Deutsche Bank Prices €8 Billion Stock Offering At 35% Discount

Tyler Durden's picture

Two weeks after 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 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.

Who is the dumb money this time around: 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.

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jmack's picture

Children, can you spell dilution?

stacking12321's picture

so, what's the real story?

why is db so desperate for cash right now?

jmack's picture

that is the real story, they are desperate for cash.  Never a good sign for a bank.

2_legs_bahhhhhd's picture

8 billion is chump change compared to their derivatives book. Who would be stupid enough to buy this at 35% discount, yet alone market.?

Unfortunately, in every game, there must be a looooooser

https://m.youtube.com/watch?time_continue=13&v=1QK2Re81_EI

wee-weed up's picture

The couldn't PAY me to buy DoucheBag Bank stock!

cue in cue's picture
cue in cue (not verified) wee-weed up Mar 20, 2017 8:52 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

stacking12321's picture

that's not really an answer to "why?", nor to "why right now?"

we all knew db was in trouble a while ago; i'd assumed they were getting some sort of covert bailout from the ecb and/or the fed. so what happened and why do they suddenly need to come up with more cash?

Raffie's picture

HURRY CATCH THE FALLING KNIFE!

Don't want the knife to get dirty.

Oldwood's picture

They see the train wreck coming, selling into declining values. Sure, it will lower their stock value but who cares. They will just take the money and run.

Yen Cross's picture

 BTFTR= Buy The Fucking Train Wreck

  My name is ~ Joe Isuzu & I work for "Douche Bank"...

buckstopshere's picture

Another pump and dump scheme.

Joe Mama 3's picture

It'll be at a discount alright.......................   too bad I just bought 3, 5 oz. ATB's, 10 $ face in walking libs, 10 oz. in Sunshine rounds, you know, wit da little thangeee in tha middle ................................. I'd like ta help, but I'm kinda tapped till payday !!!!!!!!!!!!!!!!

max2205's picture

So what's that in usd? 

buckstopshere's picture

The truth is that a much greater discount is coming.

Something like a 50%-90% discount.

J. Peasemold Gruntfuttock's picture

Yes Bucky, as we watch the great buy-up to save from a total collapse and give the bank to the Arab and Chinese world for a song.

Who needs nukla bombs when ol' buffety boy warned of financial weapons of mass destruction.

Better start shorting and offloading your 'SheetiiBank' while you can as they are primed for the same.

 

J. Peasemold Gruntfuttock

Dragon HAwk's picture

You sell enough Stock to the Right People, and you get bailed out..

Package Debt and Call it a Security.

besnook's picture

is this the black swan? it is a real oh shit moment.

hibou-Owl's picture

European business has completely stopped. My view is there is going to be massive food shortages.

Crops are looking really stunned (worst in years), this is going to filter through to these banks. Deutsche is a lost cause, and go under.
A financial and supply chain collapse, and it is eminent.

You would have to be mad to trust Deutsche with any new money, one little shock and its dead.

jewish_master's picture

shit i was plannig on getting a job in germany

gregga777's picture

"renewed optimism for banks as investors speculate economic growth and rising borrowing costs could revive earnings."

ROTFLMAO.

The Goldman Sachs Feral Reserve System is raising interest rates to trigger the third planned market crash of this century.  Their owners have sold high to the suckers, I mean, the investing public and now are waiting for the market to crash.  After the crash the suckers will sell low to the Goldman Sachs Feral Reserve System's owners for the third time this century, wiping out trillions of dollars of the suckers wealth.  


gregga777's picture

"renewed optimism for banks as investors speculate economic growth and rising borrowing costs could revive earnings."

 

There are ~96,000,000 unemployed working aged Americans and ~45,000,000 Americans dependent on food stamps to stave off starvation.  True unemployment in America is somewhere between 23% and 40% as calculated by the method used during the Great Depression.  The criminals at the Goldman Sachs Feral Reserve System would have you believe that unemployment is really 5%.  Who benefits from their lying?

gregga777's picture

Suckers, I mean, the investing public picking up pennies on the tracks in the path of a speeding 100-car freight train.

Seasmoke's picture

How are they still even breathing let alone selling their stock at a discount. 

Yen Cross's picture

   Is "Douche Bank" bailing itself IN?  That's unpossible.

   </sarc>

JailBanksters's picture

I see the same thing going to hardware store to buy a set of Drills.

How much are those $100 Drills, $60 bucks includes $40 extra value for Free.

It's Krap, and so is Douche Bank. Saying, Doing anything to try to make them solvent again.

 

 

Sledge-hammer's picture
Sledge-hammer (not verified) Mar 20, 2017 1:26 AM

Step right up folks, and buy stock in a broke-dick bank.

Know shit's picture

Listen this is a bargain, 35% cheaper than what all these other fools think it is worth.
If you have these stocks in your hands for that price today you could make a profit of 35%, how difficult can this be to understand?

Sorry.., you say DB is almost broke, and you think it actually has a negative value??!!

Listen, and this time listen good....
One way or the other we are going to get your money, it has been that way, it is that way and it will always be that way.
We will rob you by charging you an absurt amount of money if you take out a loan, if you deposite money at our bank we become owner of your money and you will have to see how to get it back, if we go down (kuchnotwhenkuch) you as depositor will be last in the line so can you say "and it is gone"?, did I tell you we create money out of nowhere and will charge you for that?, did I tell you that if you buy a house with our funny money, we are owner of that property untill it is paid back in full, we want you to insure that property (yes we mostly own that company too :=), We want you to insure your life as well (since you are stupid you will bare all of our risk and be happy to pay for all of it:=), even of you keep your money at home we win by our smart inflation scam...

So now i tell you, you better take this offer where you can make this 35%, and you better be fast......

Say WHAT?
You rather invest in barbaric stuff....

GUARDS.. SHOOT THIS GUY, HE NOWS HOW THE SYSTEM WORKS.......
BE QUICK BEFOR IT SPREADS...

Take care.

Last of the Middle Class's picture

Discounted stock offerings?  LMFAO What could possibly go wrong.

Nesbiteme's picture
Deutsche Bank = shitty systems, shitty ideas, shitty products, shitty managment, shitty internal controls = SHITTY OUTCOMES for investors and clients.
RobM's picture

TERP is much higher than the figure in this article. More like 16.90 euros (not the 15.79 in the article). It should be calculated off the price on 3 March, before the original announcement. Market price is now 17.35, slightly above (correct) TERP. See here for more https://www.ofwealth.com/deutsche-bank-capital-raise-not-negative/