Virgin strengthens Rock team

The consortium led by UK billionaire Sir Richard Branson’s The Virgin Group has expanded its Northern Rock turnaround team, as expectant bidders await the results of a Goldman Sachs proposed financing solution.

The Virgin Group consortium, including US distressed specialist WL Ross, has recruited a treasurer, a finance director and a risk management director for its Northern Rock bid, according to a city source.

Northern Rock:
Virgin team

Peter McNamara, former managing director of Alliance & Leicester, will take the role of risk management director, the source said.

The team would not be strengthening its offer for the struggling bank until a financing proposal being prepared by US bank Goldman Sachs has been revealed, he said.

The UK government bailed out the struggling bank with loans after its finance supply lines were cut when the problems in the global credit markets began. Goldman Sachs is going to suggest to the UK government it change the more than £20 billion ($39.2 billion; €26.8 billion) of loans it has lent to Northern Rock into bonds, according to media reports.

UK investment firm Olivant is also awaiting the results of the Goldman Sachs document, according to a separate source.

Rebel Northern Rock shareholders, hedge funds SRM Capital and RAB Capital, with a near 20 percent stake, achieved a pyrrhic victory on Tuesday in its attempt to restrain the Northern Rock board from underselling shares in the bank or holding a fire sale of assets.

In the extraordinary general meeting demanded by the hedge funds shareholders voted in favour of a motion restricting the board from issuing further Northern Rock’s shares without shareholder consent. But the shareholders rejected the key motion tabled by the hedge funds, which attempted to restrict the board from selling Northern Rock assets without shareholder permission.

UK Prime Minister Gordon Brown said this week he will exhaust all options in an attempt to find a private sector solution for the bank. But he said nationalisation may be the only viable option in current market conditions, where limited financing is available from banks for the bidders.

Northern Rock’s share price was up 9.92 percent today to £0.69 at 10am, although this was still 26 percent below last week.