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| Version 7 | Version 8 |
|---|---|
| Virgin named as top Rock suitor | Virgin named as top Rock suitor |
| (10 minutes later) | |
| Northern Rock has confirmed that it has chosen a consortium led by Sir Richard Branson's Virgin Group as its preferred buyer for the stricken bank. | Northern Rock has confirmed that it has chosen a consortium led by Sir Richard Branson's Virgin Group as its preferred buyer for the stricken bank. |
| Virgin's offer - which has been backed by the Treasury - includes an immediate repayment of £11bn of the £25bn the bank owes the Bank of England. | Virgin's offer - which has been backed by the Treasury - includes an immediate repayment of £11bn of the £25bn the bank owes the Bank of England. |
| If the bank's shareholders block the deal it could be nationalised or be taken into administration. | If the bank's shareholders block the deal it could be nationalised or be taken into administration. |
| Northern Rock hit funding difficulties after world credit markets dried up. | Northern Rock hit funding difficulties after world credit markets dried up. |
| New name | New name |
| The Virgin offer proposes an injection of £1.3bn of new cash into the Rock, with half of that money coming from the consortium. | The Virgin offer proposes an injection of £1.3bn of new cash into the Rock, with half of that money coming from the consortium. |
| Branson could not profit from our misery, even though some will doubtless accuse the Treasury of using our money to help him make spectacular potential long-term gains The BBC's Robert Peston Read Robert Peston's blog | |
| The remainder would be raised through an offer to existing Rock shareholders to buy new shares for 25 pence each. | The remainder would be raised through an offer to existing Rock shareholders to buy new shares for 25 pence each. |
| On that basis, Virgin values Northern Rock at £200m, considerably less than its current market value of £362m. | On that basis, Virgin values Northern Rock at £200m, considerably less than its current market value of £362m. |
| Virgin would end up with 55% of the new company, leaving current shareholders with 45%. | Virgin would end up with 55% of the new company, leaving current shareholders with 45%. |
| The new business would be rebranded Virgin Money, though it would keep its existing stock market listing. | The new business would be rebranded Virgin Money, though it would keep its existing stock market listing. |
| Virgin will then repay the remaining £14bn of Treasury loans over the next three years. | Virgin will then repay the remaining £14bn of Treasury loans over the next three years. |
| 'Difficult times' | |
| The consortium has also informed the Rock that it has no current intention of making "any material reduction" in employment in Northern Rock. | The consortium has also informed the Rock that it has no current intention of making "any material reduction" in employment in Northern Rock. |
| It also intends to continue operating the business from Newcastle-upon-Tyne. | |
| Northern Rock chairman Bryan Sanderson, described the proposed deal as "very good news" for the bank. | |
| "Over the last few weeks and months we have looked at the issues from the perspective of all stakeholders," he said. | |
| "I am grateful for the support that we have had from customers and employees who have stayed loyal to us during these difficult times - and pleased that a solution that firmly restores the company's prospects has been identified. | |
| "Furthermore our retail depositors can be fully reassured that the government has said it will ensure savers' money is safe whatever the outcome." | |
| Of the ten expressions of interest from financial institutions in taking control of Northern Rock, Virgin's was said to be preferable because it offered the best deal to the beleaguered lender's shareholders. | |
| If big Rock investors, which include hedge funds RAB Capital and SRM Global, are unhappy with the terms offered by the Virgin consortium and resist the deal, it could be nationalised or be taken into administration. |