In a letter published yesterday, SRM Global Master Fund andRAB Capital urged shareholders of Northern Rock to support resolutions the twohedge funds have put down during a special meeting to be held next week by themortgage bank, reports Financial Times.
Both hedge funds hold more than 17 percent of Northern Rock’sshares, and have demanded an extraordinary meeting to pass the resolutions, whichwould stop the board from issuing new shares, buying or selling assets, ormaking changes to the structure of the bank without explicit approval fromshareholders.
According to FT, Northern Rock’s board has advisedshareholders to vote against the resolutions at the January 15 meeting, andproposes shareholder approval would be needed if the bank sold more than 5percent of its assets. Still, RAB and SRM are concerned that if the resolutionis passed, they’ll be denied the opportunity to vote on any rescue deal thebank agrees.
In the letter, SRM stated that the bank wasn’t alone insuffering from its “inability to access short term liquidity from the wholesalecredit markets,” and that it thought Northern Rock had a “strong and viablebusiness,” according to FT.