JC Flowers out of Northern Rock

Against all expectations, the UK investment company, Olivant, established and led by Luqman Arnold, is far from out of the race to take over the Rock.

Olivant issued a statement to the market Friday detailing its plan to get Northern Rock out of its present quagmire.

It says it has the support from 23% of the Rock’s shareholder base, which effectively can block any takeover of the bank by the competing Virgin consortium.

Olivant says it will inject equity of between £450m and £650m through a Northern Rock rights issue as well as another £150m of its own money for a stake in the bank.

The firm also says it has letters of commitment from five existing institutional Northern Rock shareholders to sub-underwrite £440m of the rights issue at around the current market price.

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.”

Meanwhile, JC Flowers, the US private equity firm, has withdrawn from the race for ailing UK bank Northern Rock.

According to a report in The Telegraph, JC Flowers sent letters to both Northern Rock and the UK Treasury saying that it cannot put together a deal which meet its profitability criteria that would be acceptable to the UK government.