Deadline day for Northern Rock suitors

Published on Monday 4 February 2008 09:28

INVESTORS were today expected to submit formal bids to take control of crisis-hit mortgage lender Northern Rock, with a Government deadline for bids expiring tonight.

As many as three bids are expected. Sir Richard Branson’s Virgin-led consortium and investment firm Olivant likely to table their plans for the company, while a proposal for a management buyout also possible.

The favourite to win control is Olivant, led by former Abbey chief executive Luqman Arnold. Olivant wants to parachute in a management team immediately to turn around the business.

Virgin plans to merge Northern Rock with its existing Virgin Money business and inject 1.3 billion of new equity into the ailing firm. Northern Rock’s in-house management is also said to be preparing a potential rescue, which would see Paul Thompson, the former chief executive of insurer Resolution, take over as chief executive, if it is successful.

Any potential deal must be approved by the “tripartite authorities” of the Treasury, Financial Services Authority and the Bank of England, which are likely to decide on a preferred bidder by the end of February.

Northern Rock owes the Treasury around 24bn.