Virgin’s proposal includes paying back 11bn of the Bank of England loan on completion of the deal with a “clear path” to paying back the loan in full.
It also includes £1.3bn of new cash and the Virgin Money business- which has an implied value of £250m- being injected into Northern Rock.
Half of the £1.3bn will come from the Virgin consortium and half through an offer to existing shareholders of new shares.
Northern Rock chairman Bryan Sanderson says: “This is very good news for Northern Rock. Over the last few weeks and months we have looked at the issues from the perspective of all stakeholders.
“I am grateful for the support that we have had from customers and employees who have stayed loyal to us during these difficult times – and pleased that a solution that firmly restores the Company’s prospects has been identified. Furthermore our retail depositors can be fully reassured that the Government has said it will ensure savers’ money is safe whatever the outcome.”