Rock suitor outlines bid


Rock suitor outlines bid
An investment firm headed by the former chief executive of lender Abbey has outlined details of its bid for troubled bank Northern Rock.

Olivant, which hopes to secure a large minority stake in the Newcastle-based lender, says it intends to retain the Northern Rock brand if successful.

In a statement today the company also confirmed it would immediately seek to repay between £10 billion and £15 billion of the cash Northern Rock has borrowed from the Bank of England on the completion of any deal.

The investment group said it would seek to repay the lender's remaining debt to the central bank, thought to total around £25 billion to date, by the end of 2009.

Northern Rock was forced to borrow emergency cash from the Bank of England in September, after being unable to secure funds on the wholesale money markets due to a global credit crunch. The move prompted the first run on a British bank in almost 150 years.

A consortium led by Sir Richard Branson's Virgin Group, which has been named as Northern Rock's preferred bidder, has said it will immediately repay £11 billion of the cash borrowed by Northern Rock if its own takeover offer is successful.

Under the Virgin bid, which has been dubbed too low by some Northern Rock shareholders, the bank's brand would be brought within the existing Virgin Money business and a fresh management team put in place.

Olivant says it would also restructure the company, seconding its chairman and veteran troubleshooter Luqman Arnold to Northern Rock's board and placing the lender under his leadership, if its approach were successful.

Mr Arnold is recognised in the City as having turned around the fortunes of high street bank Abbey before it was sold to Spain's Banco Santander in 2004.

The bid put forward by his current company also involves plans for Northern Rock to raise up to £800 million through a rights issue and an equity subscription by Olivant.

Commenting on the bid, Mr Arnold said: "It is time for all stakeholders to work together to ensure prompt and full repayment of the Bank of England facility and to set Northern Rock back on course for a successful and independent future."

Meanwhile separate reports claim another of Northern Rock's suitors has withdrawn from the race to secure the bank.

US private equity firm JC Flowers has written to the Treasury to confirm its decision, according to the Financial Times and the Daily Telegraph. It is claimed the company pulled out of the bidding process after being unable to agree a deal acceptable to it and the government, with taxpayers' cash currently propping up Northern Rock.

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