Rock suitor unveils rescue plan

The field pursuing Northern Rock appears to be thinning out

One of the contenders to buy Northern Rock has unveiled details of its proposed rescue offer for the bank.

The Olivant group, led by former Abbey boss Luqman Arnold, says it could repay immediately up to £15bn of government money that is propping up the firm.

The rest of the Bank of England loan - totalling £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.

US buyout firm JC Flowers sent letters to the Treasury notifying officials of its position, the Financial Times and Daily Telegraph reported.

Olivant's scheme is much friendlier to the interests of shareholders than Virgin's proposal Robert Peston, BBC business editor Read Robert's thoughts in full See Northern Rock shares

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 consortium led by Richard Branson's Virgin Group is currently the preferred bidder for Northern Rock.

It has said it would immediately repay £11bn of the government loans and rebrand the bank under the Virgin name.

'Work together'

Under Olivant's proposals, Mr Arnold would be seconded to Northern Rock's board and become executive chairman of the bank until the money lent by the Bank of England had been fully repaid.

Olivant also said it planned for Northern Rock to raise up to £800m equity capital, with a rights issue raising up to £650m.

The group added that it had non-binding support from shareholders owning 23% of Northern Rock to take up the rights issue at, or close to, the current market price.

"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," said Mr Arnold.

"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."

Mr Arnold also said that he had no plans to sell any Northern Rock assets if the Olivant rescue proposal was successful.

Northern Rock's shares rose in response to the details of Olivant's bid, closing up 7.3% at 110.6 pence.