May 9 (Bloomberg) -- Co-Operative Bank Plc said Richard Pym will step down as chairman this year as it started a 400 million-pound ($677 million) stock offering, part of a plan to plug its capital shortfall.
The lender will offer shareholders 200 million new shares for 2 pounds apiece, the Manchester, England-based lender said in a statement today. Four investors have agreed to buy 31 percent of the stock on offer. While Co-Operative Group Ltd.’s stake will be diluted, the company said it will buy new stock and will remain the lender’s largest shareholder. Any remaining shares will be offered to money managers.
The 150-year-old lender is raising the money to plug a capital deficit that was uncovered after its failed attempt to buy branches from Lloyds Banking Group Plc. Turmoil at the bank has forced Co-Operative Group to cede control of the operation to creditors and prompted the departure of several executives including Paul Flowers, who Pym replaced as chairman less than a year ago.
“The additional capital to be raised through this transaction will enable us to reset our starting capital position,” Chief Executive Officer Niall Booker said in the statement. “Completion of this capital-raising will assist the new management team in the implementation of the business plan that aims to return the bank to health over time.”
The closely held company said it’s still considering plans to allow its shares to become publicly traded. Still, the timing remained “uncertain” as regulators probe the company, Co-Operative Bank said.
The lender said it will conduct a “full and rigorous” process to appoint Pym’s successor.
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