Societe Generale to Sell Stock at 47.50 Euros

Societe Generale to Sell Stock at 47.50 Euros

Feb. 11 (Bloomberg) -- Societe Generale SA, hurt by trading losses incurred by trader Jerome Kerviel, is selling shares at 47.50 euros apiece as it seeks to raise 5.5 billion euros ($8 billion) in a rights offer.

That's a wider-than-expected discount of 39 percent to the last closing price of 77.72 euros, Bloomberg calculations show. Analysts had been expecting a discount of as much as 30 percent. Stockholders can buy one new share for every four held, the bank said in an e-mailed statement today.

The discount ``doesn't show great confidence in selling the shares,'' said Pierre Flabbee, an analyst at Kepler Equities in Paris, who has a ``reduce'' rating on the stock. ``But this rights issue is a matter of life or death and the management may not want to take any risks placing the shares.''

The bank also said that it earned 947 million euros last year. That's more than the range of between 600 million euros and 800 million the bank estimated on Jan. 24, the day it announced a 4.9 billion euro trading loss and 2.05 billion euros of writedowns linked to risky U.S. mortgages.

Operating income, including the losses that Societe Generale blames on Kerviel, fell to 1.8 billion euros from 8 billion euros in 2006.

The subscription period will run from Feb. 21 to Feb. 29, during which time the rights will trade separately on Euronext. The new shares will carry dividend rights from the start of 2008.

The bank said it's aiming for a 2010 gross operating profit of 1 billion euros and repeated that it will pay a dividend of 45 percent of net income from 2008 to 2010.

The offering, which is guaranteed by investment banks, is lead managed by JPMorgan, Morgan Stanley & Co. and Societe Generale's own investment bank. Credit Suisse Group and Merrill Lynch & Co. are co-book runners.

BLOOMBERG