Key suitor drops out of Northern Rock takeover race

Business Materials 4 February 2008 23:01 (UTC +04:00)

( dpa ) - A key suitor for the rescue of troubled British mortgage lender Northern Rock pulled out of the race Monday, leaving Richard Branson's Virgin group in pole position for a private sector takeover.

Investment firm Olivant said it would not submit a further proposal because it had failed to come up with an offer that would satisfy its investment needs, the government's financing terms and the interests of Northern Rock stakeholders.

Sources said the firm had balked at the government's insistence that a massive Bank of England emergency loan of around 25 billion pounds (50 billion dollars) should be paid back in three years, rather than the five years offered earlier by Olivant.

The withdrawal leaves a consortium led by Virgin chief Richard Branson, and Northern Rock's new management, as the two remaining possible buyers.

Shares in the battered mortgage-lender, Britain's fifth-largest, rose in anticipation of the bids as the deadline for proposals was due to expire Monday.