Abbey ex-boss woos Rock small investors
Would-be Northern Rock saviour Luqman Arnold is wooing small investors in the deeply indebted mortgage lender in an attempt to gain widespread support for his plan to take charge of the troubled bank.
Angel face?: Investors appear impressed with Luqman Arnold's plans for a management buy-in at Northern Rock
News of Arnold's campaign came as rumours swept the City that Alliance & Leicester could be the next Northern Rock.
Shares in A&L were suspended in early trading after a sharp fall in the price, with dealers attempting to guess which other lenders may have been helped out in the Bank of England's multi-billion-pound bailout.
Investors in A&L, down 33p at 615p after trading resumed, were spooked by the apparent parallels with Barclays, whose shares were suspended for a time a week ago ahead of this week's revelations of its exposure to US subprime lending.
Northern Rock shares fared little better down 2.5p at 132.2p, just a tick above their all-time low, as the deadline for prospective bidders looked set to pass with little in the way of firm offers on the table.
Arnold, the investment banking veteran known for his stint running Abbey, is advocating a management buy-in to save Northern Rock through his vehicle Olivant.
It emerged today that Arnold has been wooing the Northern Rock ShareholdersAction Group, which claims to speak for the Rock's 180,000 small investors who hold about 20% of the company. After meetings with Arnold this week, Roger Lawson of the UK Shareholders' Association, which has helped form the action group, said today: 'We were favourably impressed.'
Although Arnold declined to give full details of Olivant's plans, Lawson added: 'Our view for some time has been that there are unlikely to be any bids for the company that are acceptable to ordinary shareholders, and Mr Arnold seems to agree.'
Arnold's plan is to parachute in a new management team to turn it around in return for a 20% equity stake. Despite talk of there being up to eight potential proposals for the former building society, advisers to the company are preparing themselves for a long weekend as would-be rescuers continue to play hardball with the Chancellor.
Merrill Lynch, Citigroup and Blackstone had asked for indicative proposals for the bank to be lodged with them by today.
But several of the bidders have demanded more clarity from the Government over the Bank of England's loan to Rock, which last night hit £22bn. In particular, they want the rising interest bill on that debt, which is already said to be about £2bn, to be waived if a takeover succeeds.
American private-equity groups JC Flowers and Cerberus have made proposals, as has Virgin Money. But none is believed to offer much to shareholders, many of whom are sitting on large losses. The bids have been described as 'aggressively low'.
The sales memo for Northern Rock, leaked to the Evening Standard, suggested either an outright sale, a takeover of the mortgage book alone or a carve-up.
Most watched Money videos
- Ford tests traffic light tech that could change the commute forever
- How will the looming recession affect YOU?
- Ray Massey gets exclusive access to the new green Rolls-Royce Spectre
- Watch the BANNED Land Rover ad that 'misrepresented' parking sensors
- 1990's advert for the Vauxhall Cavalier Turbo 4x4
- Bentley brings the comfort of a limo to their popular SUV
- Rustbucket Mercedes-Benz roadster sells at auction for almost £40k
- Ford unveils electric version of Britain's best-selling vehicle
- Renault previews new family car powered by a hydrogen-electric system
- A rare 1955 Mercedes 300 SLR Coupe being driven at Goodwood
- RM Sotheby's has sold a Mercedes for a record £115million
- Land Rover unveils its new £80,000 Range Rover Sport