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2012-01-13 - 11:15:00 - DJ UPDATE: Sabadell Plots Big Rights Issue To Absorb CAM

DJ UPDATE: Sabadell Plots Big Rights Issue To Absorb CAM

-- Rights issue would strengthen Sabadell as it takes over failed lender CAM

-- Sabadell will issue 691.81 million new shares at a discount

-- Looks to raise roughly EUR1 billion with rights issue

-- Timing of issue will depend on when CAM is absorbed

(Adds detail throughout.)

   By Christopher Bjork

MADRID (Dow Jones)--Banco Sabadell SA (SAB.MC) said Friday that it plans to issue up to 691.81 million new shares in order to strengthen its capital base as it prepares to absorb failed lender Caja de Ahorros del Mediterraneo.

The plan is to raise roughly EUR1 billion with this rights issue, the bank had said after agreeing to take over CAM from the Bank of Spain in early December. In this type of capital increase, shares are normally issued at a significant discount to their market valuation, some times of as much as 50%.

Sabadell, based in Barcelona, said in a regulatory filing that it had called an extraordinary shareholder meeting Feb. 23 to approve the share issue.

Sabadell now has 1.61 billion shares outstanding, and the bank has a market value of EUR4.23 billion.

A spokesman for the bank said the timing of the rights issue would depend on when Sabadell absorbs CAM.

"We're integrating CAM's assets onto our balance sheet, and we will become a systemic bank in Spain. It's natural to increase capital," the spokesman said.

Sabadell added it expects that the rights issue won't necessarily be fully subscribed.

Spain's central bank seized CAM last summer when it became insolvent, cleaned the bank up, and put it up for auction, offering bidders sweeping guarantees that will cover 80% of future losses tied to the Valencia lender's huge portfolio of real-estate loans and foreclosed properties over a 10-year period.

Sabadell was the only bank to place a binding bid for CAM. Before the transfer to Sabadell, Spain's deposit insurance fund will inject some EUR2.45 billion into CAM and assume EUR2.8 billion already provided by the government for the ailing bank.

Sabadell will then purchase CAM for one euro.

At 1106 GMT, Banco Sabadell shares were down 2.2% to EUR2.64. The Spanish market was up 1.1%.

-By Christopher Bjork; Dow Jones Newswires; +34913958123;

(END) Dow Jones Newswires

January 13, 2012 06:15 ET (11:15 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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