Prudential's $21bn rights issue 'may go ahead next week'

13 May 2010

Prudential's delayed $21 billion rights issue may be set to take place from the start of next week.

The British company wants to use the capital to help finance its $35.5 billion takeover of AIA, an Asian unit of American International Group (AIG).

However, the rights issue was delayed last week after the Financial Services Authority (FSA) refused to sign off the proposals by Prudential, over worries about how the takeover would affect capital levels.

The company has worked with AIG on restructuring the AIA agreement, with the US firm now set to take on $2 billion of junior debt instruments instead of cash as part of the deal, reports the Financial Times.

Prudential still has to win the approval of the UK Listing Authority, as well as a shareholder vote, before the acquisition of AIA can go through.

The deal will need the approval of 75 per cent of investors for it to be passed.

AIG wants to use the funds raised from the potential sale to pay off some of its debts to the Federal Reserve Bank of New York.

By Asim Shah

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