any comments, thoughts, on this stock.

Doesn't sound very attractive does it? What will it be in another 2 weeks?

BIG debt...


Northern Rock borrows further 5 bln stg from BoE - report
AFX


LONDON (Thomson Financial) - Troubled UK mortgage lender Northern Rock has borrowed a further 5 bln stg from the Bank of England, taking the total amount it has drawn from an emergency credit line set up by the central bank earlier this month to 8 bln stg, the Financial Times reported without citing sources.

The FT said creditors holding Northern Rock's tier two debt are forming a committee to protect their interests in any restructuring or insolvency, amid fresh concerns over the bank's viability.

The FT also reported that Northern Rock last week distributed almost 40 mln stg in dividends to holders of preference shares, shortly before it cancelled a 60 mln stg interim payout to ordinary shareholders.

tf.TFN-Europe_newsdesk@thomson.com

Price only down 5%. I get the impression the increased borrowing was known about. I see RAB added to their stake yesterday. That does intrigue. 7% now, which is a hefty stake.

Agree - price seem fairly stable. Think everyone's expecting bid details to be announced.....

Hi there; If hlyeo98 is right about the Preference Shares it's been kept quiet - but maybe NRK cannot avoid paying this class of share ( er, why are Some more-equal than others, springs to mind!). For any dividends are being paid out of borrowings, I guess.

I hold from recent stumbles and still wonder if the Hedge Funds aren't seeing a profit somewhere, but suspect the small punter will be crushed under the turmoil.

If the shares fall further I shall sell, so maybe I should sell sooner rather than hoping some White Knight comes out of the forest and rescues this distressed Princess ( judging by the sobbing) rather tattered, robbed and rumoured by some to be without virtue.

Does anyone understand RAB's stake-building ? . . . other than it gives them a position at any Negotiations . . . but surely being a known player of the Markets, wouldn't their presence (at negotiations), be illegal?

Does anyone have a guess for RAB's average sp?

- I don't understand it. -

Yet, I do understand that the Execs at NRK have been somewhat slap-happy with the way they conduct business risks; indeed some might suggest reckless, when a tiny shift in interest-rates, appears to knock them out of the game.
That strikes me as being a mistake a child might make, acting out a school project and playing with Monopoly money.

So, I'm surprised an EGM hasn't been called to eject them without any severance pay, bonuses etc. - - - let them sue for breach of contract.....
Grr.

i confess that i thought there was an AFX announcment yesterday to the effect that RAB had actually reduced their holding from 6.9% to 6.66%, but i dare say i am wrong.

for myself, i am still (quite!) firmly of the opinion there there is little or no upside to the sp, and potentially considerable downside.

i too am very very surprised that the pref share holders should actually have received their divi .... though such holders always get paid paid first (doh!), i cannot believe there was any more obligation to pay them than there was to pay the ordinary stock holders.

It has been another long painful week for NRK. Surely the BOE will have to take action very soon as this uncertainty surrounding NRK's future is undermining confidence in the whole banking sector. If it is not sorted soon the Government will lose credibility.

halifax - it is right that there should be a lack of confidence in the banking sector. They've proved exceedingly profligate this past few years, particularly with lending on property.

neither BoE nor the gov't have any obligation whatsoever to the ordinary shareholders, and in most ways, that is absolutely correct ...... the only concern (interest) will be to ensure that any depositors and mortgage holders are covered and, of somewhat secondary importance, that BoE (the taxpayer!) recovers in due course the lifeboat that has been floated with its attaching interest.

i could well be proved wrong, but i cannot believe that at the end of the day, the shareholders will recover more than a very very small % of their investment, and maybe not that much

You may well be right as all have jumped on the easy money band wagon. However my point is the NRK problem has to be sorted out now before the contagion (lack of confidence )spreads to the other profligate lenders. The Government will regret not taking decisive action and avoid being sucked into a problem not of their making.

what action do you think gov't could have taken? ...... i don't see any.
however, one would certainly hope that NRK's board do not walk away with heavily laden wallets and pension funds, as seems to be the usual procedure, while the poor employees just get kicked in the arse.

i don't hold that the shareholders should be protected, as that more than smacks of the idea that is so prevalent in the state schools that there should be no losers ...... what a load of nambypamby rubbish that is!

The question to be answered by the Government, since they became involved is quite simple , should NRK survive in its present form by pumping more and possibly more tax payers money into it or should it go into receivership? We are not short of banks in this country and one less wont make any difference, unless of course if its base is in Newcastle.

NRK will undoubtedly go into receivership or adminstration or something that will be much the same financially if the tabled t/o does not materialise, but that will, i am sure make no difference to the status of either the depositors of the mortgagees.

Had a quick look at their balance sheet with Interim 2007 figures. Equity attributable to equity shareholders was just over 2.3BN, but with total assets 113BN, including "Available for sale Securities" of 8BN (whatever they are) it does not take a maths degree to suggest that with the brand name shot to bits (i.e.imo little or no goodwill) that 2.3BN of surplus could quickly evaporate. Feel sorry for the employees, many of whom must have been sucked in as shareholders, but hopefully most on SAYE schemes where at least they will get some interest and their money back. Interesting that Interim report clearly states their reliance on debt securitisation for funding - not sure what the FSA has been doing in monitoring it (or indeed if they have a clue about the vast numbers flying around in the whole sector's balance sheets on esoteric items a layman cannot understand, some of which may yet come home to roost)

Telegraph: Lloyds back in hunt for Northern Rock

Times: MPs braced for avalanche of protests from Rock shareholders

Possibly not good news for shareholders though......

Strawbs.

I thought that it was common knowledge that Shareholders are way down in the priority list of creditors in these type of scenarios. It's just part of the risk for holding shares (no matter how many times some people cry foul). I also agree with BA above in post 469 by the way.

to paraphrase the telegraph article ...... Lloyds had initially thought of bidding 200/300 but under their revised bid, shareholders will get nothing ..... so what is it with the smoke and mirrors that is still holding sp at 180?

zero for shareholders is exactly what I thought woukld happen.

I hope is doesn't but it looked on the cards from the inital explosion of the company.

The bits will stay blown apart.

Just to play devils advocate..............
The company only becomes illiquid on the sale of its secured book. The money mae available by the BoE is more than that required to stay liquid, so I wonder what the rules say about this.
For me, selling up and realising a loss is not necessarily the only way, and if they did do it, then the BoE loan would have to be used to make up the shortfall for depositors.
They could simply stop lending money out for the time being and go on a huge cost cutting exercise across the loans sales and administration division. This could, in effect, make their deposit base justifiable and profitable and then rebuild a new business model, based on deposits rather than loans. In much the same way as mutuals used to do in the 70's.
Not saying it is ideal, or even good for shareholders, but it may be better for everyone than crystallising losses to the benefit of a few asset strippers.
Alan

Perhaps I have missed something, I was of the opinion that shareholders owned companies and not the Treasury. I may be naive to think that "turkeys will vote for Christmas" but perhaps shareholders should call for the resignation of the directors of NRK and then vote for the winding up of the company if they are to end up with nothing anyway.Who actually controls NRK at the moment?