Rock warns on bids

NEWCASTLE-BASED mortgage lender Northern Rock has warned of more shareholder misery after admitting rescue proposals were “materially below” the firm’s current value.

NEWCASTLE-BASED mortgage lender Northern Rock has warned of more shareholder misery after admitting rescue proposals were “materially below” the firm’s current value.

The group said it had not received a full offer for the business, with would-be suitors interested in buying parts of the business or injecting cash into the lender.

Northern Rock - valued at more than £5bn in February - is currently worth just £558m.

The group said: “The value to shareholders from any of the proposals remains highly uncertain and will be dependent, among other things, on when and if there is an improvement in market conditions.”

The group was forced to seek emergency funding from the Bank of England two months ago after soaring costs - and has borrowed more than £20bn so far.

A Treasury statement said those parties interested in Northern Rock “should not assume” Bank of England funding would be available beyond a sale or the expiry of the facility in February, but added it was “willing to discuss” any proposals which envisaged an ongoing role for the authorities.

Chancellor Alistair Darling is set to outline the Government’s principles for the sale of the troubled lender in a statement to Parliament today. His advisers are said to be in talks with Brussels officials over ways to continue the Bank of England’s emergency loan without breaking European Union rules.

Northern Rock chief executive Adam Applegarth and a number of non-executive directors announced their resignation on Friday as the bids deadline passed.

Mr Darling may announce any successful bidder can keep the loans already made to stricken Northern Rock, thought to total around £25bn.

It is understood the “statement of principles” will focus on three basic points - any sale maintains the financial stability of the UK, protects depositors in the bank and protects the taxpayer.

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