Northern Rock - a Turd by any other name
FT Alphaville have posted the "confidential details " of the BOE memorandum about the sale of Northern Wreck (Codename "Blackbird" AKA Turdus merulus of the Family Turdidae - someone at the BOE with a keen sense of ornithological humour ?)) for prospective buyers.
http://ftalphaville.ft.com/blog/2007/11/13/8870/project-wing-the-northern-rock-briefing-memorandum/
The document is curious - it says the Wreck expects to have a credit line of £24bn from the taxpayer (AKA BOE) as at 1/1/08 - although by most people's reckoning it stands at £30Bn. today.
The loan rate and other terms, length, termination triggers etc., are not available but ..."any potential purchaser/investor... will need to have discussions with the Bank of England and its advisers before concluding any proposal."
The business is unsaleable without this loan and this is tacitly accepted - in 2010 the Rock will require at least £6bn from ..er..." a Replacement Facility"
3 outlines scenarios are given ... all demanding BOE support and evidence that they just want this mess off the doorstep of Threadneedle Street.
• sale of the whole company; (In two words Im Possible, you could not GIVE the company away)
• sale of the basic physical infrastructure of the business, viz. the branches, IT and call centre, - the loans from the remaining stupid, short siighted retail lenders who haven't even now moved their funds to higher and safer ground.
• sale of above plus those securitised mortgages, and a "run off" of the rest - in which case the Credit Rating agencies are left withj a problem to rate and this could leave to a "trigger" by which the holders can demand their money back. (The Credit Agencies are remaining remarkably silent re the value of "Granite" etc.,
Anyone who still holds shares is a mug.
3 comments:
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