost 41% lower than where the stock traded when
"http://www.zerohedge.com/news/2017-03-19/The%20company%20will%20issue%20687.5%20million%20new%20shares%20at%2011.65%20euros%20apiece,%20it%20said%20in%20a%20statement%20Sunday,%20in-line%20with%20the%20firm%E2%80%99s%20March%205%20announcement%20on%20the%20planned%20sale.%20The%20offer%20compares%20with%20the%20stock%E2%80%99s%20closing%20price%20of%2017.86%20euros%20on%20Friday,%20and%20is%20almost%2041%20percent%20lower%20than%20where%20the%20stock%20traded%20when%20Bloomberg%20first%20reported%20that%20the%20bank%20was%20weighing%20a%20capital%20raising.%20Existing%20investors%20will%20be%20able%20to%20acquire%20one%20new%20share%20for%20each%20two%20they%20now%20hold."
target="_blank">Bloomberg first broke the news
of the imminent
capital raising on March 3.

As part of the rights offering, DB shareholders may subscribe
for 1 new ordinary share for every 2 existing shares held. The
subscription rights expected to be traded on German exchanges March
21-April 4, and on NYSE March 21-31. As Bloomberg adds, the
reference price for rights is expected to be approximately
€2.07.

The sale of equity will be the fourth capital infusion
for Deutsche Bank since 2010.
Chief Executive Officer John
Cryan, who had previously said he didn’t want to tap shareholders,
reversed course this month after the shares almost doubled from
their September low and Deutsche Bank was unable to find a buyer
for a consumer banking unit. Still, even after DB’s shares decline
this month ahead of the capital increase, the stock is still up 80%
from the record low on Sept. 30, amid what Bloomberg call “renewed
optimism for banks as investors speculate economic growth and
rising borrowing costs could revive earnings.”

“The environment for the share sale is almost perfect, given the
expectation of higher interest rates and buoyant equity markets,”
Ingo Frommen, an analyst with LBBW who has a hold recommendation on
the stock, said ahead of Sunday’s announcement.

So “perfect” in fact, buyers of DB equity would not take less
than a 35% discount to market.

As a reminder, Deutsche Bank earlier said that the capital
increase was fully underwritten at €11.65 a share by banks
including Credit Suisse, Barclays, Goldman Sachs, BNP Paribas,
Commerzbank, HSBC, Morgan Stanley and UniCredit. The group of banks
underwriting the deal has increased to 30, it said Sunday.

Qatar’s royal family and China’s HNA Group Co., two of
Deutsche Bank’s biggest investors,
plan to buy shares in
the rights offer with a view to increasing their stakes, Bloomberg
reported.

Deutsche Bank AG (USA) ( "http://etfdailynews.com/stock/DB/" target=
"_blank">NYSE:DB
)
fell $0.46 (-2.42%) in premarket
trading Monday. Year-to-date, DB has gained 5.14%, versus a 6.04%
rise in the benchmark S&P 500 index during the same period.


This article is brought to you courtesy of href=
"http://www.zerohedge.com/news/2017-03-19/deutsche-bank-prices-%E2%82%AC8-billion-stock-offering-35-discount"
target="_blank">ZeroHedge
.

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Source: http://etfdailynews.com/2017/03/20/deutsche-bank-shares-plunge-after-details-emerge-about-massive-share-offering/

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