ING sets terms for its $11.2 billion 6 for 7 rights issue

The Netherlands financial institution, International Netherlands Group (ING) said today that has priced its €7.5-billion ($11.2 billion) rights issue at a huge discount of 37.3 per cent in order to repay state aid it received during the global financial crisis.

Earlier this week, British banking and insurance major Lloyds Banking Group Plc (Lloyds) announced plans to raise a record £13.5 billion ($22.3 billion) in the country's biggest rights offering, selling shares at a 60-per cent discount in an effort to back out of the government's Asset Protection Scheme (APS). (See:  Lloyds rights issue, UK's biggest, at 60 per cent discount) 

Amsterdam, Netherlands-based ING, the eighth-largest company in the world in 2009 according to Forbes Global 2000, will issue 1.768 billion new shares fully underwritten by syndicate of banks led by Goldman Sachs and JP Morgan on top of more than 2 billion shares currently outstanding.

Existing shareholders will receive rights entitling them to subscribe for new shares subject to applicable securities laws. Eligible rights holders can subscribe for 6 new shares in relation to every 7 subscription rights that they hold, said the biggest Dutch financial-services firm in a statement.

The issue price is set at €4.24 per share. This represents a discount of 37.3 per cent to the Theoretical Ex-Rights Price (TERP), based on the closing price of €8.92 of ING's shares on Euronext Amsterdam and on Euronext Brussels on 26 November 2009.

ING said that it will use the proceeds to finance repayment and cover charge for additional payments to Dutch State it received last year during the time of the financial crisis.