Lone Star joins bidders for Northern Rock

The US buy-out firm, Lone Star, has become a potential bidder for the crisis-torn bank Northern Rock. It joins the expanding list of private equity rivals JC Flowers, Apollo and Blackstone in considering a bid for the bank.

Apollo and Blackstone have yet to meet the management or see the books of Northern Rock and Lone Star’s interest is rumoured to be in the early stages.

The interest arises from indications that the government is prepared to let Northern Rock carry on as a listed entity as it endeavours to find a buyer willing to take on the business in its entirety. None of the private equity groups have commented on the bids.

Merrill Lynch and Citigroup have been appointed to advise bidders who are likely to seek government support to help refinance the bank. Citigroup is in discussions to provide extra financing of up to £10 billion.

JC Flowers is currently examining Northern Rock’s books to assess the bank’s financial health in more detail and if the private equity group takes over the bank, it will continue its search for a chairman to lead the Northern Rock board.

It is believed that JC Flowers are to approach Sir Steve Robson who is a non-executive of RBS and Paul Myners, chairman of the Guardian Media Group and Land Securities.

Furthermore, Sir Peter Middleton, former chairman of Barclays, and Peter Ellwood, former chief executive of Lloyds TSB and chairman of ICI, have been approached but neither is thought to be interested in the position.

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