Rights Offering Pounds Guaranty Financial Group (GFG)

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Guaranty Financial Group (NYSE: GFG) announced an offering of subscription rights to its shareholders. The terms have not yet been set for the non-transferable subscription rights although the subscription price will likely be at a discount to the current share price. Shareholders that fully exercise their rights while will be given an over-subscription privilege.

They have entered into standby purchase agreements with various institutional investors and the number offered to them is based on the number of shares subscribed by their shareholders in the rights offering. The directors have indicated their intentions to fully exercise subscription rights.

The deal manager for the offering is Keefe, Bruyette, & Woods. Proceeds from the offering for the Texas and California based bank and insurance company will be used for general corporate purposes, including investments in subsidiaries. 

Since the company went public December 13, 2007 at $17.50 per share, they have steadily declined in share price to consistently below $12.00. Today, the stock is down 8% to new lows at $7.07. The 52-week range for the stock is $18.50 to $7.50. The current market cap is sitting at about $251 million.

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Rachel Lopez
April 30, 2008