Lloyds rights issue, UK’s biggest, at 60 per cent discount

British banking and insurance major Lloyds Banking Group Plc (Lloyds) 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).

The £13.5-billion rights issue will be the largest rights issue in British corporate history, overtaking HSBC's £12.5-billion rights issue in March this year.

The London-based bank said in a statement that it will offer 1.34 new shares for every one held in an issue of 36.5 billion shares, priced at 37 pence each - a deep discount of nearly 60 per cent compared with yesterday's closing price of 91.47 pence a share.

The new shares will represent just over 57 per cent of Lloyds' enlarged share capital, in which undr the advised of the government-owned UK Financial Investments Limited, the British Treasury will subscribe in full for its 43-per cent entitlement of the fully underwritten rights issue.

The bank will now seek shareholder approval on Thursday for the rights, after which dealing in nil-paid rights will begin. The new shares will begin trading on 14 December.

By not applying for the Government Asset Protection Scheme (GAPS), the bank is trying to ward off the government from raising its stake to 62 per cent and being forced to incur £15.6 billion in fees.

With Lloyd's stock losing more than three-fourths of its value since the financial crisis started in 2007, shareholders will see their stock become further diluted with the rights issue.