Sir Richard Branson is to put £200m of his own money into the rescue of Northern Rock as part of the deal he sealed during a weekend call from his private Caribbean island. Financial Times, The Times, Daily Telegraph, Independent, Guardian
Northern Rock, which owes more than £20bn to the Bank of England, will now accelerate talks with Virgin, which plans to repay £11bn of the loan upfront and the rest in three years.
Shareholders could be left holding just 6% of Northern Rock if they do not subscribe to a share issue that is central to Virgin’s plans to rescue the troubled mortgage bank, it emerged yesterday.
Under Sir Richard Branson’s proposed takeover, the group is hoping to raise £650 million of its £1.3 billion investment by offering to sell new shares at a highly discounted rate of 25p a share.
Virgin could earn up to £200m in fees from Northern Rock by allowing the stricken mortgage lender to use its brand.
The City dismissed it as an attempt to buy a large financial institution on the cheap.