Shares digital

The prospects of Northern Rock (NRK) being nationalised may have receded slightly. A crucial EGM, organised by activist investors led by the hedge funds RAB Capital (RAB:AIM) and SRM, saw shareholders vote on resolutions that would curb the power of the stricken bank’s board and according to many observers make it even more unlikely that a private buyer will be found.

Of the four resolutions only one was passed and the board of Northern Rock responded by saying this would not ‘materially restrict’ a rescue deal.

Earlier, ahead of the meeting, the shares plunged to a new low of 65.75p, down 20%. Alex Potter, from brokers Collins Stewart, described it as a ‘heads you lose and tails you don’t win scenario’.

As he explains, despite the hedge funds being largely defeated, ‘a rescue deal is still not guaranteed and unlikely to be materially above the current stock price in any case.'

Shares says: Despite a favourable result for the Northern Rock board there is no rationale for holding these.

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by: Tom Sieber