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Verbal Volleys Fly at EGM

Tuesday, 15 Jan 2008 | 8:16 AM ET

Northern Rock threatens to withhold coffee unless angry shareholders wrap things up on time. Metaphors of dogs on leashes and captains of ships fly, as a beleaguered chairman faces the silky eloquence of activist investors.

After an hour and a half at the Northern Rock EGM and there was blood everywhere.

The verbal artillery had been flying and Northern Rock Chairman Bryan Sanderson had been driven to pleading for fewer questions from shareholders. In fact, he even proposed cajoling stake holders to withhold their ire by offering beverages ONLY on the condition that they wrap up after two hours. Thereafter: no coffee, no biscuits.

Earlier the board had laid out its stall, telling all why they should vote down the proposals from the activist hedge funds. But the silky eloquence of RAB's Philip Richards and then the "Honest Jon" patter of SRM's Jon Wood had the gray vote swooning.

Wood especially sought to right the impression that he was a poker-playing gambler, a bluffmeister extraordinaire and out for only a quick buck.

"I don't even play poker," Wood said. "And I don't bluff and I've been a shareholder for eleven years." Wood spoke the language of a man seasoned by a hundred-plus corporate battles, telling his willing audience, Northern Rock board excepted, that it was not the time to panic.

This is not the time to sell assets on the cheap, he added. Togetherness was all the rage as Curzon Street's finest held the floor. Then came the curve balls from the massed shareholders. By and large, it seemed to me that the shareholders attending were angry and it was the board that just had to take the verbal punishment. After all losing 93% of your investment value in one year buys you a little time on the rostrum, no?

One shareholder told us about his dog, which needed to be kept on a short leash. He said the hedge funds' proposals would provide him and his peers with just such a short leash for the board. Sanderson bit back at this point, referring to himself as the captain of a ship who just would not be able to navigate the storm if you took away half his navigational instruments ... all very Titanic? No, just a thought.

Another blamed the media for the escalation of the crisis. I looked away at this point. You got the wrong man there guv'nor, honest. The barrage went on. An angry stakeholder then pointed out that it wasn't a question of nationalization or not. He said that it was already nationalized in effect to the tune of 1500 pounds ($3000) for every UK taxpayer.

Then, for me, came a point from the floor which summed up the whole saga. An enthusiastic shareholder, mortgage holder and depositor to boot made the point that Northern Rock was a wonderful institution that deserved the biggest support. After all it was Northern Rock who helped his nephew onto the housing market when no one else would lend him a penny.

That's kind of how this whole crisis started, isn't it?