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Credit Suisse shares sink to near rights offering price as volatility persists

Credit Suisse (NYSE:CS) shares extend their slump, falling to as low as CHF 2.67 (US$2.84) in Zurich trading on Thursday, not far from the price that investors will pay for hundreds of millions of new shares expected to be issued under its rights offering. Its American Depositary shares sank 8.2% in U.S. morning trading to ~$3.01 (CHF 2.83).

The rights offering, along with a private placement to qualified investors, including Saudi National Bank, will raise over $4B of new capital that the company will use to implement its massive restructuring plan. After years of missteps and scandals, Switzerland's second-largest lender is seeking to shed its riskier businesses, clean up its reputation, and streamline operations to its strongest business lines.

Last week, the company disclosed terms for the rights offering that's expected to issue more than 889M new shares at a price of CHF 2.52 each. The rights started trading on Nov. 28.

At a conference in London, Credit Suisse (CS) Axel Lehman said he expects the stock to stabilize after the rights issue is completed and the new shares start trading on Dec. 9, Bloomberg reported. While he said he couldn't predict what will happen with the share price, "we will have a little bit of volatility, but then I think it will start to somewhat stabilize and bottom out, and then we go from there," he said.

Reflecting its woes, Credit Suisse's (CS) stock has plunged 82% in the past five years and has lost 70% in the YTD.

As the company's shares declined, it increased the number of shares it expected to issue from its original Oct. 27 announcement.