Northern Rock saga continues as yet more suitors step up
24 January 2008 / by Verity G
Several more contenders in the Northern Rock rescue attempt have stepped forward to compete with current favourites, Virgin and Olivant, according to Treasury advisors, Goldman Sachs.
Reports suggest that a number of new parties have shown an interest including familiar names such as Cerberus and JC Flowers who both withdrew interest before Christmas, while former front-runner, Lloyds TSB, has also allegedly requested further information, prompting speculation of a fresh bid.
The renewed interest in the beleaguered bank is thought to have been spurred by the financial funding being offered by the Government, although time is running out as the February 4 deadline set by Goldman Sachs fast approaches.
The rescue package proposal outlines the Government agreement to underwrite around £30 billion in Northern Rock loans for at least three years while bidders will have to decide on feasible amounts to be paid to the Government in return for underwriting the bond scheme as well as the length of the guarantee while at the same time ensuring investors are sufficiently mollified, in particular, Richard Branson’s Virgin.
As investors and prospective suitors thrash out the finer details of their proposals, Prime Minister Gordon Brown has been forced to defend Labour's plans for the bank, in what has been a series of heated debates in the House of Commons.
Gordon Brown has said he believes that the Northern Rock fiasco will return profits for the taxpayer after it was revealed that the Government stands to take a share of any future returns that a private company makes after taking control of the bank.
Tory Leader David Cameron has accused the Prime Minister of creating a "dodgy deal" comparing him to Only Fools and Horses character 'Del Boy'.
The hope is that an agreement can be reached to avoid the risk of turning over Northern Rock to state ownership, in which case, Ron Sandler, the ex-Lloyds of London head would take the reigns, along with his hand-picked deputy, Ann Godbehere.
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