Olivant Advisors Ltd - Statement re Northern Rock

Fri Dec 7, 2007 2:01am EST

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RNS Number:4077J
Olivant Advisors Ltd
07 December 2007

7 December 2007

                     Statement regarding Northern Rock plc

Olivant, an independent investment group, announces that it has submitted today
further detailed materials in support of its indicative proposal to the Board of
Northern Rock plc ("Northern Rock" or the "Company") of 16 November 2007.

Consistent with its original proposal, Olivant continues to maintain that the
stabilization and restructuring of Northern Rock should, under the leadership of
Luqman Arnold and with the expert assistance of Olivant, be a Company-led

Overview of further details of Olivant's indicative proposal:

• Olivant seeking to join with the Company both as a significant
  shareholder and through immediate introduction of expertise appropriate to
  Northern Rock's current position

• Implementation of a restructuring strategy to scale Northern Rock to
  its natural funding and operational capacity

• Luqman Arnold, Chairman of Olivant, to be seconded to the Company's
  board and appointed Executive Chairman of Northern Rock with immediate effect
  until full repayment of the Bank of England facility

• Kirk Stephenson, Chief Operating Officer of Olivant, to be seconded to
  the Company's board and appointed as Non-executive Director of Northern Rock
  with immediate effect

• Equity capital of £600 million to £800 million to be raised by
  Northern Rock through a transferable rights issue and an equity subscription 
  by Olivant

• Rights issue to be arranged by Northern Rock to raise between £450
  million and £650 million at or around the prevailing market price at the time 
  of subscription, scaled appropriately for the Company's stabilization and
  successful strategic repositioning

• Receipt by Olivant of non-binding letters of commitment from five
  existing institutional shareholders currently representing approximately 23% 
  of the shareholder base in Northern Rock to take up pro rata rights and
  sub-underwrite approximately £440m of a rights issue at or around the current
  market price

• Receipt by Olivant of support letters from retail shareholder groups

• Equity subscription by Olivant of £150 million in cash for a minority
  stake in Northern Rock to be made on completion of the rights issue and at a
  price equal to the rights issue subscription price

• Olivant also to be issued with high premium warrants over 7% of the
  enlarged equity capital of the Company

• Debt financing to be arranged by Northern Rock with the assistance of
  Olivant's capital markets team; initial refinancing facility to enable £10
  billion to £15 billion of the existing Bank of England Liquidity Support
  Facility to be repaid on completion of the rights issue and Olivant equity
  subscription; size of the initial repayment subject to prevailing market

• Repayment of remaining Bank of England Liquidity Support Facility by
  the end of 2009 through active operational management, accelerated through
  external market financing

• Agreement to be negotiated with HM Government on process and basis for
  ultimate withdrawal of current guarantee arrangements for depositors

• The Company to issue to the Bank of England high premium warrants on
  the same terms as Olivant over 5% of the enlarged equity capital of the 

• Olivant team to start with immediate effect; the debt and equity
  financing to be implemented by the Company as soon as practicable alongside
  Olivant equity subscription

• Northern Rock brand retained

• As the Olivant proposal does not involve a change of control, Olivant
  would anticipate that the Company would respect established arrangements with
  its stakeholders, such as the Northern Rock Foundation and Unite; annual
  contribution to the Foundation ordinarily to be 5% of pre-tax profits or £10
  million, whichever is the greater.

Luqman Arnold, Chairman of Olivant, said: "It is time for all stakeholders to
work together to ensure prompt and full repayment of the Bank of England
facility and to set Northern Rock back on course for a successful and
independent future. We believe that this proposal satisfies the requirement of
all stakeholders, including the Tripartite Authorities' principles for assessing
Northern Rock proposals, whilst confirming the broad and constructive support
from shareholders."

                                    - Ends -

Brunswick Group LLP
Mike Harrison/Anita Scott/Craig Breheny/Ash Spiegelberg   +44 (0) 20 7404 5959

Ken Costa                                                 +44 (0) 20 7187 2000

Lazard & Co., Limited, which is authorized and regulated by the Financial
Services Authority in the United Kingdom, is acting for Olivant in connection
with the proposal referred to above and no-one else and will not be responsible
to anyone other than Olivant for providing the protections afforded to clients
of Lazard & Co., Limited or for providing advice in relation to the proposal
referred to above.

Notes to editors:

Olivant is an independent investment group with substantial and permanent
shareholder capital. It invests solely in the financial services sector.
Positioned between typical financial and strategic investors, it offers the
skill sets of a strategic investor but the independence and lack of conflicts of
interest of a financial investor. Olivant's partners bring an operational
approach aligned with incumbent management teams. Olivant's shareholders
comprise a number of significant financial services institutions and
sophisticated family offices.

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            The company news service from the London Stock Exchange

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