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Virgin consortium emerges as preferred bidder for troubled Northern Rock
26/11/2007. Source: AltAssets. 
 Northern Rock has announced that its board has decided to take forward discussions 'on an accelerated basis' with a consortium comprising Richard Branson's Virgin Group, WL Ross & Co, Toscafund Asset Management and First Eastern Investment Group.
Under the Virgin consortium's indicative proposal, £11bn will be repaid to the Bank of England at completion of the transaction. The remainder of the loan from the Bank of England, which reportedly totals up to £25bn, would be repaid in full within a few years.
The Virgin consortium plans to inject £1.3bn of new cash into Northern Rock. Of the cash amount half will be provided by the consortium and the other half will be raised through an offer to existing holders on the relevant record date of new ordinary shares in Northern Rock on a pro rata basis at a price of 25 pence per new ordinary share.
The Virgin empire's Virgin Money, with an implied value of £250m, would also be injected into Northern Rock and the struggling UK mortgage lender would be re-branded under the Virgin brand.
Following completion of the transaction, the Virgin consortium would hold no more than 55 per cent of the company.
Under the Virgin consortium proposal a new management team will be put in place, led by Sir Brian Pitman (formerly chairman and CEO of Lloyds TSB Group) as chairman and Jayne-Anne Gadhia as CEO, and supported by Sir George Mathewson (formerly chairman of The Royal Bank of Scotland) as senior advisor.
AIG, previously part of the consortium, would not put in equity but would offer credit insurance to help raise debt, according to Reuters.
J.C. Flowers & Co and Cerberus are among the other groups reportedly interested in Northern Rock.
Copyright © 2007 AltAssets
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