Northern Rock shares hit all-time low

by Gill Montia

Story link: Northern Rock shares hit all-time low

Northern Rock shareholders saw the value of their investments fall to an all-time low today.

Shares in the bank fell 16.2%, to 111.1p, valuing the company at £467.9 million.

The mortgage bank, which has borrowed £24 billion from the Bank of England since its liquidity crisis came to light in September, has described the proposals from those interested in buying the business as “materially below” its market value.

Ten expressions of interest are believed to have been received by last Friday’s informal deadline for bids, although further proposals are expected in the next few days.

Virgin Money is known to be among the bidders, along with JC Flowers, Cerberus and Olivant, the investment company headed by Luqman Arnold, the former chief executive at Abbey National.

Under EU rules, the Government has a deadline of February 2008 to wind-up its support for Northern Rock and the Treasury has today stated that “interested parties should not assume at this stage that the current Bank of England loan facilities will be available beyond either any sale or the expiry of the facilities in February”.

Northern Rock has added that in addition to holding talks with bidders, it continues “to be engaged in discussions with refinanciers to explore refinancing and/or reorganisation solutions for the company.”

Investment banks Citigroup and Merrill Lynch are advising the bank, together with Blackstone, the private equity firm.