Olivant makes offer for Northern Rock, JC Flowers pulls out
by Kay Murchie
Investment group, Olivant, run by Luqman Arnold, the City stalwart and former Abbey chief executive, has submitted a rescue proposal for Northern Rock today as private equity firm JC Flowers, withdraws from the bidding.
JC Flowers said it could not agree a deal acceptable to it and the Government.
Olivant’s offer would enable Northern Rock to quickly repay between £10 billion and £15 billion pounds of Bank of England loans. The investment group aims to repay the BoE loans in full by the end of 2009.
Olivant added that it proposes for Northern Rock to raise between £600 million and £800 million through a rights issue and an equity subscription by Olivant. The rights issue would raise between £450 million and £650 million and would be pitched at or around the prevailing market price at the time of subscription.
Olivant said if it is successful, the Northern Rock brand will be retained and they have no plans to sell any of the banks assets.
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. He added that we believe that this proposal satisfies the requirement of all stakeholders, including the Tripartite Authorities’ principles for assessing Northern Rock proposals, whilst confirming the broad and constructive support from shareholders.
A consortium led by Sir Richard Branson’s Virgin Group was announced to be the preferred bidder for the crisis-torn bank.The Virgin group previously said it would immediately repay £11 billion of the BoE loans and rebrand the bank under the Virgin name.
Experts in the City who have followed career of Sir Richard Branson over the last 4 decades know that there are incidents which pose serious questions about his credentials to front a bank in which more than £20 billion of taxpayers’ money will remain at risk.
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