Northern Rock PLC
21 December 2007
Northern Rock plc
Posting of Notice of EGM
On 26 November 2007, Northern Rock plc (the 'Company') announced that it had
received a notice from nominee shareholders acting on behalf of the hedge funds
SRM Global Master Fund Limited Partnership ('SRM') and RAB Special Situations
(Master) Fund Limited ('RAB') requisitioning an extraordinary general meeting
('EGM') of the Company to consider and, if thought fit, pass a special
resolution to amend the articles of association of the Company.
That notice has now been withdrawn and replaced by a second EGM requisition
notice from the same nominee shareholders acting on behalf of SRM and RAB
received on 10 December 2007. The EGM is scheduled to be held at 10 a.m. on 15
January 2008, at Metro Radio Arena, Newcastle upon Tyne, NE4 7NA.
In summary, the requisition requires a number of resolutions to be proposed at
the EGM which, if passed, would require further shareholder approval before the
directors can:
- issue new shares in the Company above certain small thresholds which
are much smaller than the thresholds the shareholders have already imposed on
the directors;
- sell assets (or take action which would permit other members of the
group to sell assets) in any twelve month period if the aggregate value of those
assets represents 5% or more of the total value of all of the group's assets
(both fixed and current);
- buy assets (or take action which would permit other members of the
group to buy assets) in any twelve month period if the aggregate value of those
assets represents 20% or more of the total value of all of the group's assets
(both fixed and current); and
- authorise other members of the group to dispose of, transfer or issue
shares or to make any other changes to their capital structure.
The Company is posting today its shareholder circular providing details of and
responding to the EGM requisition.
The Board unanimously recommends that shareholders vote against the resolutions
proposed by SRM and RAB and the shareholder circular sets out the Board's view
that the resolutions proposed by SRM and RAB, if approved by shareholders,
would:
- materially restrict the power of the Board to act at a time when
prompt, decisive action may be required to deliver an optimum solution for
shareholders and other stakeholders (including creditors);
- hinder the Board's ability to negotiate and implement swiftly
transactions that preserve liquidity and that may be key to a successful outcome
of its strategic review;
- impose restrictions on the Board during this crucial strategic review
process which go well beyond UK best practice; and
- impede the ability of the Board to properly discharge its duties.
The shareholder circular also contains details of additional resolutions to be
proposed by Northern Rock at the EGM, to confirm the recent appointments of five
new directors to the Board of Northern Rock. The Board unanimously recommends
that shareholders vote for these resolutions.
The documents being posted to shareholders today include forms of proxy for
voting at the EGM. Any shareholder wishing to vote by proxy is required to
return the completed form to Capita Registrars Limited no later than 10 a.m. on
Sunday 13 January 2008. Further details are contained in the shareholder
circular.
Chairman Bryan Sanderson commented:
'Since I joined Northern Rock as Chairman, the Board has continued to pursue its
strategic review with the aim of securing a positive outcome for all
stakeholders. The resolutions proposed on behalf of two shareholders, SRM and
RAB, in the view of the Board, restrict the ability of the Company to act in a
timely and appropriate manner during a period when the Board is likely to need
maximum flexibility.
Whilst I recognise the positive motives of the two shareholders in question, the
Board believes that we have a governance structure in place that protects the
interests of shareholders and all other stakeholders and that the proposed
resolutions place restrictions on the Company significantly in excess of the
norm for other fully-listed UK public companies.
Accordingly, I believe that these resolutions are unnecessary and, in view of
the difficult and challenging circumstances currently affecting the Company,
potentially damaging. Through our strategic review, the Board is fully committed
to promoting the success of the Company and protecting the interests of all its
stakeholders (including shareholders and creditors). The proposed resolutions,
in our judgment, do not support but rather prejudice these objectives.'
Copies of the shareholder circular have been submitted to the UKLA, and will
shortly be available at the UKLA's Document Viewing Facility, which is situated
at Financial Services Authority, 25 The North Colonnade, Canary Wharf, London
E14 5HS, Tel. 020 7066 1000.
City Contacts Press Contacts
Dave Jones Brian Giles
Group Finance Director Communications Director
0191 279 4366 0191 279 4676
Simon Hall Jemma Rundle
Investor Relations Corporate Communications
0191 279 6090 0191 279 4676
James Murgatroyd
Finsbury Limited
020 7251 3801
The Blackstone Group International Limited ('Blackstone'), Citigroup Global
Markets Limited ('Citi') and Merrill Lynch International, which are
authorised and regulated in the United Kingdom by the Financial Services
Authority, are acting exclusively for Northern Rock plc and no-one else in
connection with the matters referred to in this announcement and will not
be responsible to anyone other than Northern Rock plc for providing the
protection afforded to clients of Blackstone, Citi or Merrill Lynch
International nor for providing advice in relation to the matters
referred to in this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange