Investors advised to think carefully over Bradford & Bingley

Today's announcement from Bradford & Bingley (B&B) poses yet another question for battered investors, comments Graham Spooner, Investment Adviser at The Share Centre.

"Over the past few weeks B&B has surprised investors on more than one occasion. Firstly it announced a rights issue asking for £300m - having previously denied one was being planned - then today we have seen the original rights issue withdrawn and replaced by a restructured deal attempting to raise £258m from its existing investors.

"In the midst of all this, B&B's shares have continued to fall on the back of warnings that the housing market downturn will hit its profits this year, causing it to announce a profit warning. It has also announced the sale of a 23% stake to Texas Pacific Group for £179m and its Chief Executive, Steven Crawshaw has stepped down with immediate affect.

"Unsurprisingly all of these factors are likely to leave private investors confused about what do with their money whether they were planning to take advantage of the rights issue or not. However, although it does reflect the dire state of the buy-to-let market we do not think B&B is another Northern Rock situation.

"B&B has without doubt, been among those worst hit by the credit crunch, having traditionally taken a higher proportion of its funding from wholesale money markets as opposed to individual savers. As a result its share price has already fallen sharply this year - falling a further 30 per cent this morning.

"This poor performance, along with the relatively small discount on offer to investors in the rights issue (new shares at 55p and ordinary shares at 64p) leads us to continue to be negative about B&B for the short-term at least, and we urge investors to wait until the last minute before making their decision to act on the rights issue in the hope that the share price will settle down."