A British court has forced the Financial Times to remove details of a confidential sales memo circulated to would-be buyers of Northern Rock, the troubled UK lender. The memorandum had been obtained by the FT’s Alphaville blog and was available for several hours yesterday. The Blackstone group brought a lawsuit requesting an injunction against publication of material from the memo, which the court granted.
The memorandum, which had been prepared by Merrill Lynch, Citigroup and Blackstone, suggests that even if the company found a buyer, Northern Rock is expected to receive financial support from the Bank of England until at least 2010.
The FT has now summarized much of the memorandum, although the court order prevents them from publishing the memo itself. You should read the whole thing but here are some quick highlights:
• Northern Rock expects to have borrowed an estimated £24bn from the Bank of England by January 1 2008, which is about £4 billion more than it has already taken.
• In 2010 Northern Rock will need £6bn to refinance its Bank of England facility.
• Profits are expected to sink as low as £143m in 2008 and recover to reach £643m by 2010.
Northern Rock faces years of debt [Financial Times]