UPDATE: Northern Rock injunction on leaked memo

Source: Exec Digital UK

Date :14/11/2007 09:07:01

The troubled bank said today that it has obtained an injunction preventing publication of information contained in a memo sent to parties interested in a potential takeover.

A briefing memo sent to potential buyers of Northern Rock by its advisers showed it could still owe as much as £5.9 billion ($12.2 billion) to the Bank of England in 2010.

The Financial Times yesterday published what it said was a document prepared by the bank's advisers, Merrill Lynch, Citigroup and Blackstone Group.

Predictions

The memorandum - referred to by the codename of "Blackbird” - outlines various scenarios for the future of Northern Rock and showed how the lender would perform if it were refinanced in its present form, or if its existing assets were split in two different ways.

If the whole company were acquired, the Bank of England would continue to provide support to Northern Rock until 2010, when the bank could still be drawing down £6 billion.

But the documents said it could have increased its profits to £643 million by then, up from a projected £143 million in 2008.

Plummet

Shares in Northern Rock, which set a record 1,258p high earlier this year, closed at 152p yesterday to value the business at about 640 million pounds.

In a statement today, the bank explained its reasons for acquiring the injunction:

"Further speculative reporting based on the illustrative information in the memorandum may jeopardize the complex discussions and negotiations taking place in connection with its strategic review," it said.

Investment company Olivant, U.S. buyout firm JC Flowers, a consortium led by Richard Branson's Virgin Group and Wall Street’s Cerberus are all reported to be interested in Northern Rock.

November 14, 2007