RAB rallies support from Northern Rock shareholders
by Gill Montia
RAB Capital, the hedge fund manager that last week increased its stake in Northern Rock to 7.7%, has written to the bank’s shareholders urging them to support resolutions that will be tabled by RAB and SRM Global at an extraordinary meeting to be held on 15th January.
According to Philip Richards, chief executive of RAB Capital, the proposed sale of Northern Rock has left shareholders’ views and interests “overshadowed by political considerations”.
Mr Richards is insistent that actions taken by the board with regard to a sale of the bank should have the backing of a majority of shareholders.
He has also announced that RAB is prepared to act with other unnamed shareholders in the underwriting of a rights issue that could safeguard the future of the bank, in its present form.
In his letter, Mr Richards warns that: “the board has publicly acknowledged it is under political pressure”.
If the resolutions tabled by RAB Capital and SRM Global are adopted, they would prevent the board from selling assets worth 5% or more of the bank’s value, without the approval of investors.
They would also prevent the purchase of assets worth more than 20% of the value of the business, and prevent it issuing new shares above certain levels.
Northern Rock’s chairman, Bryan Sanderson, is opposing the resolutions because they could hold up a sale.
Any further delay in resolving the future of the bank will almost certainly increase the chances of it being broken up.
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