Hedge funds SRM Global and RAB Capital over the weekend announced their reasons for blocking the takeover of Northern Rock, saying their bid is still a viable one.
"It is nothing like the "lame duck" that some would have you believe," said the hedge fund SRM in a statement. "Based on the company's stated guidance regarding its valuation, SRM believes that the company's book value is materially in excess of its current share price."
Major Northern Rock shareholder and fellow hedge fund RAB Capital said that it believes the bank will be able to repay the billions of pounds loaned to it by the Bank of England "with careful guidance and support of its shareholders".
SRM, with the backing of RAB Capital, is seeking support for shareholder resolutions next week that would prevent Northern Rock from selling itself or changing its capital structure without the support of shareholders.
Both SRM and RAB are in support of a bid by Olivant Partners for Northern Rock, rivaling a bid led by Richard Branson's Virgin Group.
"SRM believes that any sale of assets and/or business of the company at below its true value is detrimental to the company and to its shareholders and would inhibit a timely and complete repayment of the Bank of England facilities," the hedge fund said.
Northern Rock has been after a reasonable bid since it became a casualty in the global credit crisis this year.
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