Northern Rock has confirmed it has chosen the Virgin led consortium as its preferred buyer, despite Virgin’s offer valuing Northern Rock at £200 million – considerably less than the £362 million the bank is valued at. With Northern Rock owing the Bank of England over £25 billion in emergency funding, Virgin’s offer includes an immediate repayment of £11 billion, with the remainder of the money to be repaid over the next three years.
Virgin’s offer also includes a cash injection of £1.3 billion into Northern Rock. Half of that money belongs to the consortium, which includes the American International Group, whilst the rest would be raised in a share issue in which existing shareholders could buy new shares for 25p each.
The offer would see Virgin own 55% of the new company, with current shareholders owning the remaining 45%. The business would be rebranded Virgin Money but would maintain its existing stock market listing, which recently saw a rise in share prices of 48 per cent to 127.4 pence following the news of the Virgin offer.
Virgin Named as Bank's Preferred Buyer
Virgin Named as Bank's Preferred Buyer
Wed, 05 Dec 2007
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