Bradford & Bingley PLC said Friday it is revising its plans to raise new capital after U.S. private equity fund Texas Pacific Group pulled out of its agreement to invest more than $350 million in the mortgage banker.

TPG withdrew after Moody's rating service downgraded Bradford & Bingley's long-term debt ratings from A3 to Baa1. TPG's agreement to invest 179 million pounds ($356 million) in B&B included an escape clause in the event of downgrading.

Bradford & Bingley, a specialist in mortgages for the purchase of rental properties, now hopes to raise 400 million pounds ($800 million) entirely through a cash call to shareholders.

The rights issue is supported by major shareholders M&G Investment Managers, Legal & General Investment Management, Insight Investment and Standard Life Investments, will have a subscription price of 55 pence ($1.09) per share.

Standard Life and Legal & General previously had backed a proposed offer by financier Clive Cowdery's company, Resolution PLC. Cowdery withdrew after B&B refused to opens its books to his team.

Bradford & Bingley shares fell 18 percent to 50 pence (99 US cents) in trading on the London Stock Exchange. They had traded above 180 pence in early May.

"Management have bungled here, in our view, and the rights process is now being lengthened meaning likely further stock price falls," said Alex Potter banking analyst at Collins Stewart, who rated the stock as "sell."

Potter said the downgrade to Baa1 _ "three notches above junk" _ is "relatively startling for a deposit-taking bank in an OECD economy but we categorically do not believe there is a material risk of depositors losing money."

Standard & Poor's, which already had B&B under review, said the latest developments were "a further blow for B&B's credibility and financial flexibility."

"The withdrawal of TPG suggests reduced confidence in B&B's business model from the prospective largest shareholder, and in our view B&B is increasingly constrained," said Standard & Poor's credit analyst Nick Hill.

However, he said the apparent support of major shareholders for the latest plan was positive.

In May, the company announced a rights issue at 82 pence per share to raise 300 million pounds ($596 million).

That was revised in June after B&B reported that pretax earnings, excluding one-time costs, were down 48 percent to 56 million pounds ($110 million) in the first four months of the year. Continued...