Butterfield Bank shares went on a roller-coaster ride in yesterday's Bermuda Stock Exchange (BSX) trading, on the day the bank announced details of its $130 million rights offering.

Shareholders who subscribe to the offering will be able to purchase shares for $1.21 each — the same price paid by institutional investors who bought $550 million of new Butterfield equity last week.

Only shareholders of record, as of 5 p.m. yesterday, were eligible to participate. Normally, a three-day settlement period is required for shares purchased to go on the record.

In a statement released by the BSX yesterday, Butterfield said eligible shareholders will receive, for each common share owned as of yesterday at 5 p.m., 1.113 transferable rights units to buy shares.

Each rights unit will entitle the holder to purchase 0.92308 common shares and 0.07692 contingent value convertible preference shares at a subscription price of $1.21 per rights unit.

In yesterday's morning trade, Butterfield shares opened at $2.40. The initial direction was up and by 10.40 a.m. the share price had reached $2.75, according to Bloomberg data.

From there, the stock price went downhill and by 11.40 a.m., Butterfield was trading at $1.75 — fully 36 percent lower than an hour earlier. By just after 12.30 p.m. the price had shot back up to $2.50.

Two trades of 900 shares apiece, each completed in the last 10 minutes of trading yesterday, sent the share price back down to $1.75 at the close.

As a result of last week's capital injection, the bank's new investors own approximately 82.5 percent of the bank. The rights issue will give shareholders to buy back some of that stake.

Should the rights issue be fully subscribed and shareholders snap up the full $130 million worth of equity, then those other than the new investors would own a 37 percent stake. The institutions including Carlyle Group and Canadian Imperial Bank of Commerce, who ploughed more than half a billion dollars into the bank last week, will not be eligible to take part in the rights offering. Neither will the bank's US shareholders.

The convertible preference shares mentioned were issued by the bank to facilitate last week's major investment and will convert to common stock in five years, or at the time the bank is sold, if that should happen inside five years. They also bear the same voting and dividend rights as common shares.

In a statement last night, Butterfield added that the rights prospectus will be mailed to eligible shareholders after the bank's annual general meeting on April 8.

The first rights offering information session will be held on April 8, immediately after the AGM, at the Fairmont Hamilton Princess's Harbourview Ballroom.

Dates for additional information sessions will be announced in due course.

The rights offering will be held open for 30 days and any units left unsubscribed will be made available to eligible shareholders and then to holders of the Butterfield preference shares that were sold in a $200 million offering last year.