SRM Global Master Fd - Statement re Northern Rock : NON-REG

RNS Number:1803L
SRM Global Master Fund Ltd Partners
07 January 2008

Letter dated 2 January 2008

STATEMENT BY SRM GLOBAL FUND

Dear Shareholder

Northern Rock plc (the "Company") - Extraordinary General Meeting
15 January 2008.

By now it is likely that you will have received a communication from the
board of directors of the Company (the "Board") in connection with
business to be conducted at a proposed extraordinary general meeting of
the Company to be held on 15 January 2008. You will note that
resolutions 5, 6, 7, 8 and 9 have been proposed by the Company and that
resolutions 1, 2, 3 and 4 (the "Resolutions") have been proposed by two
of the Company's shareholders, RAB Capital and SRM Global Fund
("SRM")' The purpose of this letter is to set out the reasons why SRM
has proposed the Resolutions, why we consider that adoption by the
Company of the Resolutions benefits all shareholders and why we would
urge you and every shareholder to vote in favour of resolutions 1,2,3 and
4.

The Company's current difficulties result from its inability to access short,
term liquidity from the wholesale credit markets. This situation is not unique
to the Company. Many financial institutions throughout the world are also
currently experiencing difficulties in accessing operating finance from other
banks. As a result such institutions are being supported by central banks,
although none of the other financial institutions appears to be subject to the
media scrutiny or conditions relating to such central bank funding as the
Company. HM Government is merely fulfilling its role as lender of last resort
(in common with other central banks) and providing the financial support
required by the Company.

SRM believes the Company is a strong and viable business. It is nothing
like the "lame duck" that some would have you believe. We are
shareholders in a company that has true value in its assets, its brand and
its employees. Based on the Company's stated guidance regarding its
valuation, SRM believes that the Company's book value is materially in
excess of its current share price. SRM believes that any sale of assets
and/or business of the Company at below its true value is detrimental to
the Company and to its shareholders and would inhibit a timely and
complete repayment of the Bank of England facilities. By adopting a
proportionate approach, the Company's liquidity can be restored.
It is these beliefs which underpin the four resolutions which SRM has
proposed.

1 The Company currently finds itself in exceptional circumstances
and in these circumstances shareholders cannot rely upon the usual
safeguards (including those of seeking shareholder consent for
significant transactions). In these exceptional circumstances, there
is a risk that the Company may take material steps relating to its
future without first seeking the approval of its shareholders. SRM
has asked the Board to confirm to all shareholders that any
proposed action affecting the Company's business will be put to
shareholders for their approval. The Company and its advisers
have been unwilling to agree to this. Accordingly, exceptional
circumstances dictate that the Resolutions are required to ensure
that best practice is adhered to and that shareholders consent is
required for material transactions,

2 The Resolutions generally reflect best practice as to when the
Company should seek shareholder approval. However, as noted above the
exceptional circumstances the Company finds itself in may permit the
usual shareholder checks and balances to be sidelined. The Resolutions
aim at ensuring that shareholders are part of the decision making
process and that hastily ill thought out actions are not implemented
without their consent.

The Board has made its position known to you (including the Chairman's
recognition of our "positive motives"). We believe that the Board's
concerns are over-stated:

1 The Resolutions do not impede the Board's ability to discharge its
duties. Rather, they simply seek to assert that in transactions of
a material nature shareholder consent is obtained prior to executing
any proposal.

2 The Resolutions do not block or stop the Board from taking or
pursuing a course of action. Rather the Resolutions reflect good
corporate practice and seek to involve shareholders in material
decisions affecting the future of the Company and to ensure that
adequate checks and balances are in place. SRM believe that
Shareholder involvement is positive and constructive - it
strengthens the Company's position and ensures that proposals are
properly debated, considered, well prepared and rational. It will
prevent hasty action which would needlessly destroy value in the
Company.

3 Going to shareholders will not increase materially any timetable
upon which a deal is done as approvals will also need to be
obtained from the Tripartite Authorities and the work required to
obtain shareholder consent will usually proceed on a parallel path
such that shareholder consent will be sought at roughly the same
time that a proposal is being finalized.

4 Seeking shareholder consent for any material course of action will
strengthen the Board's negotiating position as any proposal that
has shareholder backing will provide the board with significant
support.

We recognise that all shareholders are very important to the Company's future.
It is for this reason that we would urge you to vote FOR each of resolutions 1,
2, 3 and 4. The rationale for doing so is simple - this is the best way of
preventing a loss in value of the Company by forcing the Company to protect
shareholders' interests at this crucial time in its history.

Yours sincerely

For and on behalf of
SRM Global Master Fund Limited Partnership

This information is provided by RNS
The company news service from the London Stock Exchange

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