Virgin Group ‘Confident’ Of Deal To Secure Rock

by Stewart Douglas

Story link: Virgin Group ‘Confident’ Of Deal To Secure Rock

The face of the Virgin Group Sir Richard Branson has today suggested that he is confident he could still reach agreement with the government to acquire the troubled mortgage lender Northern Rock, pending the details of the financing arrangements proposed by the government, following a week of speculation that the bank could be nationalised.

The Virgin Group bid is still in contention for the takeover of the lender, and is anticipating an approach from investment bank Goldman Sachs, who are currently acting as advisers to the government over the Northern Rock situation.  However it still remains to be seen what funding options will be put in place for the deal, which is currently instrumental in determining any commercial resolution.

The bank had been seen as a strong takeover target, attracting the interests of a number of private equity firms following its liquidity problems in the wake of the sub-prime sector collapse.  However as a result of the credit crunch, it had been proposed until now that there may be no way for the relevant funds to be raised, making nationalisation appear to be the only remaining option.

However today’s move would perhaps indicate that there may still be a commercial resolution to the Northern Rock situation, which the government has said all along would be a preferable solution as opposed to nationalisation, despite the fact that many analysts had already suggested nationalisation may be the only option.

Whilst the government have said that nationalisation still remains a real possibility, leading private equity bids from the Virgin Group and Olivant amongst others could still come to fruition, with Goldman Sachs currently in discussions with the potential buyers to attempt to find a commercial compromise.