Cerberus’ Northern Rock bid supported by GMAC

by Gill Montia

Story link: Cerberus’ Northern Rock bid supported by GMAC

GMAC, the US financial services group, is supporting Cerberus, the US private equity firm, in its plans to bid for Northern Rock.

Cerberus owns a 51% share in GMAC, which holds around £140 billion in assets, and GMAC’s involvement with Cerberus will give any bid additional weight.

However, Virgin remains a strong competitor in resolving the future of Northern Rock.

Last week, it continued talks with its partners, which include the hedge fund Tosca and the US insurance group, AIG.

It is reported that Dubai International Capital is also close to signing up as another of Virgin’s equity partners.

At the same time, JC Flowers, the private-equity group, already has around £15 billion of funding in place to support its bid.

It has also announced the names of senior executives that will be put in place if it succeeds in buying the bank.

Northern Rock’s management has been warned by the Chancellor of the Exchequer, Alistair Darling, that they must make haste to settle the bank’s future, as the Bank of England’s lending facility is limited.

At the end of last week, Northern Rock had borrowed over £20 billion from the Bank of England and Mr Darling has put in place a deadline of February next year to formalise proposals on Northern Rock’s future.