SRM Global Master Fd - RAB Stmnt re Northern Rock : NON-REG

RNS Number:1799L
SRM Global Master Fund Ltd Partners
07 January 2008

Sent on behalf of the RAB Special Situations (Master) Fund Limited

Letter dated 3rd January, 2008

We are all aware of the intense media and political speculation over the last
few months surrounding the future of Northern Rock plc (the "Company") and its
business.

In the turmoil many people seem to have ignored the fact that the Company
remains owned by its shareholders. The exercise of our voting rights involves
being mindful of our responsibilities to the many employees working in the
branches and head office as well as all the people whose businesses rely upon the
Company. Hundreds of thousands of its customers continue to trust their savings
to the Company and its lending operations have given many the opportunity to own
their own house. The preservation of these operations is partly due to the
billions of pounds loaned to the Company by the Bank of England which must now
be repaid as soon as possible.

We are writing to you as a fellow shareholder with all of this is mind.

Many of you will have been shareholders since demutualisation. Others, like the
RAB Special Situations (Master) Fund Limited ("RAB"), will be more recent
investors, Nevertheless we have all suffered financial pain resulting from the
recent destruction of the Company's share price.

We continue to believe that, with careful guidance and the support of its
shareholders, the Company can emerge from its current beleaguered state to once
again stand as a successful and well run business, thereby enabling it to repay
the Bank of England as rapidly as possible. To this end, RAB and others have
indicated a willingness to participate in the underwriting of a rights issue to
recapitalise the Company on reasonable terms provided that the business of the
Company continues in its current form.

However, we are concerned that, due to the external pressure the Board of
Directors of the Company (the "Board") is clearly experiencing, shareholders'
views and interests appear overshadowed by political considerations. Several
other shareholders have expressed a reluctance to passively allow the Board to
decide the future of the Company irrespective of shareholders' interests.

This is why RAB and SRM Global Master Fund Partnership have requisitioned an
Extraordinary General Meeting of the Company (the "EGM").

Proposed Extraordinary General Meeting

At the EGM certain constitutional amendments will be tabled. These will restrict
the Board's ability to complete any material corporate activity without the
support of a simple majority of shareholders. More specifically shareholders
will be asked to consider, and if thought fit, pass one ordinary resolution and
three special resolutions numbered 1,2,3 and 4 (together "Resolutions 1-4"),
details of which have already been provided to you by a letter from the Chairman
of the Board dated 21 December 2007 (the "Chairman's Letter").

It is suggested in the Chairman's Letter that adopting Resolutions 1-4 would be
prejudicial to the Board's ability to negotiate and implement transactions. In
ordinary circumstances we might agree that the Board's executive powers should
not be unduly restricted and the Board should be permitted to carry out the
normal, day to day business of the Company. However, these are not ordinary
circumstances and the possible actions which are being considered by the Board
are neither 'normal' nor 'day to day'.

In our view the shareholder ratification requirements which would be
introduced by Resolutions 1-4 are necessary given that:

• the Board has publicly acknowledged it is under political pressure from a
variety of interested parties;

• the Board has no collective track record of success in managing the
Company, a fact which assumes greater significance as a result of the
previous Board's business strategy; and

• shareholders' consent to any significant transaction would be advantageous
to the Board as it would have the effect of ratifying their decision.

The passing of Resolutions 1-4 gives shareholders an essential voice as part of
the approval process for any rescue transaction and would not introduce any
significant delay to such process.

In the circumstances RAB strongly recommends that you vote FOR each of
Resolutions 1-4.

We will be attending the EGM and intend to vote all the shares held by RAB
(31,968.741 shares or 7.59 per cent of the Company at the date of this letter)
in favour of Resolutions 1-4. Should you wish to appoint a proxy rather than
attend the EGM in person then please ensure that when appointing your proxy you
instruct them to vote FOR each of Resolutions 1-4 if you agree with us.

Finally, we would reiterate RAB's commitment to the Company, We have publicly
stated that RAB would support the introduction of new equity funding into the
Company on appropriate terms and if required would make additional finance
available. This is something RAB would choose to do as a responsible
shareholder.

RAB will be paying all costs for the printing and circulation of this statement
to its fellow shareholders.

Letter from:

Philip Richards
Chief Executive Officer
RAB Capital plc
fund manager to
RAB Special Situations (Master) Fund Limited

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

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