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Bidder 'quits Northern Rock race' Rock suitor unveils rescue plan
(19 minutes later)
One of the frontrunners to buy Northern Rock has pulled out of the running, newspaper reports have claimed. One of the contenders to buy Northern Rock has unveiled details of its proposed rescue offer for the bank.
US buyout firm JC Flowers sent letters to the Treasury notifying officials of its position, the Financial Times and Daily Telegraph reported. The Olivant group, headed by former Abbey Boss Luqman Arnold says it would immediately repay £11bn of government money that is propping up the firm.
The rest of the Bank of England loan - about £25bn to date - would be repaid by 2009 - with the Northern Rock brand being retained, it said.
Separately, another of the frontrunners for the bank has reportedly pulled out.
The Financial Times and Daily Telegraph reported that the US buyout firm JC Flowers sent letters to the Treasury notifying officials of its position, the Financial Times and Daily Telegraph reported.
The firm, they said, decided it could not agree a deal acceptable to it and the government - which is currently propping up the stricken lender.The firm, they said, decided it could not agree a deal acceptable to it and the government - which is currently propping up the stricken lender.
A Virgin-led consortium is currently the preferred bidder for Northern Rock.A Virgin-led consortium is currently the preferred bidder for Northern Rock.
Another bidder, the Olivant consortium led by former Abbey boss Luqman Arnold, is expected to make a revised proposal on Friday.
However reports suggest that it is refusing to make any major concessions in the terms of its approach.
Bid machinations
Analysts saw JC Flowers as the most credible alternative should the Virgin bid not prove acceptable to Northern Rock shareholders.
Neither JC Flowers nor the Treasury has commented on the firm's reported move, which would be a major blow in efforts to resolve the crisis surrounding the mortgage lender.
Representatives from JC Flowers have been holding talks with Treasury officials in recent days about its proposed bid.
This would see £15bn of the £25bn so far lent by the government to Northern Rock being repaid upfront, with the remainder being paid back over three years.
According to the FT, JC Flowers concluded after these meetings that any offer would not be able to satisfy its shareholders as well as meet government criteria for the sale.