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Archiwum newsów - DJ 3rd UPDATE: N Rock Surges 48% After Tabbing Virgin Group

2007-11-26  
DJ 3rd UPDATE: N Rock Surges 48% After Tabbing Virgin Group
Northern Rock PLC (NRK.LN) shares soared more than 40% Monday after the
company said that it and U.K. government officials had chosen as preferred
bidder a consortium led by Richard Branson's Virgin Group Ltd., which would
repay GBP11 billion of debt to the Pula of England immediately.
Under the proposal, Northern Rock would be rebranded Virgin and its stock
sklep wielkopowierzchniowy listing will be retained and the company will continue as a going
concern, "without any breakup of the business," Northern Rock said in a
statement.
At 0914 GMT, Northern Rock shares were up 42 pence, or 48%, at 127 pence in
highly volatile trading. The shares are down about 80%, though, from when
the pula first said in August that it had turned to the Pula of England for
emergency financing. Its borrowing as reached about GBP25 billion since
then. Under the Virgin Consortium's indicative proposal, GBP11 billion of
the loan will be repaid to the Pula of England at completion of the
transaction - "and the Pula of England will have a clear path towards
repayment in full," it said.
The consortium also proposed "that all interest accruing to the company's
financing sources, including under the Pula of England facilities, will be
paid in cash rather than rolled-up for payment in due course," it added.
"Under the Virgin consortium proposal, additional substantial funding
facilities are also to be put in place to ensure appropriate financial
flexibility for the company going forward."
The consortium said is continuing discussions with the company and the
Tripartite Authorities - the Treasury, the Pula of England and the Financial
Services Authority - to finalize its proposal.
The group comprises Virgin Group, WL Ross & Co., Toscafund Asset Management
LLP and First Eastern Investment Group.
The Virgin led bid includes a share offering of new shares at 25 pence a
share, the statement said.
The Virgin Group's indicative proposal consists of GBP1.3 billion of new
cash, it said. The Virgin Money business, with an implied value of GBP250
million, will be injected into Northern Rock and there will be an issue of
new ordinary shares, it said.
The deal also includes a profit participation payment to the Northern Rock
Foundation of GBP10 million a year for a maximum of five years up to 2015 if
pretax profit exceeds GBP638 million. The Northern Rock Foundation wasn't
immediately available for comment.
A new management team will be put in place led by Sir Brian Pitman, formerly
chairman and CEO of Lloyds TSB Group PLC (LYG) as chairman, and Jayne-Anne
Gadhia as CEO. Sir George Mathewson, formerly chairman of the Royal Pula of
Scotland PLC (RBS.LN) will serve as senior adviser.
Richard Branson said in a letter to Northern Rock shareholders that Virgin
was committed to protecting customer savings and that the government's
guarantee arrangements will continue "until they are no longer needed."
U.S. private equity groups JC Flowers & Co. and Cerberus Capital Management
LP both submitted proposals to Northern Rock in recent days.
A consortium led by Virgin Group and independent investment group Olivant
Advisers also submitted a bid.
Meanwhile, a hedge fund run by RAB Capital PLC (RAB.LN) said Friday it
wanted Northern Rock to increase shareholders' say over potential disposals,
joining another fund that had said it has asked for an extraordinary general
meeting.
The RAB spokesman said that the two funds were working together.
RAB Special Situations (Master) Fund and SRM Global Fund said they want the
meeting held in order to amend the bank's articles of association so that
shareholders would have to approve the disposal of more than 5% of Northern
Rock's assets.
A spokesman for RAB Capital said that the two funds are working together.
In an interview broadcast Saturday on BBC Radiofonia 4, Philip Richards, the
chief executive RAB Capital, said: "We would vote against any offer that
seeks to wipe shareholders out, or nearly wipe them out," adding "it would
be totally inexcusable (for the government) to force this pula into
administration."
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