BRADFORD & BINGLEY’s 850,000 shareholders were left feeling aggrieved last week after Britain’s biggest buy-to-let lender slashed the terms of its rights issue.

It was initially offering 16 new shares for every 25 owned at 82p each, but last Monday it changed this to 19 new shares for every 25 at 55p each following a profit warning.

American investor Texas Pacific Group stepped in with a £179m investment, cutting the amount B&B needed to raise from the rights issue from £300m to £258m.

Investors are angry because they would have been able to sell their rights at 82p, above the current price of 73½p, but now they will get only 55p, a discount of nearly 12%.

We answer your questions.

What is B&B doing?

B&B has decided it needs to raise cash from its 850,000 shareholders to bolster its balance sheet. Shares in B&B have plunged after the lender reported an £8m pretax loss in the first four months of 2008.

Should I take part in the new offer?

Keith Bowman at Hargreaves Lansdown, an adviser, said: “The broad market opinion is against the B&B offer. The difficulty is its lack of diversification, which leaves it very vulnerable to shocks to the UK housing market.”

What if I don’t take up my rights?

You will be allocated “nil-paid rights”, in effect a financial instrument that gives you the right to buy the new shares at the discounted price. These can be bought and sold in the same way as normal shares. If you do not take up the rights, your holding will be diluted.

What should I do now?

You will soon receive details of a general meeting to approve the new deal, which is expected to take place next month.