Northern Rock’s share price fell to an all-time low on Monday after the firm said potential bids valued it at “materially below” its market price.
A Treasury statement saying it might not guarantee the Bank of England’s loans past February helped spark the sell-off although the Treasury signalled that it was willing to discuss any proposals made.
Rock’s share price has fallen by over 90 per cent in the last year from 1,258p to 104p on Monday. It price fell to 60p on Tuesday but rallied to 97p.
Treasury officials are in discussions with the European Commission over whether they can extend the emergency loan past February without contravening Euro laws on state aid.
Northern Rock says its advisers have begun discussions with interested parties to clarify their proposals in order to allow the board to consider and identify the most appropriate course of action for the company and its stakeholders.
New chairman Bryan Sanderson made board changes as chief executive Adam Applegarth and Sir Derek Wanless, head of the risk and audit committee, both quit.
Applegarth will continue his work at the bank throughout the second phase of the strategic review process set to go on until the end of January 2008.
Sanderson has brought in two well-known trouble-shooters as non-executive directors, Telent chairman John Devaney and former Safeway financial officer Simon Laffin.
Northern Rock says it expects further interest in the next few days but adds: “There can be no certainty that the discussions with interested parties will lead to an investment in or offer for the company or for all or any part of its business.”