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Guest mSparks

Northern Rock Valuation

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Guest mSparks

just been following up on the latest developments on our favorite friends Northern Rock and came across these intersting quotes from Baroness Noakes.

Investors who bought Northern Rock shares through Hong Kong entities may well be able to use the bilateral treaty compensation principles which provide, in Article 5, for compensation based on,

“the real value immediately before the deprivation or before the impending deprivation became public knowledge whichever is the earlier”.

That seems to set at 90p a compensation floor for any investors who can take advantage of such a treaty, but there will be a lot of scope for arguing that the “real value” referred to in Article 5 has to eliminate the extent to which the threat of nationalisation was already embedded in that price. A figure of £4 per share has been talked about in the press, but there are other plausible values—perhaps a pre-credit crunch value of £8 or £9 might be argued for. I do not expect the Minister to comment on these values.

looks like the value may be forced somewhere around £4 -£9.....

And my favorite:

But the Minister will know that if the Chancellor does try to ignore the fact that Northern Rock’s liabilities are those of the public sector, as the ONS has already determined, he will be unmasked as the biggest fiddler of figures of all time. His predecessor, the Prime Minister, was adept at cooking the books but never on such a large scale.
Edited by mSparks

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Err... how can Northern Rock be anything more than zero?

It's liabilities is more than it's assets!

If it was to go into administration, share holders would get nothing!

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