Newspaper article The Evening Standard (London, England)

Gambling on Virgin to Get It Right Could Be a Good Bet

Newspaper article The Evening Standard (London, England)

Gambling on Virgin to Get It Right Could Be a Good Bet

Article excerpt

SIR Richard Branson plans to pump money into Northern Rock by buying itsshares at just 25p each. That is precisely 98% lower than the failed bank'sshare price back in February when it hit an all-time high of 1251p.

The knee-jerk reaction was seen when the stock market opened today withNorthern Rock shares tumbling more than 15p to 70.3p.

But within an hour the price had more than recovered and was trading some 20%higher, up 18.1p at 104p.

Even at these levels Northern Rock's two largest shareholders RAB Capital andJon Wood's SRMwhich each own about 6.5% stakesare facing huge losses. RAB paid an average of around 257p a share, while SRM,still buying today, forked out just under 180p a share.

Branson's plan would involve a massive issue of new shares. Northern Rockcurrently has 421 million in issue.

Virgin would issue 6.2 billion new shares, half of which would be on offer toexisting shareholders on a six-for-one basis at 25p a time. …

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