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Context of 'October 12, 2007: Virgin-Led Consortium Announces Bid for Troubled Bank Northern Rock'

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A consortium led by Sir Richard Branson’s Virgin Group puts forward a proposal to rescue troubled British mortgage lender Northern Rock. Under the plans, Northern Rock would keep its stock market listing, but would be rebranded as Virgin Money. (Daily Telegraph 2/26/2008; BBC 8/5/2008)

Troubled British mortgage lender Northern Rock names a consortium headed by Sir Richard Branson’s Virgin Group as the preferred bidder to purchase it. The bank is up for sale because it has been hit hard by the credit crisis and requires new funding. The Virgin offer includes the immediate repayment of £11 billion ($22 billion) of the £25bn ($50 billion) Northern Rock has borrowed from the Bank of England to help it through the crisis. The remainder is to be paid over the next three years. RAB Capital, which is the second-largest shareholder in Northern Rock with a stake of about 6.7 percent, says it will oppose the move from Virgin. (Daily Telegraph 2/26/2008; BBC 8/5/2008)

Sir Richard Branson’s Virgin Group submits a bid to take over the ailing British mortgage giant Northern Rock. Another bid is submitted by the bank’s own board of directors. These are the only two bids submitted by the deadline, as all the other potential buyers have already dropped out. (Daily Telegraph 2/26/2008; BBC 8/5/2008) Under the terms of its rescue plan, Virgin would inject £1.25 billion (about $2.5 billion) into the bank and take a stake of 55 percent in it. The bank would be rebranded as Virgin Money. Northern Rock’s managers say their proposal—which gained shareholder backing—includes raising at least £500 million (about $1 billion), reducing the assets on the bank’s balance sheet, and reorganizing its operations. The managers criticize Virgin’s bid over the job cuts it entails, although Virgin says they are needed in order to rapidly repay the government money propping the bank up. (BBC 8/5/2008)


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