Virgin Submits Proposal for N. Rock, Olivant Quits


A consortium led by Richard Branson's Virgin Group has submitted a proposal that will recapitalise and refinance embattled British mortgage bank Northern Rock, it said on Monday.

The consortium confirmed it planned to inject 1.25 billion pounds ($2.47 billion) of new equity capital into the bank, made up of 500 million in cash from the consortium, its Virgin Money business, worth 250 million, and a rights issue of 500 million pounds, priced at 25p per share.

"We have made a proposal that seeks to stabilise the company and rebuild it as a trusted and thriving institution under the Virgin brand with a long-term future," Brian Pitman, proposed Executive Chairman of Virgin Bank, said.

Olivant Quits Race

Investment firm Olivant quit the race to rescue ailing British bank Northern Rock on Monday, saying it was unable to put together a proposal that met its investment criteria and that of other stakeholders.

Former investment banker Luqman Arnold, head of Olivant, said in a statement: "Despite working intensively, we have been unable to formulate a value creation proposal which meets our investment criteria whilst also respecting HM Government's proposed financing terms and the interests of other stakeholders in the company."

Olivant's withdrawal leaves billionaire Richard Branson's Virgin Group and an "in-house" management team as the only suitors expected to submit proposals by today's government set deadline.

'In-House' Offer

Northern Rock said it had submitted an "in-house" proposal to restructure the bank to compete with any other offers.

Under the proposal it would raise at least 500 million pounds ($988.5 million), reduce the assets held in its balance sheet and reorganise its operations.