Northern Rock secures injunction

14-11-2007

Northern Rock secures injunction
Beleaguered lender Northern Rock has obtained an injunction barring the disclosure of information sent to its potential suitors.

The move comes after a newspaper published supposed details of a memorandum sent to prospective Northern Rock buyers on its website.

Northern Rock, which said it had been reported the memo included "certain illustrative transaction structures and financial information", confirmed it had taken action in order to "protect the integrity" of the details it had supplied to potential purchasers.

Northern Rock added it also wanted to ensure it could complete the strategic review it is currently conducting of it business, so as to achieve the "best outcome" for the company, its shareholders, customers and employees.

"The company believes that further speculative reporting based on the illustrative information in the memorandum may jeopardise the complex discussions and negotiations taking place in connection with its strategic review," Northern Rock stressed in a statement today.

Those eyeing up Northern Rock have until Friday to declare their interest in the troubled lender, which was at the centre of the first run on a British bank in almost 150 years in September.

Northern Rock savers rushed to withdraw their cash from the bank after it emerged the company had asked the Bank of England for an emergency loan, due to liquidity problems prompted by the ongoing global squeeze on credit.

The government was subsequently forced to guarantee the savings of Northern Rock customers, in order to restore confidence in the UK banking system.

Earlier this week an investment group headed by the former boss of Abbey declared it was set to propose a rescue plan for Northern Rock.

Olivant said its chairman Luqman Arnold would work "intensively" with Northern Rock's board as part of the proposed move, which would involve the investment firm taking a minority stake in the lender.

Under such a proposal the bank could be spared from a complete sale or break-up of its operations.

Meanwhile US private equity group JC Flowers and a consortium led by Sir Richard Branson's Virgin group have already both indicated they are considering tabling official bids for Northern Rock.

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