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. Last Updated: 07/27/2016

Virgin Picked for Rock Bid

LONDON -- Northern Rock will hold accelerated takeover discussions with a consortium led by Virgin Group, the battered mortgage lender said Monday.

Virgin, which proposes to re-brand Northern Rock as part of Virgin Money business, says its consortium would repay 11 billion pounds ($22.7 billion) of the 25 billion pounds that the Bank of England has loaned to Northern Rock on the completion of the transaction.

The remainder of the money would be paid "in due course," Northern Rock said in an announcement to the London Stock Exchange.

The Virgin Consortium also promised additional funding facilities to support the business.

The market's first reaction was negative, with Northern Rock shares falling 11.5 percent in early trading on the London Stock Exchange to 76 pence ($1.57).

By midafternoon, however, buyers bid up the shares to 113.7 pence, up 32 percent.

Investors in the bank have said they would resist any bid that did not offer shareholders value for money. The government has the option of placing the bank in administration if a deal cannot be struck -- the worst outcome for stockholders.

Hedge fund RAB Capital, one of the largest shareholders in Northern Rock with a 6.6 percent stake, has not taken a public position on Virgin's offer.